How to improve returns while trading in stock market ?

Traders have to face infinite challenges which are offered by stock market , making it difficult for them to earn high returns. Earlier stock market did not offer different modes by which traders can trade in it. But now various modes are present which have their own pros and cons. Traders often fail to understand behavior of certain modes and earn themselves negative returns. Stock Tips suggested by financial analysts after performing a good research work are quite helpful in earning desired returns.

Some of the techniques which can be used for improving returns while trading in stock market are discussed below :

1)Diversification

As th old saying says “ Never put all your eggs in one basket”. It is very important to protect your portfolio from market fluctuations by keeping them as diversified as possible. Many traders fails to realize that this will help them in improving their returns as well. At times when some of stocks which are part of your portfolio are not performing well and earning less returns , then other stocks ,equities or bonds which are part of your portfolio which are performing well and earning high returns will help you to compensate the loss caused by non-performing stocks. Traders can also seek advise in the form of stock market trading tips if they are not having sufficient knowledge about the market.

2) Re-balancing

This is not something which has to be done frequently once in a year is also fruitful.. Re-balancing your portfolio presents you with an opportunity to maximize the benefits of diversification. It simply means sell few of those stocks which have performed well and also buy few of those stocks which have not performed well.
For Example: Your portfolio consists of 50% stocks and 50% bonds. Due to adverse market performance stocks declined by 20% and on the other hand bond rises by 10%. Then at the time of re-balancing sell few of your bonds who have performed well which will earn you profit and also buy stocks which have not performed well at lower price . At the end you will be able to buy low and sell high by doing so.

3) Cost averaging

Under this all you have to do is put same amount in your portfolio every moth. Say for example you have Rs10,000 every month to purchase some stocks . By cost averaging you will be able to buy more stocks when price is low and you can benefit yourself by selling them when its prices rise again.

Above discussed are some of the techniques which traders can use if they are willing to improve their returns from the stock market. There are financial advisory services providers as well whose services like stock market tips helps to improve returns. As often traders lack in having a good knowledge about the market or there knowledge is not sufficient to predict the market in the right direction. These service providers helps traders to overcome this barrier of lack of knowledge and assists them to earn better.