Prime Transaction: How can you significantly increase your chances of winning in the stock market?

Whoever wants to become an investor must, first of all, understand what it really means to be an investor, says Alin Brendea, the Operations Director of Prime Transaction, who has written eight tips that help beginners have a positive start in the stock market, detailed in the attached document.

"To invest means to use the saved capital in an activity that is subject to risk, that is, it can produce both gains and losses. It is a qualitative leap from the bank deposit, where you get a guaranteed return, but it is also guaranteed that it is not the highest, often being below the level of inflation. Therefore, you will put your capital at risk, which requires you to know what you have to do. Risk is the payment you make for high returns. It's the axiom of financial markets: risk is proportional to gain," wrote the Prime Director.

Secondly, you have to understand the logic of the stock market investment process, says Alin Brendea. "When you buy, someone sells. In the market, investors are often in adverse positions. The investment process is not primarily about making as much profit as possible, but about making a profit by investing as closely as possible to your investment profile and personal goals. As such, not everything that is good for one investor is good for all, just as something bad for one may be good for another," according to the broker.

Thirdly, it is important to understand what suitability means on the stock market, i.e. the choice of investment strategies and financial instruments adapted to the stock market knowledge, capital needs, risk profile and above all investment objectives, says Brendea. Another element that must be understood is the source of profit on the stock market, the broker states, adding: "Always, the main source of investors' earnings is economic growth."

• Alin Brendea: "You have several options for how you can become an investor on the stock market"

There are several ways in which one can become an investor in the stock market, which for example can decide whether to handle the stock portfolio personally or use simpler solutions provided by the market or specialized intermediaries, according to the broker.

"If you decide that your investments will be facilitated with the help of market instruments and mechanisms, you could start buying units of specialized funds traded on the stock exchange, known by the acronym ETF, which propose standard investments copying the structure of some stock market indexes", says Alin Brendea, adding that such placement has both advantages and disadvantages, detailed in the attached material.

According to the Director of Prime Transaction, another way to access the market is to have a specialist (broker) manage your investment account, which is called discretionary management. The disadvantage of such a solution is that it requires a large capital, but on the other hand, it minimizes the risks of loss caused by lack of experience.

"The variant in which you personally deal with your own investment account has the disadvantage that it requires more important time resources, but it also presents important advantages", says Alin Brendea, pointing out that, in the long term, the investor will enrich his experience.

• Brendea: "Realistic investment goals and consistency in pursuing them are the beacon that will guide you through the cloudier times in the stock market"

It is very important for an investor to know why he performs this activity and what he expects from it, a process that must lead to realistic goals, affirms the Prime Director.

"What can you expect from the stock exchange? In any case, not that you will double the amount invested every year. A realistic objective is that, in the long term, you have a positive real return, above the level of inflation and implicitly above what a bank deposit offers as a return. It's a minimal goal. Increases of 10-15% per year are achievable targets. However, in no way can these increases be taken as guaranteed values. Nothing is guaranteed on the stock market!", states Brendea.

According to the broker, among the most important investment markets: money, the real estate market and the stock market, there are many studies that indicate that, in the long term, the stock market brings the best returns. "Some realistic investment goals, but also the consistency in pursuing them, are the beacon that will guide you in the foggier times on the stock market and will represent fixed points when the markets become fluid, without a clear direction and horizon", pointed out Alin Brendea.

• Financial services intermediary, market operator and specialist media - the first sources of information for investors, recommended by the Prime broker

The selection of information sources is another tip of the broker for novice investors. "Mass media channels, but especially social media, have developed into areas where direct or hidden advertising can become extremely aggressive. The deep-fake phenomenon has taken, with the help of artificial intelligence, this trend to another level, generating images and speeches that are more difficult to identify as inappropriate, lying or rigged", wrote Brendea.

Prime executive urges investors to only credit information from official sources. "You can start with the stock broker that provides you with financial services and you can continue with the sources of information provided by the market operator (BVB) and specialized media. Over time, you will need to build up a database of sources that prove to be reliable. Certainly, as your investment experience increases, you will more easily notice the sources of toxic information", says Alin Brendea.

Last but not least, the broker recommends allocating a period of daily study to understand stock market developments.

"The stock market is the most beautiful market in the economy, it requires financial resources and effort, but it also offers commensurate rewards!", concludes Alin Brendea.