If you’re going to be trading on the stock market, then you should know how easy it is to lose all of your money in one sitting. If you don’t know the right strategies for saving your money and making a profit, you could end up in a serious financial crisis. That’s why you’ve got to keep reading down below to learn the top ways to not lose all of your hard-earned money on the stock market.
1. Buy Your Stocks Low and Sell Them High
The first rule of thumb when you are trading stocks is that you want to buy them at their low point and sell them whenever they are high in price. Many novice traders don’t understand this and will end up selling their stocks at their low price. All it takes is the patience to wait it out and wait until your stock increases value.
2. Know Exactly What You’re Buying Before You Buy It
You shouldn’t be investing in a stock just because some financial pundit said that you should. Do your research and understand the company that you are buying stocks from before you invest your hard-earned money. If you don’t do this, then that’s just a recipe for financial disaster when that company goes under.
3. Keep Up with Those Quarterly Reports
The quarterly reports of a company are the documents that will tell you exactly how this company is doing. It’s going to give you some key insights into their daily operations and what their profit margin looks like. If things are looking like they’re going to go south, then you should take the opportunity to run before the stock devalues in price and you lose your precious money.
4. Don’t Apply Trading Strategies to Those Investments That Are Long-Term
If you are doing long-term investments, don’t think that you can automatically transfer over your daily trading strategies. Long-term investments are more of a chess-game that you have to think much harder about. If you are habitual of dealing in breakout stocks, you might need some getting used to the investment game in the long run.
5. Always Diversify
Diversifying your portfolio is one of the absolute best ways that you’re going to be able to keep yourself financially safe. If one item in your portfolio goes under, you can have another item to help keep you above the rising waters. If you don’t have a diversified portfolio, then chances are that you’re going to under.
6. Don’t Hold onto Those Loser Stocks
If there are certain stocks in your portfolio that are obviously losers, then why would you keep them around? Many novice stock traders think it’s better to keep them around in case they become successful in the future, but it’s a much smarter strategy to only keep your winning stocks around.
7. Know How to Navigate Inflation
If you really don’t want to lose your money, you’ve got to understand how inflation works and how to properly navigate it. If a currency is becoming inflated, then this means that your money is going to be worth less than before.
8. Understand the Threats of Currency Devaluation
Of course, if you are trading currencies, then you need to read up on the ongoing threat of currency devaluation. This is the process by which a currency makes their currency look stronger or weaker when compared to other currencies.
9. Know How Much Money You’re Losing for Commission
If you are giving away tons of cash with every stock sale thanks to commission, then this is something to watch out for. Be sure to look for trading platforms where you don’t have to pay that much commission if you want to save some serious money.
10. Know How Many Fees You’re Paying Out
And lastly, if you are paying any other fees to your trading platform, then know what those fees are and see if there are ways that you can reduce them.
There you have it! These are the strategies you should use if you want to not lose all of your money on the stock market.