Trading in Equity? Read this checklist before progressing into the equity market!

Trading in equity market can be compared to marriage to a large extent. One needs to have commitment and long-term approach for both. However, here is a checklist one must follow before investing in the equity market.

Long-term Approach

When an investor starts investing in the equity market, he must invest with a long-term view in mind. Investing for a longer period of time can multiply your investments while giving you superior returns. Equity markets can be quite volatile in the short-term as it tends to react to every announcement made in the country. A long-term approach provides stability to your portfolio.

Avoid Relying on Tips

A lot of people think that they are experts in the equity markets after investing and making profit a couple of times. They go ahead on giving advice to their fellow mates regarding which stock to buy and which to sell. When you are new to trading, a lot of people will give you stock tips. Refrain from acting on such tips as you can end up making losses. It is always better to consult your financial advisor or a person who has expertise and knowledge about the equity market.

Do not depend on the News Flow

One must avoid investing based on any news which is out in the market. Stock markets take some time to adjust to any news. So, making hasty decisions and investing quickly based on the news flow can prove to be a bad idea.

Avoid Timing the Market

Equity market is something once cannot control. Even a person who has been investing in the equity market for a decade or two cannot time the market. If you try timing the market, it is very likely that you will take a lot of wrong decisions and end up ruining your portfolio.

Do not Speculate

One must avoid speculating an event before it occurs. Speculative investing is when an individual assumes a certain event, its impact on the stock and invests accordingly. If an individual speculates that the stock will go up after a particular event, and the event does not occur, or the stock does not react as predicted, one can bear a huge loss.