Which Investment Strategy Is Best for You?

Investors have been perennially fascinated with the potential of equities market in terms of growth and performance. However, short-term market volatility and unpredictable price movements of stocks have time and again proved this fascination to be a fickle thing at its best. That is, if the investor does not follow a predefined strategy and tries to evolve his approach as he gets exposure to the market.

Depending on personal risk appetite and preferences, an individual might adopt a defensive or aggressive investment strategy and work towards achieving his or her financial goals. Developing an investment portfolio is the key to managing your investments in an intelligent manner. Investing solely in equities would not be advisable, instead, one should invest proportionately in bonds, debentures and stocks and the proportion would depend largely on the risk tolerance and a host of other factors for stock market investors.

A defensive investor would always try to seek a balanced diversification of investment portfolio and devote a larger proportion of resources to fixed-income securities and debt instruments which are comparatively safe avenues and invest only a low proportion in high-risk equities. On the other hand, an aggressive investor would invest a greater proportion of his investments to high-risk equities and try to take advantage of every opportunity presented by the market to profit from his investments.

However, it is not advisable to go in for day trading for aggressive investors because it can drain the energy of an individual very quickly with comparatively little gains to make. Experts suggest that most of the well-known investors are those who have learnt to discipline their instincts and those who invest for the longer term for substantial gains to be had from the same. Most of the people, both defensive and aggressive investors, tend to sell when the market goes into a downturn spiral and start buying heavily when the market moves up.

Open a Demat Account and Invest for Financial Security

With constantly rising cost of living, education and healthcare due to rising inflation and taxes, financial planning has acquired greater significance than ever before to secure your financial future. While you may think that keeping a little amount aside for the rainy day might help but the fact is that this money keeps losing its purchasing power over the years and your future security is going down the drain with it.

To ensure that your savings at least retain the original purchasing power when you put them aside you need to explore healthy investment options to help grow this money in an intelligent manner. It would not be enough to go in for fixed deposit schemes or buy some fixed-income securities because when you factor in for inflation and taxes at the time of maturity, you may find that you got even lesser than what you kept aside.

To avoid such a situation, you need to consider alternativein vestment options which can bring in higher returns without escalating the level of risk beyond your tolerance levels. The best option to multiply your savings would be to invest in equities but they also involve a higher level of risk but if one opts for mutual funds they can offer a good level of returns without increasing the risk level that much. However, it requires choosing a mutual fund which suits your individual requirements well enough.

Arbitrage Offers A Low-Risk Strategy for Online Trading

There are many strategies which can be employed for online trading but it always remains a contagious issue to minimize the risks involved and generally, the higher the risks, greater are the rewards. It is here that the concept of arbitrage comes into the picture. Arbitrage represents a unique approach in which a specific asset being traded on more than one market is bought at one market and sold at another for a higher price at the same time. This method works because of a certain discrepancy which exists in the prices for any particular stock between two exchanges due to pricing inefficiencies. An arbitrager in essence attempts to identify these arbitraging opportunities and utilizes them to his advantage.

However, this discrepancy is too small to make any real gains so the trader buys in bulk and sells off in another market immediately to profit from this small difference in price. This is known as pure arbitrage and presents a strategy for online trading with minimal amount of risk involved. This strategy can be successfully employed in equities, commodities or forex market without much issue. It is especially useful in forex market where a trader with quick reflexes can identify arbitrage opportunities by tracking real-time prices of various currency pairs and act swiftly to make some good gains.

It is essential to act upon these opportunities without losing time because these arbitrage trades tend to correct the price inefficiencies which created them in the first place. However, market makers can steal the show from retail traders when it comes to arbitraging. This is so because successful arbitrage requires a good amount of capital to convert the small price difference into desirable gains which makes it a little difficult for the average retail trader.

The trader needs to have a great amount of skill and knowledge about online trading along with an ability to keep updated constantly with any factors in and outside of market which can have an impact on the movement in stock markets. Last but not the least; it requires access to efficient trading software with an eye for good trades. Apart from pure arbitrage, there is another type of arbitrage which is very attractive but risky as well. Aptly, this is known as risk arbitrage. This type of arbitrage usually involves trading with a view to take advantage of any prospective or underway merger or acquisition which can bring a sudden change in the price of stocks.

If you wish to try your hand at arbitraging, you can open a free demat account with Ashlar Online and begin online trading through us. With years of expertise and exposure in the field, we will be able to guide you better and help you manage your risks in an efficient manner to become a successful trader. 

Opening a Free Demat Account at a Shares Trading Platform Posted By :Ashlar online

Just imagine the share market having traffic signals at its various shares trading terminals for NSE shares, BSE shares, etc! Once you see the red light, you become aware that shares trading at that point of time can be dangerous; so, you wait till the green signal is displayed. You may still take risks by moving along when the orange signal is exhibited. And the traffic personnel are the stock brokers, steering your activities on road, especially at the terminals. Well, the stock market is a totally different field and such signals will never work. It is up to you how you move along. You can create an analogous situation in your mind. But to give yourself the red signal or green signal or orange signal, you will have to be fully equipped with the knowledge about the field. Otherwise you will end up moving forward every time the signal is red!


The changing economy does affect the market; it depends on how you interpret the same immediately and act on it. As you know what you are looking for, you will accordingly find out which NSE shares or which BSE shares will prove lucrative for you.

Portfolio Diversification and Its Risks

You may have heard a thousand times that diversification is the key to create a balanced portfolio and to make successful investments in the long-term. No doubt this works in practice as well but the reasons for diversifying your investments do matter. If you understand your investments well enough, but choose to diversify simply to achieve more balanced returns, it could work well enough. However, if you think diversifying is a good idea simply because you do not understand your investments properly and are afraid of losing money by betting on some single stock, probably you will still lose.

Another risk in developing a diversified portfolio is that you may lose sight of the fact that you do not need to diversify beyond a certain limit. Over-diversification of an investment portfolio can make any meaningful returns too negligible, thus working to neutralize the very reason for making any investment in the first place. Most of the time, diversification is simply meant to cover against the high-risk investments by making equal or higher investments in low-risk options to minimize the losses. However, if you plan to gradually increase your returns then you need to revisit your investment choices regularly and optimize your portfolio by making any necessary changes.

Momentum Trading: High Risks For Higher Rewards

Momentum trading is an important strategy for online stock trading adopted by a number of investors willing to take a higher amount of risk for substantial gains. In this method of trading, one tries to identify stocks which are showing significant momentum and buys them to ride the momentum to make the best gains possible. It is different from value investing because in it generally one would try to buy low and sell high but momentum trader would wait long enough to make sure that the market is indicating continuity of momentum before buying. So, a momentum trader usually buys high and aims to sell higher.

It is of utmost importance for a momentum trader to exhibit high levels of discipline and not be taken in by emotional highs and lows that come along with the market movements. One of the foremost things is to be able to identify the right entry and exit points in this type of online sharetrading. A number of traders employ moving averages to identify the right entry point by trying to determine market inertia and momentum at a given point of time. With a careful use of moving averages, a trader tries to look for buy and sell signals.

It is important to understand the role played by moving averages. Essentially, they act as directional indicators showing key support and resistance levels which are important to understand the nature of price movements in stock markets within a given time frame. These concepts help deal with the volatility factor to an extent and understand price turnarounds better which is what momentum trading is all about. Basically, support level represents a price level below which the prices for a certain stock has not fallen for a time period of weeks or months represented by a trading chart.

On the other hand, resistance levels are those above which the stock prices have not gone in a certain time period. These are not hardcore concepts which pre-determine what will happen to stock prices but only represent a certain amount of probability based on past movement of prices that they may not push through these limits in near future. However, it is always better for the momentum trader to have a contingency strategy to deal with any unexpected changes in price movements. In short, momentum trading offers a lot of opportunities to make good gains but one must weigh the risks involved against the advantages before using this strategy.http://www.ashlaronline.com

 

Technical Analysis for Investing in Stocks

Where fundamental analysis is good for understanding long-term growth or decline of stock price movements, technical analysis can serve as an excellent tool to help with short-term online trading. There is an underlying difference between the two techniques which makes them so distinct and unique in their own right.

The fundamental approach is primarily concerned with studying any events or developments directly or indirectly impacting the movement of stocks and holding a position long enough for that event to translate into the right kind of price movements. On the other hand, technical approach is more about studying stock movements with the help of detailed charts and graphs in an attempt to identify useful patterns which can indicate when to buy or sell.

Technical traders believe that the factors considered in the fundamental approach are already accounted for in the current price of stock, so there is no reason to study fundamentals. Instead, they prefer to go by unique patterns and geometrical formations which occur in graphic representations of price movements to predict future changes in stock prices.Online traders look for the best time to trade in the short-term which could be anywhere from minutes to hours, days or even weeks, based on particular patterns forming or appearing in these charts representing historical price and volume data for any stock.

It must be remembered that technical analysis can be used for almost any form of security including equities, futures and commodities, forex or fixed-income securities. The only basic premise is that historical data for price movements and volumes traded should be available to online traders for that type of security. Technical analysis makes some important assumptions, one of which is that price movement is usually in trends and once a trend has set in, it is likely to continue in the direction established by it rather than against it.

These trends can broadly be classified into three categories, upwards, downwards and horizontal/sideways trends. A trendline is used in technical charts to point out the relevant stock trends. Channel lines are used parallel to trendlines to mark the support and resistance levels. The support level is considered to be the lower price level below which the stock has very little chance of falling and resistance is the upper price level above which the stock has very little chance of rising in the stock market. Volumes traded have also to be considered which indicate the level of activity in a particular stock.

Usually, four types of charts are employed for online trading analysis, which include line charts, bar charts, point and figure charts and candlestick charts. There can be different types of patterns which can indicate a reversal of the price trend or continuation in keeping with their individual significance. Moving averages, indicators and oscillators are used by technical traders to study different aspects of stock movements and gain a better understanding of the stock market behavior in the short-term.

It should be kept in mind that although fundamental and technical analysis represent two completely different approaches for analyzing stock movements and predicting future activity, yet it is possible to combine them in a balanced manner to manage the risks better and maximize opportunities in online trading.

Ashlar Online offers expert fundamental and technical analysis for securities of all kinds to help our clients make the most of their trading opportunities.online share trading in india Online share trading in india  

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