How to Make Money in the Online Share Market

Despite being portrayed as a way of getting rich quick

Despite being portrayed as a way of getting rich quick, the truth about the online share market is that there's no guarantee that you'll profit.  In fact, you could lose big time, that's why you're cautioned not to risk more than you can afford to lose. The key to making money, even in the stock market is simple hard work.  Here are some tips to help you make money in the stock market:

1.  Invest in undervalued companies

Rather self-explanatory.  You can purchase shares in such companies at a low rate and then watch them grow.  Many solid profits are made just this way.  This is a tactic that works pretty much everywhere, even in the share market India.

2. Find stocks that have price-earnings ratios which are much lower compared to those of their peer group.

3.  Watch for bad news.

Wall Street loves to overreact to bad news such as a missed earnings prediction, which will serve to drive a stock lower than it should go.  This too happens pretty much everywhere, even in the share market India.

4.  Find out who is in charge of running the company and where the top executives worked prior to joining this particular company.

5.  Look for strong balance sheets.

Companies with low debt loads and consistently good earnings in the online stock market make for great prospects.

6.  Check the portfolios of successful mutual-fund companies.

If these companies are continually receiving great returns year after year, then you just might want to purchase some of the stocks they are holding.  They might know a thing or two that you and your broker don't know.

7.  Know when to cut your losses.

While it's true that you want to invest for the long term, you certainly don't want to stick with a consistent loser beyond the point of reason.  There just comes a time when you have to acknowledge that a certain stock isn't performing as well as you had hoped and give up on it.  And don't leave room for sentiment.  That will do you in more than anything else.

8.  Work hard.

Do research; read the financial section of your newspaper; study quarterly and annual reports together with registration statements, all the while looking for trends and opportunities.  Go online and search there; talk to your friends.  In the end every bit of research that you do pays off.

9.  Talk to your broker.

If your broker is recommending that you purchase a certain stock, ask him to explain in detail why.  The same goes if he is against your making a certain purchase.  Don't be afraid to question your broker, remember that he works for you.

Jake Hyet is considered an expert in all aspects of the stock market, having worked there for a decade.  He has written extensively about the online share market and share market India.

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