Stock Market TipsPosted on September 9th, 2010 William No comments
Here's a tip: don't believe anyone who tells you they know how to beat the market. Most professionals fail to beat the market; what makes you think that your cousin's neighbor's son-in-law knows better?
That said, here are some stock market tips to give you the best possible chance of making the maximum amount of money in the market.
- Educate yourself. If you don't know exactly how the market works, you're likely to get yourself in trouble. "Knowing enough to be dangerous" is particularly apt in this case; you need to understand the overall mechanics of the stock market, not just how to place a trade.
- Educate yourself specifically. What do I mean by that? Become an expert in whatever area you plan to trade in. If you're going to buy technology stocks, become an expert on technology companies. (More realistically, choose one particular type of technology and become an expert on that). If you're going into currency trading, become an expert on Forex. Information is power, and while you can never be an expert on everything, you can know one area very well, possibly well enough to beat the market.
- Read the fine print. Unless your uncle is a broker, you will presumably be doing internet share trading; make sure you're familiar with all of the fees and minimums, and make sure your trades will be executed when you place them, not batched with everyone else's at the end of the week.
- Diversify...or, don't put all your eggs in one basket! Even if you're right that one company is about to market the best thing since sliced bread, that doesn't mean they won't get sued and go out of business before they make it to market. Investing all of your savings in the company that employs you is a particularly bad idea!
- Trade as little as possible. Trying to time the market is a great way to lose money; even if you're right more often than not, you still end up paying a lot of fees. Additionally, you never want to make emotional decisions; decide in advance when you'll buy or sell a stock, and stick to it.
- Reinvest! If a stock you own pays dividends, that's a great chance to buy more stocks and keep your portfolio growing!