Stock Buying Tips
Tips for buying stocks
As I invested my money across the world, I met people from different cultural and educational backgrounds; most of these people were losing money in the stock market except for few who had almost the same way of thinking even though they lived in different continents and never met each other before.
I came to realize the fact that making money from stocks is not a skill but rather a way of thinking or a mindset. Any person with average intelligence and moderate background about investing can make good profits from the stock market by just having this mindset.
This article intends to give you tips for buying stocks so that you end up having the mentality of those who make lots of money from stocks.
Tips for making money from stocks
- Buy what you know: Never buy a stock because you heard that its price will go up, parents, friends and even brokers are good people but most of them will give you incorrect advices thus resulting in wasting your money.
- Don't worship charts: Technical analysis is only useful for determine the timing to buy something that you already intended to buy, depend on technical analysis alone and you are ruined.
- Avoid frequent traiding: I have met lots of day traders but I never met someone who realized any gains over the period of five years. I've seen some make 50% gains in few months and few years later they went broke. Day trading is gambling, frequent trading is like coin tossing so make sure you avoid both.
- Buy and hold: When you find a good opportunity hold on to it, most people who trade sell their stocks when they gain 5% or more while if they had waited for few months they could have sold it with 40% and 50% gains. When you buy a good stock allow it to move up in price by holding on to it at least for few months. By selling before the stock reaches its potential price you will be wasting your time and minimizing your profits.
- Avoid over diversification:Warren buffet, the richest man in the world who made his money from investment once said that diversification is only good for those who don't know what they are doing, If you are sure that you know five good stocks then have faith in yourself and distribute your money among them instead of buying thirty random companies that you know nothing about. Diversification can scientifically reduce your returns especially when you believe that few stocks will go up in price by a good percentage.
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Article Source: ArticlesBase.com
