3 Tips for Beginner Investors
Trying to learn the stock market on your own through trial and error is about as easy as tickling a grizzly bears paw and walking away unscathed. And unfortunately, if trial and error is your strategy, the end result won't be too different either. What you need to understand is that even the most successful stocks and options traders has had their lunch eaten for them at one point or another, but through the tips and tricks outlined here, they picked the pieces back up and went from beginners stock trading to investment pro.
Fortunes are made and lost everyday in the stock market. Whether you are trading penny stocks or blue chips, day trading or taking a more conservative long term approach, there are tactics that will earn you an incredible payout, and there are others that will have you financially flatlining in the tick of a NYSE minute.
This article will give you 3 tips on how to successfully navigate today's volatile market and come out on top. We'll go over how to judge which stock market shares to invest in and which ones you shouldn't, as well as a few pointers on how the market actually works at its core. I look forward to your comments and any further advice you can offer our readers.
3) Watch The News
It's no secret amongst the most successful investors that the stock market is ran by emotion. Excitement and fear are directly tied to the rise and fall of stock share prices and values. Take Apple (AAPL) for example; with the recent release of the iPhone 5 many shareholders were expecting a surge in value, as has been the norm with every other major release over the last decade or so. But due to a sub par maps app replacing the Google maps app and the subsequent poor reviews the stock dropped by nearly $50 a share. The performance of the new maps feature didn't seem to affect sales, but the market definitely lost certainty in the tech giant and the stock suffered for it.
Pay attention to recent press releases on the company you're interested in investing in and also the volume at which it is trading. Positive news and high trade volume often will equate positive returns, while negative press and high trade volume is usually a good indication that it is not one of the best stock shares to be investing in at that time.
2) Know When to Hold Them and When to Fold Them
In some respects, the stock market is a lot like a game of poker. There's a huge pot to be taken by the player with the right hand, or, the right approach to that hand. Stocks, like poker, is a zero sum game. In order for one player to win, another must lose and also like poker, statistically speaking the odds are not in your favor that you will win every hand that you play. With that being said, you need to know when to hold onto a stock and when to cut your losses and run for the hills. Setting clearly defined goals for your investments is a great way to mitigate your losses and maximize your returns. Where you set these goals is dependent upon your level of risk tolerance. A good rule of thumb is to set your sell line at 15-20%. If you see a 20% upswing in your stock then be happy with the money made and get out while the gettin' is still good. Chances are the stock will rise and fall for some time and by selling at a set percentage and rebuying at a lower percentage you leverage your investment and really start to compound those gains. This is the essence of day trading.
1) Diversify and Thrive, Consolidate and Die
One of the biggest mistakes beginning investors make is to consolidate all of their investment power into one so called "sure thing". First and fore most, there is no such thing as a sure fire bet in the stock market, only educated guesses at best. Second, putting all of your eggs in one basket is about as smart as betting it all on Black 17. Yes, the potential for huge earnings is there, but with it is the potential for a financially crushing blow. A smart investor will spread his bet across the market. Find a few stocks that have been performing well and watch them for a week or two, Acclimate yourself to their swing patterns and make knowledgeable investments in a variety of sectors. While it may be tempting to bet the farm on what you believe to be a barnburner, you may end up doing just that, burning your investment power away and driving yourself and your family to financial ruin.
The question you need to ask yourself at this point is, "How serious am I about becoming a successful stock trader?" If your answer is that you are serious and you want to truly up your game then the strongest suggestion I could make to you is to enlist the help of either a personal investment coach or invest in a program that can take a lot of the guess work out of the game for you. There are people out there far smarter than us who have made it their business to know as well as you can know what the stock market is set to do, and they have created powerful algorithms to help us make the smartest decisions possible when it come to investing our hard earned money.
With that being said, best of luck out there, and may the market always be a bull for you!
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