ROI (Return On Investment), expressed as an annual percentage, is the profit an investor make on the sale of a security or other asset divided by the amount of the investment.
ROI (Return on Investment) in stock market trading includes all the income one earns on the stock, also includes any profit that results from selling the stock. If the sale price plus any income is higher than the purchase price, it means you have a positive ROI, and on the other hand, if sale price plus any income is lower, then your ROI is negative.
People always look for high ROI (not only just positive ROI) while trading in stock market. And to get a high ROI in stock market trading, here are some tips for investors:
- Always know what you buy
To ensure a high ROI in stock market trading, investor should acquire as much information as possible about the company they are planning to invest in. do some basic analysis to find out whether the stock is worth the price or else (because if it doesn’t, you will be likely to gamble on it).
Ask consultants for the research if you don’t have time to do it yourself. Major brokerage houses, finance publications and mutual fund companies are reliable sources. - Don’t confuse smart investing with a bull market (differ smart marketing from bull market)
You could get a high ROI in stock market trading when you are investing smartly.
Although sometimes you can make money with almost no effort, because you be in the right place at the right time.
When the market is going up, you shouldn’t feel extra smart and then were tempted to trade more frequently and taking riskier positions. - Avoid active trading
There will be temptation for investors to trade frequently when they are gaining. Especially with online stock market trading where investing is only a few clicks of the mouse away.
But beating the market consistently to make money is tough. Better using buy and hold strategy to ensure a high ROI in stock market trading. - Mind the taxes
Frequent trading could be very costly with high income taxes triggered by your profits. It could reach as high as 40%.
To get a high ROI in stock market trading, it’s advisable to buy and hold for a period of at least a year so you would qualify for the lower capital gains rate of 20%
