Beginners in stock trading may note that small amounts may be invested in different stocks instead of putting all eggs in one basket.

That is, different types of stocks may be selected and few stocks or shares may be purchased in each category. By this method, one can avoid hoarding all money in a single company. If different stocks are purchased, a loss in a particular company may be made up with the gains in other industries. Hence it is important that distribution of shares should be done after careful study and analysis.

This distribution may be maintained at all levels. If there is good profit in a particular share, it may be tempting to sell some other shares and invest in the one that is making profit in the short run. However, one should not be in a haste as these lower performing industries may also pick up leaving the investor regretting for having sold it. Only in the case of very poor performers, shares may be sold and the funds diverted to profit making companies.

A good portflio is one where a certain percentage of shares are invested in different types of industry, like automobiles, banks, cement, constructon, and so on and so forth. It need not be equal number of shares, but a certain percentage that the investor decides upon after careful study.

Having made this initial decision, it may be held for a certain period of time, say, a minimum of six months to know the true worth of these shares. Then gradually, changes may be made by selling some portion depending upon the movement of share values in the stock market.

To start with, two or three types of industries may be selected, and slowly after gaining some amount on these shares, some profit could be made which could be diverted to buying other shares, or if there is some amount available to be invested, shares in different industries could be purchased. Also a good portfolio is one which can be capable of being handled by the investor. By such methods a good portfolio could be built up over a period of time.