Secret #1: Always Invest in quality Intraday Market: -
Day traders understand about Intraday. It is the value of the homeless the
amount owed to the bank. The same is true of a business. Its equity is the
total assets minus all the liabilities. You can think of this as the money
locked up in the business. It is a measure of how much money management has to
run the business. Another measure of the money available to management is the
capital of the business. This is its equity plus the long-term debt of the
company.
Clearly the success of any business is going to depend on how well management
uses its equity and its capital. This is commonly measured by two ratios called
return on Intraday and return on capital. Putting it simply, these are defined
as the earnings of the company divided by equity and by capital.
In other words, as investors we focus on the medium to long term business
characteristics of companies. It is these that drive the share price. Focusing
on the short-term aspects of a company including both business and price
fluctuations is foolish Even though we focus on the long-term; the investment
is even more profitable if we purchase the stock during one of its drops.
Secret #2: Make Your Own Strategies
In intraday market it just makes no sense to ignore the fact that the stock
symbol is attached to a company. And it makes no sense not to apply sound
business principles to analyze these companies. The more we know about the
company, then the more confident we can be about the price of the stock. Not on
a day to day basis, but over time.
So before buying a stock for intraday trading, think of it in terms of buying a
whole company, just as if you were buying a store down the street. If you were
buying a store you would want to know all about it. What were its products? How
consistent are the sales? Do they keep trying new products or do their products
stay fairly constant? What competitors does the store have and what
distinguishes it from them? What would be the most worrying thing about owning
such a store?
This leads to the idea of looking for companies that have a strong and durable
economic moat. Just as castles have moats to protect them from invaders, so
companies can have economic moats to protect them from challenges of competitors
and changes in consumer preferences.
Resource: -
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