Six tips to reduce the risks of investing in the equity market and protect against upsets in the face of stock market fluctuations
You can also make money in the stock market from conservative positions that aim to preserve investors’ savings . For the operations to develop correctly, nothing better than promoting a series of actions that are based on protecting all movements in the financial markets. In this way, it will be possible to generate profits every year that, although not very large, can be almost guaranteed. In this article, some tips are explained to be able to achieve these goals .
One of the priority objectives for small and medium investors is based on avoiding any type of risk in their investments in variable income . To satisfy this desire, there are a number of actions that can be very practical. Do you want to know some of relevant? Here are six suggestions that can help you get out of more than one difficulty.
1. Invest the money under trend
It is the basic element not to risk too much. It consists of selecting the values that are in an upward trend . He will rarely be wrong and will have every chance of generating capital gains every year so that once he detects the first signs of weakness, he opts for an orderly exit from the financial markets. With bullish values you will be investing with an advantage because the inertia to keep going up is their common denominator.
2. Choose stocks with dividends
This investment strategy never fails. Among other reasons, because by choosing securities with dividends you will be receiving a fixed and guaranteed interest every year, regardless of the evolution of the stock markets. This payment to the shareholder generates an average return that ranges between 3% and 7% , whatever happens with the quotation of its prices. It is a very original modality to create a fixed income within the variable.
3. Limit losses
One of the best ways to protect stock market operations is to limit the possible losses that can occur through an order called a stop loss , which serves to prevent handicaps from deepening in the operations you have opened. In this way, he will only have to know up to which levels he can face the losses . Thus, it will not have to endure very significant levels of decline, as often happens in the variable income markets.
4. Not investing all the savings
It is not necessary to invest all the assets, but, on the contrary, it will be sufficient to allocate part of the money so as not to risk the current account balance. With this formula it is not possible to achieve higher returns, but at least you will be able to provide greater security to all stock market operations.
5. Be more selective in choosing
In order not to take unnecessary risks, nothing better than opting for values that are more stable in their quotation; that is to say, that they show very slight oscillations between their maximum and minimum price . In this way, it will not be a negative surprise. Defensive sectors will be the most inclined to use this investment strategy, such as values from sectors as diverse as food, electricity, motorways or tourism. You will rarely be surprised by their excessive swings in quotes.
6. Respect the supports
A tactic that provides great security in stock market operations is for the stock price to remain above the supports. Its potential for revaluation is likely to be higher than in other scenarios. Although, if these levels are violated, he will have no other solution than to undo positions. Among other reasons, because you will be more vulnerable to losing money in stock market movements.
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