My dad’s biggest concern was how he would spend his days after retirement. He is workaholic by nature and can’t even think about a day when he would spend a lazy morning. So, he started thinking about several ways that would keep him busy and bring money in home.
One option for him was a part-time job. But, after working for so many years, he didn’t want to work under anyone. He wanted to be his own ‘boss’. So, the second option for him was to start a business. Fortunately, he didn’t want want to walk on that route as well since his business acumen is highly questionable.
The third option for him was to invest in stock market and he chose that option happily.
My dad has always been interested in stock market. He reads articles and doesn’t miss out any T.V show on stock trading. Plus, he has traded stocks for several years. So, he has a vast experience on this sector. Quite naturally, I was confident that he would choose this option.
Skills you must acquire to be seasoned stock trader
Today, my dad is happy. He is still a busy man. Plus, he is making money just like before.
Here are a few skills which my dad believes you need to have to be a successful stock trader.
Skill #1: Time management: Taking the right financial step at the right time is also a skill. For instance, if you’re planning to buy a house, then the best time to go for it is when:
- The real estate market is down
- Property price is low or within your budget
- Your credit is shining
- You have money to make down payment
Likewise, if you’re planning to buy a particular stock, then the right time to do it is when its price is low. But all low-priced stocks are not good. You need to differentiate between blue-chip companies and bad companies. For this, you need to check out the performance of the companies for a certain period. This may give you an idea.
If you want to sell a particular stock, then the right time would be when there’s a correction in the stock market. It is the right time to buy a stock you’ve been planning to grab for a long time. The stock market may crash for various reasons. But, it will recover slowly or quickly. And the price of a good individual stock will eventually increase. This means, you’ll reap profits within a few days. Never ever lose this opportunity for yourself.
Skill #2: Strategic planning: I learned this skill from my dad a few days back. He is not a tech-savvy person. So, he maintains a notebook to plan his every move. But, you can use a tab or smartphone instead of a notebook.
Let me explain you clearly.
Make a list of the scripts you have. Note the date on which you purchased/sold shares and at what price. Next, note the current price of your scripts. This will help you decide if you need to buy or sell a script. Whenever you buy new scripts, add them to your list.
Your list/chart will be something like this.
Just remember, you need to update this chart every day to plan your next move.
Skill #3: Social networking: This skill is bound to give you success. It is not possible to know everything on your own. So, interact with right people and get meaningful inputs from them through social networking websites. Check out the Twitter updates and Facebook posts of financial analysts. Sometimes what they say, is ten times more than what you know. A single piece of information can change the direction of your financial planning.
Skill #4: Fund allocation: My dad always says – “Never put all your money at stake”. It’s a stupid move. Invest only a small fraction of your savings in stock market since it is volatile. When you start making profits, roll-over a fraction of the total amount in the stock market and keep the rest of the amount in your savings account.
Stock traders need to have analytical skills to taste success. As my dad says, stock market is volatile. There’s a big chance to make losses also. Unless, you’ve a skill to analyze the market properly, it would be very tough survive as an investor.
If you don’t have any analytical skill, then stock trading is not for you. Plain and simple fact.
Do you invest in stock market? Have any interesting tip to share? Then feel free to leave your comments here.