Stock Market Investment Advice
So many people trade in the stock market with the same chance, but few percent
of them earn enough return.
Many of these people that don't earn enough return; have enough information
about trading in the stock market.
Why these people don't earn enough return in the stock market?
The answer is emotions and strategies. Successful traders act without emotions
and they have a strategy and follow the principles of their strategy.
To success in the stock market, you should avoid some mistakes (you can see them
below) and learn some investment tips. A good way is to summarize investment
advice in a list of rules.
Don't make these Mistakes
1. Lack of Strategy
Having a strategy in the stock market is very important. You should know when
buy a stock, what is selling price and how long you will hold the shares. When
choose a strategy follow its principles and don't change your strategy every
day.
2. Waiting for Market
Many traders when lose in a stock don't sell the stock and stay till the stock
price return to the price they have bought. This is one of the greatest mistakes
that new trades do it because they maybe lose much more money and time with
holding a fail position.
3. Not taking the Profit
When a reasonable profit has already been made, Overcome to Greed and sell the
stock for taking the profit.
4. Overtrading
Many traders especially day traders feel the need to hold positions in the
market at all times on every trading day. Often they will break their own rules
in order to get all of their capital into the market. Sometimes , it is best to
stand aside and avoid holding any position in the markets at all.
5. Trading with money you can't afford to lose
Don't use money that you really can't afford to lose. Examples of this would be
money that is supposed to be used to pay the mortgage, bills or your child's
college tuition. This is causing trading with fear and emotions.
6. Falling in love with a Stock
Some people stick to a stock because they believe it is a good stock. They even
lose much money, but don't sell it.
7. A way to get Rich Quickly
People will often expect to get rich in the market overnight, but they fail to
realize that trading is like any profession; you must learn how to do it first.
8. Not adhering to a ‘stop-loss' position
A stop-loss is a predetermined price point at which a loss is accepted and an
investor closes the position.
Planning to go into stock market investment? Here are some
general tips to live by.
1. Understand the basics of economics.
The stock market follows the laws of economics, particularly the law of supply
and demand. If there is a greater demand for the stocks of a particular company,
the price of its stocks will go up accordingly. On the other hand, if there are
more stocks available for selling (more sellers) than stock buyers, the unit
price of that company’s stocks will go down.
2. Study your prospective company/ies.
Read up on the company’s profile: products, services, operations, and track
record in the business. This is important to assess the company’s stability and
capability to deliver its promises and meet its profit targets.
3. Choose companies that are more likely to stay.
With so many existing companies in the stock market, choosing becomes a big
challenge for beginners. Government-owned companies and businesses are
relatively stable, unless there is a political revolution in the horizon.
Telecommunications and gasoline companies are also stable and profitable since
the demand for these products and services is constant. Although IT companies
are the fastest growing in the market today, be careful because there are so
many of them that it checking on their profiles could be very taxing. Choose IT
companies that have proven track records of profitability and stability of at
least 10 years.
4. Always read and watch the news.
Dealing with the stock market is not a guessing game. Sound decisions and good
intuition are results of constantly learning about the local and global
political and economic happenings. Give particular attention to the industry
where your company belongs. Even stable companies can suddenly go bankrupt or
experience a big blow that can bring them down. Remember Enron?
5. Spread your investments.
Avoid investing in just one company. If all your stocks are concentrated to one
company, the chance for loses is also greater. Spread them out so that earning
investments can cushion those investments that earn less.
6. Do not rely solely on stock brokers.
Do your homework. Remember, the stock broker is “gambling” with your money. When
an investor does not understand how the stock market works, he/she becomes
vulnerable to scrupulous brokers.
7. Do not be greedy.
Although stock market investment is all about profits, becoming greedy will make
an investor lose his/her better senses. He/She might suddenly forget to check on
economic rumors and decide right away to buy or sell thinking that he/she would
make big profits by doing so.
