There is somewhere a right time to invest in the stock market. It is the moment in which if you invest well, you can obtain great profits. But besides if you do not get it right with your investment, you can lose a lot of money. Thus, knowing when to buy a certain share is the special moment that every successful investor must consider. In order to make a profit when investing in the stock market.
If you talk to a successful trader or real estate investor. They will probably tell you that what has generated the best returns, was bought at a great price. They will tell you that if you buy at a good price, it will be very easy for you to sell at high prices. And thus be able to obtain an interesting profit margin and a fast turnover of your trade.
When to buy shares on the stock market?
When I started investing in the stock market, I did not take that concept into account, because I considered that it was always a good time to buy shares. Because either someone informed me to buy a particular share or because I watched financial content on the internet. That commented that it was an excellent time to buy this or that stock. But unfortunately, it did not follow the essential criteria. Criteria to buy shares in the stock market at the right time and sacrificing great benefits.
Currently I found the solution that solved that problem, and being able to know the best time to buy shares in the stock market. And being able to make a good trade when the stock market allows it.
Therefore, I want to tell you which are the three most common ways in which an investor in the stock market decides to invest and also what is the best time to buy shares.
3 Ways to Know When to Buy Stocks on the Stock Market
1- Buy shares when the trend is up.
Almost all investors buy when the trend of the stock is up. Which is very good, since they are being incorporated into the upward march of the stock. The problem is that they usually join late and just when there is a change in trend and they start to lose money.
2- Buy shares when the trend is down.
Some investors buy when the trend is down, because they calculate that the stock has already fallen too low and that it cannot fall much more, so they buy. Thinking about the change in trend upwards will be able to gain advantage of all the increase that this stock can have from the beginning.
The problem can be if the downward trend continues for a long time. Or if the stock of the company they buy has many problems that can make their recovery very difficult and therefore money also loses.
3- Buying shares at the JUST MOMENT when the purchase allows you to PROTECT YOUR MONEY and obtain great benefits.
Here we follow this strategy to invest in the stock market. We see that there is a time when the stock always has an upward trend. Now you have the possibility to buy shares with a minimum risk and with great possibilities of earnings!
These are the three most common times to buy stocks that you can consider to invest in the stock market.
Remember that you can start trading the stock market, and there is no reason why you can’t do it today. For more profits and less risk!
What type of investor are you?
At this point in the manual it is very important to know what type of investor you are or would like to become.
We could make many classifications but I want to share with you some professional categorization based on people’s characteristics and the risk they assume or intend to assume. In my opinion, the classification that best suits this functionality is: absolute conservative investor, moderate investor and aggressive investor.
Absolute conservative investor
An investor who is absolute conservative should not under any circumstances enter the stock market, since in the stock market one works with variable income and with it there will always be risks.
This investor must involve in buying real estate and keeps long-term bank deposits.
The absolute conservative investor must work with public debt, which is the capital that is lent to the State and Central Banks (SBI, HDFC etc.) to finance their expenses and investments. At the moment, public bank deposits are much safer than in the stock market due to the high possibility of loss for an absolutely conservative investor.
The bank deposit is a financial product that is considered low-risk savings. Through which a person, an institution, a company deposits capital in a bank’s system to obtain a fixed return for a specified period of time.
Thus, the bank receives that capital and redirects it to whoever corresponds. The bank uses your capital to finance mortgages, credit cards and give personal loans among other things.
In deposits, the holder has the interest money for the time he invested.
Therefore, as investors, we must seek that our profitability is above inflation and this is difficult to achieve currently being a conservative investor or an absolute conservative. We will forever get returns of 8-12% in fixed income as it happened in most of the bank schemes.
Moderate investor
The moderate investor takes more risk. You can dedicate part of your capital to working in a larger market. It is characterized by being quite balanced, distributing 50% of the capital to investment in fixed income and the other 50% to investment in variable market income.
This investor will buy stocks, but will follow and analyze them through the charts and will not hold them forever. If you make a mistake you will have the ability to exit even when you observe that the losses are close to 3% or 5% and trying to correct the error by entering perhaps from a lower position and at a more advantageous price. This way you can wait for a subsequent rise, thus recovering the first loss.
Aggressive investor
It will operate in products where there is leverage, that is, on those that, by investing little capital, the profits can be multiplied by 5, by 10, by 20, and knowing that the same proportion is applicable to losses.
Those financial investments work with high risk and we will discuss these later. The aggressive investor has been trained in the stock market by attending courses and seminars, reading, following the economic news and being influenced by it aggressively.
Its system is based on daily work, on the constant analysis of charts and simulation, it has provided it with the knowledge to anticipate the movement of the market and its volatility.
This last aspect is very important to know, since if there is no volatility the market does not move and therefore we could not trade or earn money.
The volatility materializes in the sudden movements that occur in the stock market, in the deviations that originate in the value that we are using.
Explained in a simple way, it would be the speed with which the price moves. Therefore the value will be more or less, dangerous in terms of risk depending on those sudden movements. Likewise, we must bear in mind that changes in the price of coffee are not the same as those of oil. Investing in the second is much riskier than in the first.
Finally, say that an aggressive investor can leave their investments in the hands of a broker or financial institution. But it is normal for them to trade, that is, they will enter the market, carry out their trades and leave, assuming their profits or losses.
Conclusion
In summary, being one type of investor or another will largely depend on our type of profile. The term of the investment, the risk we are willing to assume, our financial situation (the greater the liquidity, the greater the risk) and also depends on the financial culture that we have.
