Making money out of stock market seems to be very simple and easy for many people.

Making money out of stock market seems to be very simple and easy for many people. They assume that sitting in front of the screen all day will make them earn millions.

But so is not the case.

Entering stock market is one of major life decisions, especially when put in your hard earned money into it.

So in this video, we will let you know the 5 important things you should know before investing in stock market:

Firstly, you must be aware that:

• Stock Market has substantial risk.

Before investing in stock market, one should know that despite of experience and research, it may happen that market may show you odds. Stock market is volatile and you never be 100% sure of the upcoming market scenario.

So when you invest, you need to be sure to have a good risk appetite.

• Don’t use too much of leverage:

Leveraging means borrowing money from other people and using that amount for investing in stock market. When the market becomes bullish people get too excited seeing the opportunity. They start borrowing from the others and start trading to make profits.

But what happens when the market suddenly moves down.

They start making losses and their money erodes; they also do not have that capital which they borrowed from the others to return back. So it is always better to invest from your own capital and try to avoid leverage.

• Get your Fundamentals strong:

One you have decided on your risk appetite and you have your own capital accumulated, invest in those companies which you know everything about.

Go for a company, the product of which has been used by you or you are familiar with.

Suppose you use Dabur Honey and you know that it is the best kind of honey available amongst the other brands available in the market.

You also know that Dabur has other several consumer products and have been doing well in its sector.

So in this regard, you can study the financial statements of Dabur, its past performance, future growth process, read the numbers etc to get an overall assurance about the product.

This was just an example for you to understand, you can make similar observations in your daily life as well.

• Keep your portfolio diversified:

While deciding on the companies you are looking to invest in, remember to keep your portfolio diversified. Try to pool in money in different sector so that a poor performance of one sector is cushioned by the good performance of other sector

• Keep your emotions separate from trading:

Many people have suffered losses in the stock market as they are not able to separate their emotions from the particular stocks which they are trading.

They keep thinking that the stock will bounce back and they keep holding that stock, missing the opportunities in other stocks.

So while trading try to keep your emotions separated from the trading.

Having discussed this, we must always remember that in stock market there is no assurance of abnormally high returns. But yes, you tend to make significant wealth as you start understanding stock market and with experience you will surely understand the techniques to used in stock market.