Tips for beginners at Bucharest Stock Exchange from a former investor

Broker at Intercapital thinks this is the best moment to take the first steps at the stock market, which usually should consist in getting as much information as possible, the understanding of its functioning mechanisms, selection of information channels, and carrying virtual trading in the end.

A person who decides to enter the market in the upcoming period has two big advantages compared to an investor who started activity at the stock exchange three years ago.

First of all he/she is aware of the risks. A simple calculation will show him/her that if he/she had bought stocks earlier this year he would have registered major losses. Risk awareness is a core element of a successful investment because this way the investor is ready to cope with a loss, being able to make rational decisions, influenced at a lower extent by emotional factor.

An investor who started to invest few years ago had not been aware of all the market’s risks, even if the broker did his job to warn him/her, because analyzing stock evolution in the past few years he would see the positive trend of the market.

Second of all, the investor who takes his first steps at the stock exchange, may benefit of major outturns, said the former investor, if we take into consideration that many shares will have attractive prices at the end of the decline period.

A basic rule of stock exchange evolution is that of periodicity. Evolution of a stock cannot be constantly upward, or downward, but on the contrary, the growth intervals are followed by declines.

“If we take for example the local stock market, starting 2000, the market underwent a mounting trend by mid 2007, when the trend was reversed. Even if we come across with many pessimistic investors in these times, the declines will certainly not last forever, and when investors will get acquainted with the attractive prices, we will register a new upside trend,” Intercapital broker added.

Given the available sources of information, an investor who starts investing now, he/she has a considerable advantage compared to an investor who started activity 7-8 years ago. This thing occurs in the context of Internet outburst, and on the fact that at that time, the market was at its infancy, Aldea explained.

Beginner investors are recommended to carry out transactions assisted by a broker, because the broker will provide core information on the market that can be omitted.

“At first, you deal with wide amount of data where you extract the meaningful information and this is made by the broker, and can direct you to the right path”, Aldea explained.
After a period, an investor advised by a broker can start trading online, however this depends on his/her knowledge and on the time he/she is willing to allot investments.

“Although I started my investments with a borrowed sum, I strongly don’t recommend my clients to do the same. However, if they decide to go for it, they must take into account that the borrowed amount should not burden the current expenses. In this case, the psychological pressure will lead investor to failure”, Gabriel Aldea pointed out.

Translated by Camelia Oancea

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