Steps for Investment Strategy for Stock Market Essay - 3

Steps for Investment Strategy for Stock Market - Essay Example As the capital market is very volatile and requires very efficient and effective strategies for making investments in stock market. The stock markets are highly uncertain, and it is difficult to predict. Therefore, the chances of loss are higher without proper investment plan. This paper will attempt to present an argumentative discussion on the investment strategy for a stock market. In regard to trading strategies in the stock market, many have argued against the stock investment by claiming it as a zero-sum game as there is an equal number of winners and losers. The stock market is highly volatile and to take a winners’ position is quite challenging. An efficient trading strategy can make gains in bullish as well as in the bearish market. The following figure presents volatility of the FTSE for the last forty years. The most of investors who faced great loses due to investments in the stock market are mainly caused by their lack of knowledge and lack of general awareness. In fact, many investors having very limited knowledge regarding stock investments tend to face losses from the stock market investments and their investment behavior mainly driven by behavioral finance. The investors often make the investment based on their behavior which is mainly driven by unconventional market behavior. For example, investors should buy a stock when it comes to its lower boundary and sells just before it is supposed to fall. However, generally, investors do the opposite and face losses. However, there are also certain factors that must be taken into consideration, and the entire investment should follow systematic steps.