The Right Way To Buy And Sell Stocks For Investors And Trader, Beginners Must Know!

Illustration of stock trading (Unsplash).

YOGYAKARTA – Shares are an investment instrument that is proof of ownership of a company. By becoming a shareholder, you can get dividends every month as a return on equity in the company. However, stocks are high-risk or high-risk investment instruments. Therefore, you need to know the right way to buy and sell stocks so you don't experience losses in the future.

How to Buy and Sell Stocks for Beginner Investors and Traders

Before investing in stocks, you must first determine your position, whether you are an investor or a trader.

Investors usually buy stocks for long term goals. Conversely, a trader buys stocks not to hold back the rate of appreciation of their funds gradually as traditional investors do.

Differences in trading positions will affect the timing of buying shares. So, when is the right time to buy stocks?

If you are positioned as an investor in stock trading, the right time to invest is:

• Every quarter: Investors can buy shares every three months or up to 4 times a year. At certain times, you can buy when the stock price is declining and fundamental conditions are supportive. The best periods to buy shares are February, May, August, and November. The reason is, in these months, the company has released financial reports. This can be a consideration when you want to buy shares.
• When the company is in good condition: Investors who want to buy shares are advised to do a fundamental analysis first. Check whether the company whose shares you want to buy is growing healthy or not. Also, look for information on whether the company is experiencing losses or not.
• When Company Liquidity is in Good Condition: Before buying shares, investors need to understand a number of things, such as the profile and level of company liquidity, fluctuations in the Jakarta Composite Index (IHSG), market trends, Return of Equity (ROE) or profits from shareholder investment in the company, sales or sales, and Earning per Share (EPS) Growth.

Meanwhile, for those of you who are positioned as traders, the best time to buy shares is 15 minutes after the opening of the trade or the opening bell.

The period from 9:30 to 10:30 is often referred to as the best hours of daily trading. What if you're lucky, the biggest stock price movement in a short time can occur during prime time or the opening bell.

Related to this, you can increase the time up to 11:30 if you want to add points in one hour of trading. Nevertheless, professional traders tend to stop at that hour.

However, if your analytical skills on stock movements are poor, you are advised not to trade during turbulent times, or in the first hours of trading.

Illustration of selling shares (Freepik/Wirestock)

Next, is how to sell the right stock. In order to get the maximum profit, you are advised to sell shares when the price is rising. This action is known as profit-taking.

So, what if the stock price drops? If this happens, the right time to sell shares is to set a cut loss.

Adapted by VOI from the official website of the Financial Services Authority (OJK), Wednesday, 1 February 2023, the cut loss is a term used when investors sell shares at a price lower than the purchase price. Cut loss is done to prevent greater losses when the stock price depreciates.

For example, if you set a cut loss limit at 5 percent or 7 percent, then when losses reach that range, you can immediately sell the shares you hold.

An investor or trader is advised to cut losses when the stock price drops, in order to maintain the capital they have.

For a trader, the best time to cut loss is when the value of the stock that is held continues to fall.

Meanwhile, for an investor, the cutting loss can be done when there is a fundamental change in the company's performance. Several things can be taken into consideration for cutting losses, including when there is bad news regarding the company concerned and/or if there is a decline in the JCI.

This is information about how to buy and sell stocks that are right for investors and traders. Hope it is useful!