Buying securities for cash is the safest way for a first-time investor looking to participate in the equity market. Unlike leveraged margin trading, buying shares for cash can help minimize risks without affecting the investor’s chances of making a tidy profit. Read ahead for ten useful tips about trading in the cash segment. 

1. Have a Long-Term Vision

It is a myth that you need a huge amount of cash to earn profits in the equity market. Have a long-term vision. Invest Rs. 5,000 every month and buy shares of reputed companies. Continuing for a year will put you in a position to earn a tidy profit on a significant investment. 

2. Market Research is Very Important

The risks involved in share trading don’t vanish just because you are trading in cash. Do proper research.  Learn to identify the right companies that will yield good returns over the long run. Investing in unknown penny stocks can result in total loss of your capital.

3. Reinvest Dividends and Bonuses

One advantage of cash trading is that you will become entitled to dividends, bonus shares, and rights issues. Reinvest these incomes to increase the size of your cash portfolio. 

4. Utilize Benefits of Margin Against Securities

If you want to try your hand at leveraged trading, then consider brokers that offer margin against securities in your portfolio. This can help you avoid further cash outflow and minimize risks involved in margin trading.

5. Have a Diversified Portfolio

The basic rules of investing remain the same even if you are investing in the cash segment. Diversify your portfolio. Avoid putting all your cash in a single company or sector.

6. Identify the Right Time to Enter

Be patient when making delivery-based trades. Wait for market crashes to enter into the right stock. A level-headed approach can help you avoid unnecessary losses.

7. Have a Clear and Fixed Stop Loss

There is no point watching your capital come down to zero due to your decision to buy the wrong stock. Have a clear stop loss and cut your losses once it is hit. Don’t be too rigid as it may result in your capital getting wiped out.

8. Determine Your Time Frame

A six-month investor cannot adopt a strategy designed for a 20-year investor. Determine your time frame and risk tolerance before you begin trading. 

9. Rely on a Reputed and Affordable Share Broker

Buying shares for delivery is no different than buying any other asset. Choose a reputed, credible, and authorized share broker offering affordable services. Take your time and do your research before taking a decision.

10. Seek New-Age Trading Solutions

Opt for services providers that offer online equity trading services along with delivery of market research to your email inbox or smartphone app. Take advantage of technology to ensure you take the best investment decisions at all times.

With the equity market set to enter a prolonged bull run, cash segment trading is a smart way to earn tidy short-term profits. Further, it is ideal for those seeking to build a long-term portfolio consisting of shares of reputed Indian companies.

To know more about cash trading, visit HDFC securities today!