1. Stock market investing vs. trading. Real stock market
professionals understand that you cannot make money fast by investing into dividend paying stocks for the long haul. Stock trading is
the only way for fast stock market investing success. The difference is your
involvement and understanding how the stock market works, cyclical stock market
changes, highs and lows of certain stocks, swing trading stocks
and much more. Stock market trading
focuses on acquiring stocks within specified low margins and selling them
within specified high margins. Every stock is different and should be
approached on a case by case basis. Before you begin, you need to find a
knowledgeable stock or commodity trading broker. Another option is opening a
brokerage account online through a series of reliable brokerage companies.
2. Get educated about the basics of stock market investing. One of the best approaches
to learn about is Warren Buffet’s philosophies on becoming an investor. Warren
Buffet does not only preach his investment principles, he also lives by them
daily. Without knowing the basics, you simply cannot survive on the stock
market for very long and risk losing all of your funds.
3. Understand the difference between
fundamental and technical stock analysis. Before you rush in the highly
volatile world of stock market investing, knowing these two types of stock analysis
is a must. Technical analysis makes its goal to evaluate stocks focusing purely
on their price and volume while fundamental analysis is centered on profound
knowledge of economic stock trends, ability to analyze charts and financial
data. If you are not familiar with these, do learn both methods before even
considering buying stocks.
4. If you are an emerging penny stock trader, be warned that even due to seemingly
low prices on penny stocks, these stocks are
super high risk stocks due to the lack of information and
performance history. You can still lose a lot of money over mere hours or days
if you do not have a solid penny stock trading system in place. Study penny stock companies
thoroughly, if you have trouble finding information about a company, walk away
from these picks because you do not want to be stock gambling and investing
blindly. It takes time and involvement to find penny stocks, if you do not have the time, you might
be better off to staying with regular stocks.
5. Once you get the basics of stock market investing down to the bone, it’s time
to automate the trading mechanism to remove your emotions out of the equation.
Automated trading allows you to automatically buy or sell stocks once they
reach certain specified by you criteria. Additionally, trading software allows
you to significantly cut trading time and manage stock market investing risk.
6. Do not rely on hot stock picks even if they come from experienced
investors like Jim Cramer without
your own analysis of the stock market performance because
these picks might be perfect for meeting their investment goals and not yours.
Do your own technical analysis and performance evaluating to make sure these
meet your short or long term goals. Young single investors vs. married older
individuals have almost opposite investment goals and objectives; therefore
relying on somebody else’s picks is not financially wise.
7. Do not invest in unknown to you
sectors of economy. It’s a simple, yet effective advice to stick to. If you do
not understand what the company is doing, you cannot make any prognosis on
future performance. Buy stocks of companies you thoroughly understand,
therefore, can analyze and make your own prediction.
8. Go against stock marketing trends just like Warren Buffet does
it. When everybody is selling, perhaps you should consider buying some undervalued stocks for incredible potential earnings. And
oppositely, when the stock market investors are buying and the prices are coming
up, consider selling some stocks to make a profit.
9. Understand the intrinsic value of a stock market company. You
cannot achieve the knowledge of understanding the absolute lowest value of a
company’s stock overnight but with time and continuous personal education, you
will be able to identify stocks at rock bottom market prices and buy them. This
analysis is done through careful research and analysis of several similar
market sector companies, their performance charts and financial data. Opting
for companies with a history is a must, this way there’s a track record to
examine and make a prediction. Emerging market stocks might
not be the best option for investment, however, some high risk investor prefer
such picks for high risk – high return reasons.
10. Look for stocks with an ”edge”!
Various factors can give a certain stock an edge, mainly, special one a kind
product development, high competition edge, license requirements or something
that the company has that the rest cannot achieve easily or hard for
competitors to replicate.
