Trading involves high risk and demands a lot of patience which is quite often missing in many new traders. There is no one guaranteed method of earning higher returns, but it comes with practice in the live market environment. Even though all the strategies have some loopholes and risks, you can use the best basic tips to get better results from the share market.
Invest in few stocks for experience
The cardinal principle of smart trading is to start with only a small group of stocks (10 to 15) until you gain some knowledge and experience. Share trading can be multifaceted as you need to learn the fundamental triggers, news flows, technical levels, etc. It will be difficult for you to manage a large number of stocks with so much research to do. You must also commit a higher capital when the conviction level becomes higher. It will only be possible when you spend more time and effort on only a handful of stocks.
Focus on high momentum stocks
You will need to be consistent in trading and trade frequently to stay active for any quick opportunities. It will help in developing a momentum stock collection. The momentum of a stock is the speed and intensity of the stock to news, triggers, and chart patterns. For example, investing in a big stock will not provide the momentum to the trader as the big companies have already reached close to their caps and do not develop more gaps. Instead, you should be focusing on high momentum stocks which can offer long term momentum.
Trade high beta stocks
Stocks can be aggressive or defensive. The stocks which have a beta of less than one are called defensive sticks while the stocks with a beta greater than one are called aggressive stocks. Trading becomes much more profitable when you bet on stocks which have beta more than 1.5. These stocks will also have high momentum, which will work in your favour. High beta works in both ways, so you need to think of strategies that can minimize the risks while giving you the best profits.
Learn the short side of the market
Short trading is often labelled as a risk that traders take. The short sellers play an important role in the stock market as buyers. Short sellers play on the selling side when they feel negative about the market. You can sell in the forex market and buy back the game day. Similarly, when you want long term investments, you can choose the future or put options. The short side of the market has low crowd as most of the investors play on the long side. You can benefit from both sides if you make the right choices.