Many can’t quite believe that I have a successful career as a stock trader. Their unbelief turns to amazement whenever I tell them I’ve earned millions by trading stocks in the Philippine stock exchange. If I recall, I had the same doubts when I started. I really didn’t aim for my first million because to me it seems far-fetched.
My goal then was simple. I wanted to be good at stock trading and earn enough to sustain my lifestyle. However, once I learned the ‘ropes’ or ‘tricks of the trade,’ the more I realized that becoming a millionaire by trading in the stock market is not a fantasy.
“How to trade and make your first million”
I believe the biggest advantage I have over the rest is my passion. I was fortunate to be introduced to the stock trading at an early age. From there it was all learning, analyzing, and trading. Eventually, I was earning more money than a junior executive in a nine-to-five job.
Here are some helpful tips that can help motivate those aspiring to become millionaires.
1. Buy Low and Sell High
First of all, stock market newbies should be aware that stock trading is a game of probabilities. It’s all about the price movements and fluctuations. There are only two directions to follow – up or down.
When you’re buying a stock, the primary objective is to make a profit when the time to sell comes. Thus, the general rule is to buy low and sell high. This is the widely used strategy by traders. During market dips, opportunities to make profits abound. With depressed prices, investors engage in a buying spree that can drive average prices further down. You can buy more shares in this scenario.
If you bought quality or blue-chip stocks, their prices will eventually trend higher and seek its natural level. By then, you should be preparing your exit strategy. Timing is critical so it is important that you set a target price. Manage your greed and sell at a price that will yield an acceptable profit. As you perform trades using this strategy, you’ll be ready to exploit price movements and earn more.
2. Invest regularly
Assuming you have seed money of Php 20,000. The amount is a very tiny fraction of 1 million pesos. However, if you park this money in a traditional savings account, the interest earnings you will derive is very small in 6 months to a year.
Whereas, when you invest it in the stock market, the potential earnings could be higher within the same time frame. Usually, beginners invest in the stock market before going into trading. The secret is to purchase the stocks of established companies. These formidable conglomerates can withstand market fluctuations and certain to keep your seed money save.
Start building your stock portfolio from there. If you have extra cash to spare, buy more of the prime stocks. Take time to know the related fees and expenses so you can perfectly time your purchases. When you invest in the stock market regularly, your earning opportunities widen. Perhaps a dozen blue-chip stocks could be your starting point.
3. Seize profit opportunities
The time will come that you need to seize opportunities and make profits. While it’s good to hold on to some stocks longer, there are also instances you have to sell some to make profits.
Your earnings can compound if you are able to ride on momentums during a ‘bull’ market. By selling and taking profits at the proper time, you can accelerate your first million objectives. Roll-over your investment and profits together then buy more shares to replenish your portfolio.
4. Don’t run after your losses
When you’re actively trading in the stock market, you can expect to incur losses. A common but fatal mistake committed by beginners is running after losses. I’ve become an intelligent trader because of my discipline and patience.
I didn’t fall into the trap of buying high and selling low. That is the exact opposite of the general rule. Because of the desire to cut or recover losses, some traders would tend to buy even if the price of a particular stock continues to dive. You can’t be impulsive in the stock market.
The best way is to exercise discipline and implement the correct strategies. For as long as you understand the typical cycle of the market, you will know how to react. Instead of running after my losses, I prepare for the succeeding trades. When you’re confident about your skills, you can recover your losses and not repeat the same mistake that made you lose money. You learn from experience.
5. Balance your stock portfolio
Stock traders who have earned by the millions in the Philippine stock market are excellent financial managers. Besides the trading skills and effective strategies, they have a balanced and diversified stock portfolio.
There various industry sectors in the stock exchange where you can select individual stocks from each sector. Your earnings are not limited to buying and selling of stocks or price movements.
When you pick companies, find out if they pay out dividends. Top Philippine companies reward their loyal stockholders with cash or stock dividends. That can boost the value of your stock portfolio and pave the way to own more shares. Larger holdings translate to higher profits.
It is suggested that you balance your stock portfolio and broaden your investment. Analyze the industry performance regularly as the best-performing stocks emerge from time to time depending on market trends. Be mindful of market crisis too because it creates more buying opportunities.
Set out to earn your first million
The image of the Philippine stock market as an investment arena for the rich and the wealthy is fast eroding. Many of the younger generation or the Filipino millennials are discovering that an investment as low as 20,000 pesos can turn into a million in less than a decade. Stock trading is not as complicated as perceived by many. Returns are greater and can increase tenfold when you get the hang of trading.
My experience in stock trading is worth telling. I am grateful to the stock market for making me a millionaire. The things I’ve learned and the sacrifices I made bore fruit. My passion is unchanged because the stock market remains vibrant. The earning opportunities are endless and I can grab hold of them while I’m still young and healthy.