Tips: Learn as you grow. What a dip in recent stock market teaches you?
Gale.in, is active for more than 11 months here, yeah! it’s almost a year. We have seen few market dips, deeper cuts and medium corrections. Correction in market happen due to
- Geopolitical risks and tensions
- RBI Policy
- Global commodity market
- Foreign country bankruptcy
- IIP Data
Very few of the corrections affect the market fundamentally, Corrections are mostly technical. Stocks in overbought zone corrects towards oversold zone.
How to avoid losses and make use of these dips in the market?
One needs to understand basic fundamentals and know basic technical charts. Basic fundamental will allow you to choose good stocks to invest in, Technical will help you book partial profits and also help you enter the market at a good point.
Once you buy a stock, avoid selling on immediate rally, wait for a technically overbought zone, analyze the technical chart and find a trailing stoploss. Book partial profits on the way towards the target price on a intermediate resistance zone. Learn to buy on dips.
If you find the technical trailing stoploss is hit and the stock is moving down, however quality the stock is and however cheaper it is, avoid buying until you find a technical reversal in the stock. Be wise while you pick a stock and buy it at a right price.
Final tips is to hold 20% cash to pick quality stocks on a nice dip.