With all the challenges you’ll face participating in the stock market, it’s better to be prepared than to be sorry later on. It’s your hard earned money at stake. Being over confident and lacking of discernment can ruin your investments in a blink of an eye. Here’s a stock trading guide to help you become an effective stock market investor.
1. Learn Before You Leap – Know as much as you can before you buy shares. It’s surprising how so many people buy stocks without a shred of an idea about equity markets. These are usually the people who quickly lose money in stocks before even seeing a profit. Enrolling in a good stock trading training course can help you start-out right.
2. Have an Objective – It is crucial to have a plan of attack when buying stocks. What are your time frames and target profits for the week, month, and year? How much of a risk and potential loss are you willing to take to achieve those targets? Defining a clear objective will help you achieve your investment goals much faster.
3. Use Online Stock Trading Services – Online stock trading platforms and services can make your life as a trader/investor a lot easier. Their services are also far more affordable compared to traditional brokers. You are given tools to better understand current market data. You can expect support and even a good stock trading guide upon signing-up for such services.
4. Stay Up-to-date with the Market – The Internet is a rich source of free, real-time stock market data and information. Being current about market fluctuations and trends is vital. Without this information you may not be able to make the crucial decisions needed to give you the advantage and help you determine the difference between a “profit” or a “loss”.
5. Buy the Company, Not the Stock – This is what any stock trading guide or course would tell you. Remember Enron? Their stocks sold like crazy until bad management and bad auditing undid them… including the demise of many hopes and dreams of a lot of Enron shareholders. Before you buy a stock, know more about the company selling it.
6. Build a Well-Diversified Portfolio – You know how the saying goes; “don’t put all your eggs in one basket”. A well-mixed portfolio fuels your growth and shields against a total loss. Include tried and tested companies as well as fast-rising new players in your portfolio for stability and profit, respectively.
7. Technology gives you an Edge, Automate it – Aside from the Internet and web-based trading platforms, automated stock trading systems are the next best thing. Think of these as your personal trading robot that scans the market for the best and worst stocks. They can identify patterns and factors that lead to rising and sinking stock prices. This can give an investor a particular edge in buying cheap stocks and selling for a big profit later on.