As rightly advised by Sir Warren Buffet “Buy low, sell high.” However, the market is always subject to great volatility, momentum, price escalations, volume turmoil etc. It may not always be possible for an investor to encase revenues out of every stock market strategies that the investor undertakes.
Market conditions are subject to several macro and micro factors. These factors are again subject to economic, political and other implications on the market working.
No matter how dynamic or static the market conditions are, an investor should always maintain the few thumb rules in stock market strategies before deriving any strategy following the market fever.
This is one of the basic stock market strategies. Be responsive to the market changes. This means that do not wait too long to take any decision. Long time lags in taking decision may ruin your exiting returns. Also, market is subject to massive volatility. One delay in decision may cause havoc to your finances.
Risk Averse option
If an investor looks for risk averse option, then perhaps he will never be able to adapt to the market volatility. Market is subject to risk and great ups and downs. An investor should structure his stock market strategies in such a way so as to manage risk and keep it minimal. For instance, a trader/ an investor can derive maximum benefits by deriving a balanced portfolio for keeping minimum risk.
Reliance over fundamentals
Avoid relying excessively only on the fundamentals of the company. This becomes important because the judgement of the movement of the stocks just does not depend on the fundamentals but also on its overall performance of the past years.
Maintain sufficient cash
Whatsoever stock market strategies an investor can maintain, it is always suitable to maintain sufficient amount of cash balance with oneself. Whether the investor goes short or long in any stock/securities, it is always important to maintain sufficient cash reserves. This cash helps you as a cushion when your stocks are not performing well or you suffer loss.
Hence, for an investor it is always important to maintain the basic strategy of investing and trading. Undoubtedly the strategies are subject to market volatility, as mentioned before. Based on an investor’s experience one should take necessary move in stock market and take the decision. This helps the investors in planning both the short term and long term targets and portfolio management.