Living in the twenty-first century with high dreams and heavy college debts, the millennials see the stock market as a way out. Let’s face it, everyone wants to be successful in life, while living in a swanky beach house or driving a top class automobile. The stock market success stories about how one can turn their life by investing has led to an increase in affinity towards stock market. So, most of us want to become a stock market millionaire in the shortest possible time (5 years or less), but is it really possible? Let’s find it out.
Steps to become a Stock Market Millionaire
The journey to Stock Market Millionaire is neither a short one nor will it be easier. It is simply putting on a path to investment and ripping its fortunes. With the right actions and a plan in hand, one can definitely earn his first million. Follow these 8 steps and your way to become a stock market millionaire would be easier and swifter.
Focus on stocks closing at new highs
As a new entrant to the alluring world, it is better to keep hot stocks in focus. The hot stocks are promising and can be analyzed if it fits into one’s investment options. It is better to go with them as they would cash in higher returns than others. The stocks hitting new lows can be skipped.
Buy and short sell
It is a common misconception that you always have to buy high and sell low. There is also an option to sell high and buy low, this is called short selling. So you need not always look for climbing stocks, you can also speculate on the losing ones. However this option is available only in equity intraday and derivative markets.
Quickly cut losses
Failure is known as part of the same coin as a success. In the stock market, two out of ten stock transactions will go down the drain. Failure should not dent the effectiveness with which investment is done. Failure cannot be avoided, yet it can be used as an effective tool to look into the exciting future. It is better to cut the losses and move on. You should have a effective risk management strategy and stop losses should be religiously followed for any trade.
Embrace New Technologies
To be successful in the stock market, it is better to stay ahead of time. People who are better to read the path to be taken in the future reap most of the profits. Our world is evolving, so is the stock market. Be innovative, be future ready. Technology has benefited stock markets to the most. Learn stuffs like algorithmic trading and high frequency trading to keep yourself updated.
If you ask me one sure-shot way to become a stock market millionaire, I would say it’s compounding. It lets you grow your wealth over time. So, never withdraw your profits unless you absolutely need it, rather invest your profit back into your portfolio. Check this post to understand how you can multiply your capital through compounding.
Liquid stocks are the best
To make it big, it is better to stick with liquid stocks. They provide flexibility to get in or get out anytime you desire. Also, most of the trading strategies based on technical analysis works the best on liquid stocks.
Be Research Oriented
In the stock market, you will always see buzz created for some of the unknown stocks. This is the way how promoters fill their pockets with investors’ money. So beware of this. Even if the financial advisor wants to go with any hyped stocks, cut it out. The success in stock markets is only through proper research and due diligence before taking any positions. The research may be technical or fundamental, but it should be mandatory for each of your investment.
Stick with one plan
For longtime success, it is always better to get started with a plan in hand. The risk and return profile are to be curated before starting on any trade. The plan might not always be successful always, but stick to it at any cost. It will definitely pay in the end.
We wouldn’t say these are the only 8 mantras which can make you a stock market millionaire, but if you stick to these no one can stop you from a overwhelming success. It would be definitely hard to follow everything from the beginning, but your patience can help you master these. Let us know if you want to understand any of these steps in more detail.