SHARETIPSINFO >> Articles Directory >>Tips for investors in volatile market


There is s common perception among the retail investors that investing in the volatile market is risky. That is main reason that most of the investors restrain themselves from investing in the NSE and BSE when the stock market is volatile in nature. But the wise investors always make good investment even in the volatile market and earn good profit leveraging from the ups and down in the stock prices in the volatile market. You too can benefit from the rapid price movement in the stock market during the volatile phase. Here we are offering some effective tips for investing in the volatile market.

Choose the stocks diligently – Whether the market is volatile or not the basic of making profitable stock market investment is to find out the best stocks for investment. That is all the more true when you are investing during the volatile phase of the market. For selecting the stocks you have to choose stocks from the sectors that are least affected by the up and down of the market. During any volatile phase there are some sectors that are not largely affected by the general uncertainty that is prevalent in the market. You can safely choose stocks from these sectors and invest in them. Otherwise you can always select stocks that are potentially good and have already gone through the correction phase and presently in a stable condition.

Do your research well – Once you have selected the stocks you have to determine the price level at which you should buy the stock to get the best possible return. For that you have to depend on the technical analysis of the stocks that will effectively help you to determine the exact price level by comparing the price movement with the previous pattern of the price movement of that particular stock. You must consider the price level, trading volume and the price level of the stock of the previous years at that particular time.  

Short selling – Short selling is another way to get profit in the volatile market. If you are ready to take risk and quite sure of the stocks that will go down you can always short sell the stocks to make profit from the deal. You can make good profit by selling the stocks at a higher price and then buy them back when the price goes down. This is a well practiced technique by expert stock market traders that they adopt to trade in the volatile market. The volatile market is the ideal time for short selling as the stocks price move too frequently during this phase and as the buyers confidence is low, the price of most of the stocks remain downward.

Be prepared for long term investment – When you are trading in a volatile market, the most important quality that you need to have is patience. You can afford to show haste in your trading decisions. In a volatile market you can make good profit from regular movement in the price of the stocks. But the intraday or short term trades are largely dependent on the speculation that can go wrong at any time. To make that loss or to reduce that loss you might need to hold that trade for a long period. You need to be mentally prepared for that while trading in volatile market. Moreover, while trading in a volatile market you can not afford to take decisions for buying and selling stocks in haste. You should be more careful, more calculative for every step you take. Do not pay any hid to the panic and rumors that rise in the market and stock to your strategy for investing in the market.

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