InvestorQ : this time buy stock share? future profit?
bishnu das made post

this time buy stock share? future profit?

Neha Samdani answered.
2 years ago

Before starting with whether this is the right time to buy, we must know what are the market conditions at present and when one should buy any stock.

Pre-conditions for buying any stock: Do your own homework: First thing one must do before making any investment is to gain market understanding first, find out the attractive shares, follow them for some period. Gain thorough understanding of the company in which you’re willing to invest. There is always expert’s advice available for investors, but you should know what you’re getting into before relying on anyone.

Buy Price: Another thing to be considered while buying any share is to track it’s market scenario and decide a buying price for that particular stock. Once that stock hits your desired price, buy that.

Undervalued share: It is always preferred to buy shares that are undervalued, which means fair price of share (market price) is less than it’s actual price. Well, that technically means you’re getting something at a price which is lesser than even it’s fixed/decided price.

Holding strategy: This is one of the important factors you should decide before making any investment, that for how long you want to hold that particular, because different periods have different outcomes.

Market Conditions: Now, after deciding your investment pre-conditions assess the market conditions. If I talk about current period, the economy is facing recession and hence most of the stocks are at their lowest. If you are interested to make a long-term investment, say you’re in no hurryand can wait for the market to go up which can take a period of more than 3 years to give you desired returns.

If you’re someone who is having some idle money for a short period of time and is investing to get returns in a very short span of time, this might not be the right time for you to invest. Market is unpredictable right now due to prevailing recession in the economy. So, the right time to invest is based upon several factors and firstly you need to decide all those factors, and see whether the time suits your strategy.

Coming to your second question, for trading in futures and options you need to understand the finer points of these products in greater detail.

Both future and options are called derivative products because they derive their value from an underlying asset. A future is symmetric product wherein your profits and losses are synchronized. That means, irrespective of whether you are long on futures or short on futures, your profits can be unlimited either ways and your losses can also be unlimited either way.