Stock market for beginners
There’s a lot of information out there about stocks and how to enter the stock market, but new investors can easily get lost in the shuffle. What should they know before they get into the market?
Not following the rules has been the name of the game for a longtime. Practice disciplines many, many times until you become comfortable with it. Be sure that you are following the principles. When the losing trades occur, your losses will be small and manageable. Be careful and diligent in whatever you set out to accomplish. But don’t be so worried about making mistakes that you fail to get anything done. Don’t feel guilty about what you’ve failed to accomplish. Feel energized about what you now can achieve. Have fun investing. Don’t overextend yourself, and never put money into companies that make or do anything you don't admire.
Which stock would you buy? Majority of investors choose the stock that has fallen they believe that it will eventually make it back up to those levels again.
"Those who try to catch a falling knife only get hurt."
The goal is to buy good companies at a reasonable price. Buying companies solely because their market price has fallen will get you nowhere. Never "fall in love" with a stock. If it is a loser, let it go. Do not over-hold any stock just waiting (hoping) for it to get back to even.
There is another old adage that is very much worth repeating: "What's obvious is obviously wrong." This means that knowing a little bit will only have you following the crowd Successful investing takes hard work and effort. A partially informed investor is about as effective as a partially informed surgeon; he or she will only hurt themselves and those around them.
You have to earn a few and close out the trade to catch it while it is still profitable. But when the trades goes against to hang onto it too long thinking it will come back to profitability end up losing more. And then, what’s really frustrating is that the trade ends up moving in the direction of original trade.
A key thing that a trader must do is acknowledge that you will have losing trades. If a trade moves against you, as a trader you need to be willing to accept that loss just as you are willing to accept the winning trades. Since you are trading with risk capital, money that you can afford to lose, a trader must be OK with a loss as it will not affect your life style one tiny bit. Losses are simply a part of trading.
Have your Investment goals and have clear strategies to reach them. Write them out, and review them at least once per year. Adjust or amend them when appropriate.
You don't have to be a guru but you do need adequate investment knowledge some investors want to make money, but they want to make fast money. So they take short cuts and refuse to improve on their trading knowledge. Instead, they depend more on hearsay and their luck when it comes to investing. If you cannot find good investment opportunities, you should never afraid to have some of your, stock money in cash. Do not feel the need to be "fully invested" at all times.
Bear in mind that while brokers will tempt you with seemingly cheap share dealing, that doesn't necessarily make them the best option for you, nor does it do enough to guarantee trading success. Read, analyze, and do your own thinking always striving to improve your investment practices. Never buy a stock solely on a tip.
Choosing which stocks to invest requires effort, a disciplined and focused approach, and a dedication to learning your craft that's synonymous with learning any profession or trade.
Keep yourself focused on the goal you’ve chosen, and keep yourself moving in the best way you know how. If you fall short of the goal, make another effort. If the efforts continue to fall short, find another strategy.