Tips For Money Management In Share Market

The share market is not a place where you gamble away your capital. It is a forum which offers high returns at the cost of bearing higher risk. However, with proper help and guidance coupled with the use statistical analysis one may foray into share investments and manage the risk return balance efficiently.

It is a well known fact that one only has control over own money and risk exposure and not the entire market. Thus, a sound strategy in shares is necessary for proper management of money resources.
 

  • Whenever taking up a position with respect to a stock in which a change in position is expected, try to determine the stop loss figure or till what extent will you wait for a turn around after which the cut your losses psyche must kick in.

 

  • It is advisable by most traders that trading capital invested in a particular trade or a transaction should not exceed 2% of total trading capital. Hence, the idea should not be the amount of gains to be made, it should be balance in the amount of probable losses in case things go awry.

 

  • It is essential to perform risk analysis and consequently risk management which is basically mapping the available pool of funds with the opportunities available. The mind should be kept open for losses and there should be absolute clarity as to appetite for risk.

 

  • It is also advisable to not spend money based on mere hearsay in the form of tips. The scientific process of technical analysis should be learnt and applied holistically.

 

  • It is important not to get greedy and hence one must not wait too long for profit booking. Money management here happens through maintaining discipline. Hence, the stop loss order must be as per planned entry and exit points for the investment.

 

  • There are many individuals who do not have the luxury of a financial partner. However, there are online calculator tools for managing money per trade which give such information on furnishing some specific details.

 

  • A stock which has a beta of 1 or more means good scrip.  Hence, such stocks follow the market and do not carry individual risk if properly prepared.


It is also essential to time the purchase and sale of shares. Thus, for instance if a stock is going well with volume demand, it should not be bought. The forces of demand, supply and flow of news impact money flows and hence it would be wise to keep an eye for them.

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