According to statistics and Australian stock market news, the average return on the stock market is 10% per annum. Unfortunately, not everyone is lucky to enjoy the earnings that the market has to offer, even with all their investments. Many factors are responsible for this. The major factor is that many do not stay long enough to invest in the market.
With some losses, they cut themselves the slacks and abandon the market. Interestingly, the key to becoming successful as a trader and making money in the stock market is by remaining consistent in the market and following the most updated Australian stock market news.
The truth is that the length of your time in the market predicts your performance and profitability. Moving in and out of the market will often lead to losses, making investors lose out on the annual return.
Best Tip to Make Money in the Stock Market
Australian stock market news has clearly shown that investors that stick to trading often increase their profitability with time. To make a profit while trading in the stock, the tips highlighted below will be of great help.
Have a Brokerage Account
This is the first thing to do in the stock market. You should open a brokerage account to start your investment. With time, you will begin to collect dividends when the company pays. If you choose to trade in and out of the stock market daily, weekly or even monthly, it becomes difficult to get those dividends.
This is because it is very unlikely that you will have the stock during critical points when the payouts should be captured. According to Australian stock market news, investors that invested consistently over some years make returns of 9.9% per annum. However, if you do not invest for ten best days during the period, your return per annum drops to 5%.
If you miss out on trading for twenty or thirty best days, the return drops to 2% and -0.4% respectively. This means that if you stay invested, you would earn as twice as much as leaving the market during the best day’s windows.
Three Reasons You Do Not Make Money from Stock Market
Waiting until the Market is Safe
The first thing you must understand about the stock market is that it is volatile. This means it is unpredictable and there is nothing like a safe time to invest. If you go through Australian stock market news, you would understand that the market is all about risk, and investors that make a profit usually take calculated risks. It is normal to be afraid of losing but having a myopic loss aversion is the root cause of losing out on stock opportunities in the name of waiting for a safe market.
Waiting to buy when the Price is Lower
Investors can’t know which way that the stocks would swing on any given day. A stock could rise next week just as easily as it could fall. So, be a smart investor and buy stocks when you perceive that they are cheap and keep them over time before you sell.
This Stock is Boring, I Have to Sell
Stock investment is not casino gambling where you get excitement on your games. Smart stock investment is boring and the best investors understand this. So, instead of hurrying to sell, they sit on their stock and wait for them to compound profits before they sell. This can take years but the result is often rewarding. You must understand that the gains in the stock market come as you wait and not while trading sporadically.
The simple trick to making money in the stock market is to stay invested. It is a known fact that more time means more opportunities in the market. In other words, the longer you stay in the market, doing your best and following Australian stock market news, the more opportunities can explore to make your investments increase.