Investing in stocks may not be the best choice, but it is the easiest. When buying a stock, buyers purchase part ownership of a company or fund. The more shares someone owns in a particular company, the bigger their piece…

Investing in stocks may not be the best choice, but it is the easiest. When buying a stock, buyers purchase part ownership of a company or fund. The more shares someone owns in a particular company, the bigger their piece of its future earnings will be.

Whatever type of stock an investor wants to buy, they need to research its history, understand its business model, and get a feel for how much risk is involved. Once they’re comfortable with their decision, buying shares of that company is as easy as entering some numbers into a computer or smartphone at any major brokerage firm.

Many different factors can affect how much money someone should invest in stocks – but having said all of this, investing has become increasingly popular over the last few years because people are becoming more aware of the potential returns. For example, Internet companies like Google were at one point considered very risky investments, but they’ve proven themselves to be capable of making big profits.

To become a stock trader remember the following ten rules

To become a stock trader in Hong Kong, you should remember the following ten rules:

Know what you are doing

Do not take on more risk than you can handle or expect to gain from the trade.

Take action

Do not be afraid of making mistakes and learn from them quickly; better yet, study and work out your likely moves beforehand.

Protect your capital

Never invest all of your savings into one trade, hedge, and use stop-losses and targets that will limit any potential loss but also enable the opportunity to buy low and sell high.

Diversify your portfolio

Don’t put all your eggs in one basket, so to speak, as you never know what will happen to one stock or the market as a whole.

Be thorough and diligent.

Conduct due diligence and check the facts and figures before jumping in feet first; it is easy to be excited about an opportunity but take your time so as not to regret your purchase later.

Start small and work your way up.

Do not commit all of your savings to one trade or investment. Test things out first to see how much risk you can handle and then grow from there.

Do not try to second-guess the market

If everyone else is buying something, there must be something wrong with it; this may sound like common sense, but many people cannot resist the urge to jump on the bandwagon.

Have a plan for exiting before buying

Buying low and selling high is not just about the entry point but also about choosing an appropriate exit point; think of your target place stop-losses where they should be to limit any potential loss arising from the trade or investment you are making.

Do not be distracted by short-term market fluctuations

Take them into account if you must, but keep your eye on the bigger picture; stay focused and do not lose sight of why you are doing what you are doing. You may find it helpful to refer periodically to your goals, aims, and plans.

If you decide to drop out, drop out sooner rather than later

You will not be able to buy back in at the same price, especially if everyone else is aware of your plan.

Bottom Line

As long as an investor has taken all of these things into consideration before making a purchase, there is no reason why they shouldn’t be able to become a successful stock trader here in Hong Kong. After all, even if one investment looks good now, there’s no guarantee it’ll stay that way forever – so being able to have a portfolio of stocks is incredibly important. New investors interested in trading hongkong stocks should contact Saxo Bank and trade on a demo account before investing real money.