These 7 stock trading tips will help you to make a wise decision while investing in Bursa Malaysia.
Have you heard this famous saying on money?
“Don’t work for money; make it work for you.” Robert Kiyosaki
How will you do make your money to work for you?
By investing it in right place at right time.
There is more than one way where you can invest in Bursa Malaysia, for example, mutual fund, stocks, bonds, forex, gold etc.
But before investing anywhere you will need a few tips or suggestions to make wise decisions. We are here going to tell you the most important stock trading tips, that will help you to make investment smooth and hassle-free.
Everyone needs tricks and tips to make one’s life easy and happy. The investment strategy for KLSE stock investment is one of them. You have to know some ways and means to make sure you are not making a mistake. Relying on luck is fool’s investment strategy which you should avoid.
These 7 stock trading tips will help you while investing in stocks of Bursa Malaysia.
1. BUILD THE FOUNDATION FIRST
In stock investing your foundation is your knowledge about listed stocks in KLSE, basic terminology and all the prerequisite to trade in the equity market.
Know the basic financial definitions- Before starting your investment journey you have to be aware of the terms like P/E ratio, dividend yield, ROE(Return on equity), CAGR ( compound annual growth rate), earning per share (EPS). You should know how they are calculated and that will help you separate healthy companies from poor companies in Bursa Malaysia.
Types of Investment Accounts
Stock Selection Method and Trade Timing
As Warren Buffett said, “Risk comes from not knowing what you are doing.”
2. CHECK YOUR EMOTIONS
Investing in stock can affect your financial condition in a big way. You can not make a decision with your gut or if your just ‘feeling’ like it. Many investors fail in stock trading because they do not check their emotions and make a decision in a jiffy.
There are terms for how you feel about the market. When a trader thinks negative about the market he is being bearish and when he feels the market will go up he is being bullish.
But your market opinion should be based on analysis not just on the basis your feeling or affected with other investors.
3. CALCULATE YOUR RISK TOLERANCE
According to the definition risk, tolerance is “the extent to which a person chooses to experience a less favorable outcome. In the pursuit of a more favorable outcome.”
In laymen terms, how much you are ready to lose to gain much better.
The KLSE market can be volatile and be very uncertain at a time. If you know how much you are ready to lose it will make steer clear of all the dangerous time in the trading market.
4. ALWAYS GO FOR LONG RUN
If you will need the money you are investing in two or three years then do not invest in stocks. Stocks are not for your short-term financial goal.
The growth of your portfolio depends upon the capital you have invested and for how much time you have invested. Return on investment is highly affected by the time of investment.
Make a plan when you will need the money, is it for the college education or for a retirement plan.
But we highly recommend investing in KLSE stocks for the long-term.
5. DIVERSIFICATION IS YOUR FRIEND
Diversification is a strategy for risk management.
There are many types of stocks available in the Bursa Malaysia. There is a small, mid and large cap stocks. There are sector wise stocks energy, banking, real estate and many more.
Diversification is investing in different types of stocks. We recommend you to invest only 10% of your money in the particular type of stock.
6. INVEST IN COMPANIES NOT STOCKS
Its normal to forget about the real business behind the number and stock quotes you see in Bloomberg or Reuters. You see the number and get all pumped up by looking at high dividend and ROE.
Mr. Buffett recommends
“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
You don’t have to become a businessman to understand the company. But you have to understand the business they are doing, what is the demand of that business, what could be the future of it.
You will see an overwhelming amount of information and will want to invest in it but you have to take care of all the prospect to take care of the investment portfolio.
7. OVERACTIVE TRADE IS NOT FOR YOU
Checking you stock once quarterly is enough. Its when you receive a quarterly report from the company. This will be enough for you.
It is tempting to look for the stocks performing every now and then. This will make you overreactive and you will end up making stupid decisions. Minor fluctuation in KLSE stock price will affect your decision making. This is overactive trading.
Records have suggested that about 20% of investors who traded over actively earned an average net annual return 5.5% less than the least active investors.
On the last note by MVR
As you already know the Bursa Malaysia equity market is a great opportunity for the people who want to invest right and want to make money on time. You can build a large asset if you pay enough attention in the making of a series of steps while investing stock market.
Above stock trading tips will help you to start an investing endeavor in KLSE.
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Money Value Research has a strong grip in the global market with the experts of Bursa Malaysia. You can talk to our expert for more tips and KLSE stock signals.