The stock market presents steep competition – but that just means victory is sweeter. Click here to learn tips on how to win in the stock market.
Roughly 54% of the American population is invested in the stock market. That’s good news because, while the stock market has its ups and downs, over the last 100 years, people who invested in the country’s top 500 companies have enjoyed an average of 10% returns.
While all of the opportunity in stocks can be alluring, unfortunately, making money in stocks isn’t as simple as blindly investing. Investing in order to get returns that outpace market averages takes a certain set of skills and characteristics.
Therein lies the purpose of this article.
Our team has sourced the top investment advice out there and has compiled a quick download for you that outlines 7 of the top tips when it comes to how to win in the stock market.
Our hope is that the advice below will make you a more disciplined trader and will help you to reach your financial goals faster!
- When You Bet Correctly, Let Your Success Grow
When people put money in stocks and see that they’re growing, it can be a natural tendency to count your blessings and pull out. That’s a huge mistake.
Success in the stock market is all about sustained growth. While companies can zig-zag back and forth on a daily basis, if you take a step back and see that over the last year, decade, half-century, etc. they’re trending upwards, you don’t want to ditch that trend.
Don’t be shaken by short-term wins or short-term losses. Always ride what looks to be a good company into the promise land.
- Don’t Be Afraid to Cut Your Losses
If a company you bet on looks like a stinker after taking on substantial losses without any game plan to recoup, pull out.
It can hurt to take losses on a stock but taking losses is a natural part of trading. The sooner you can be honest with yourself about a company that doesn’t have any fight left in it, the better you can minimize your losses.
- When Markets are Down, Buy
If there’s one thing we know about the stock market, it’s that it goes up and it goes down. Overall though, the market grows at a pace that far beats the rise of inflation.
That means, even when things look bleak in the market, you can bet that the top companies will bounce back and drive returns for their investors again.
So then, how can you capitalize on that insight? When people start selling their stocks in a panic and prices drop, you can double down and buy additional stock at great prices.
Then, when demand goes back up, you’ll see an incredible return on your investment.
- Beware of Market Inflation
Sometimes the market gets hyperinflated. If you’re noticing that stocks are experiencing incredible growth, start keeping an eye out for information on if the stock bubble is likely to pop.
The market growing and then correcting itself with falling prices is a natural part of market operations. But, if you can get out ahead of a bubble pop and strategically sell, you can minimize your stock market losses.
- Find a Great Source of Information
Knowledge is power when it comes to how to win in the stock market. While there’s a lot of information you can read about stocks online, not all information is good information.
Our recommendation is to sample as many different stock-focused news and advice outlets as possible. See which ones make the most sense to you and take recommendations from other successful investors. You may also check out many investment books in the market like the Margin of Safety by Seth Klarman which provides an in-depth analysis on the value investing approach.
- Become a Student of the Companies You Invest In
Trading based on headlines that tell you which companies are hot and which are not is a surefire way to never get ahead of trends and never make serious money in stocks. If you’re really interested in learning how to win in the stock market, you have to forge your own educational journey.
For example, if you’re thinking of investing in a company within the energy sector, do some research on it.
What is their plan for the future? What does their company culture like? Do people like working for them?
If you can ID a company that’s built for success before the mainstream media does, you can get in on stocks when demand is low and watch your finances explode when those companies hit their stride.
- Don’t Be Afraid to Keep Things Simple
Investing is an interesting activity. On its head it’s simple but it also has a rabbit hole you can go down that makes things unnecessarily complicated.
At the end of the day, if you want to know how to win in the stock market, the simplest piece of advice we can give you is to keep your definition of winning attainable.
For example, as we mentioned earlier, you can park your money in an S&P 500 index fund and enjoy returns that far outpace inflation. That’s a win, right?
If you’re looking for simple and smart returns on stocks, winning is easy. If you’re looking for staggering annual returns, that can get hard and risky.
We won’t tell you which way is the best way to go. What we will say though is that you have options.
Wrapping Up Tips on How to Win in the Stock Market
Above, we’ve shared with you 7 solid tips on how to win in the stock market.
Whether it’s keeping informed with reputable news sources or keeping your expectations in check, we’re confident that if you follow our advice above, you’ll enjoy awesome returns that will help you meet your financial goals sooner than you ever dreamed!
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