How to Build Wealth in the Stock Market?

The most important criterion when buying stocks is to make a profit.
For this:
- Buy during periods when the stock markets experience significant declines and drop by 20-30% from their peak.
- Generally, economic crises, wars, and natural disasters are opportunities for these periods.
- Prefer stocks that have fallen less, not those that have fallen drastically.(Good companies are resilient during crises and experience smaller declines. They recover faster with the market rebound.)
Not all sectors rise at the same rate. It’s beneficial to create a sectoral basket.
Generally, after crisis periods end, the finance sector recovers more quickly.
Large companies recover faster.
Afterward, diversify into different sectors. Because the rally spreads across the board after the initial surge.
The biggest mistake is to follow stocks recommended on social media.
The best action is to create a basket of stocks with high market capitalization. And buy at least 4 stocks. The number of stocks should not exceed 5. Otherwise, you’ll keep buying new stocks constantly.
Once purchases are made and good gains are realized, the real action is to sell these stocks.
Key indicators for this:
Fundamental Analysis Indicators
- When participation in the stock market grows exponentially.
- When Central Banks start raising interest rates.
- When the cost of holding money increases.
Technical Indicators (Chart-Focused)
- Overbought Zones (RSI): When the RSI indicator exceeds 70 or 80 on a weekly basis, it signals that the market is "overheated" and a correction may occur.
- Trend Break: If a stock is within an upward channel and breaks below its support, the upward trend may have ended.
- Moving Average Crossovers: When the price drops below the 20 or 50-day moving averages, it indicates a loss of short- and medium-term momentum. If the 50-day moving average is broken and supported by fundamental indicators, do not hesitate to sell.
Strategic and Psychological Factors
- Reaching the Target Price: When your profit targets of 30%, 50%, or 100% are achieved, you should sell with discipline.
- Better Opportunities Arise: If your stock has gained 20% and you see a much cheaper and promising opportunity in another sector, such as energy or technology, you can sell to reallocate capital.
- Portfolio Rebalancing: If a stock rises excessively and reaches 40-50% of your total portfolio, it’s risky. To diversify risk, it’s wise to sell some profit and reduce its weight.
- Principal Withdrawal: You can withdraw your initial capital and continue with only the profit, creating "free stocks." This approach provides psychological comfort.
- Partial Selling: By selling 25% at resistance points, you avoid missing the chance of continued upward movement.
You sold everything... You have cash... But the markets didn’t move as you expected. In this case, you can keep your money in deposits or Eurobonds.
Don’t worry, markets decline by 20-30% roughly every 3 years on average. Major crashes happen once every ten years.
You buy again...
BUYING STOCKS IS EASY. THE SKILL LIES IN HOLDING AND SELLING THEM.
(Stock )MoneyMaking #Strategy