Free Stock Market Tips
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1)Understand the economy - look at economic indicators such as employment and wages growth, consumer sentiment, housing growth and decide if the economy is slowing or growing. This will give you an overall picture of the market and whether which way it will go. If people there is growth in the economy the stock market will grow because people are spending and all indicators are positive and vice versa for a slowing economy.
2)Research the company profitability: products, services, operations, and track record in the business and industry. This is important to assess the company stability and capability to deliver its promises and meet its profit targets and compare them to there competititors and other similar companies in the industry
Always read and watch the news and keep up to date this helps make sound decisions and have develop good intuition. You will need to constantly learn about the local and global political and economic happenings and study the particular industry where your company belongs. Even stable companies can suddenly go bankrupt or experience a big blow that can bring them down.
3)Sell the losers and let the winners ride!- Investors can make the mistake of taking profits by selling their stocks investments to early and hold onto stocks that have declined in hopes of a rebound.
Riding a Winner - If a stock that is performing well, you may be better to let it ride rather than sticking to some rigid personal rule.
Selling a Loser - There is no guarantee that a stock will bounce back after a decline. While it's important not to underestimate good stocks, it's equally important to be realistic about investments that are performing badly. Recognizing your losers is hard because it's also an acknowledgment of your mistake. But it's important to be honest when you realize that a stock is not performing as well as you expected it to. Don't be afraid to swallow your pride and move on before your losses become even greater!
Just remember not to let your fears limit your returns or inflate your losses.
5) Don't listen to a "hot tip" Even if a tip comes from your brother, cousin, neighbor, or even a really good broker, no one can ever guarantee what a stock will go your way. It is your investment, you should know why you invested. It's important you know the reasons for doing so: do your own research and analysis of any company before you even consider investing your hard earned money. Relying on a tip from someone else is as good as gambling.
6)Do not focus on the small stuff - As a long-term investor various movements within shorter time periods, should not worry you. You should look at the big picture, when looking at your long term investment perspective. Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility in the short term.
Active trader will use small fluctuations to make gains, but the gains of a long-term investor come from an overall long term trend.
5) Resist the lure of penny stocks - Penny stocks are a lot riskier because they have less regulations than a larger company and they have a lot less market capitalization. So if they have more probability of going broke if there is less assets behind them.
6) Pick a strategy that suits you - Find a style that suits your personality and risk profile. This is how much risk you can take in an investment.
7) The future is more important - Traders use past as an indication of things to come, but should look at what might happen in the future based on the present conditions and other factors that can affect the future.
8) Investors with long term perspective - The new investor is always enticed by large short-term profits and its not impossible for large profits to happen. Likelyhood of this happening to a new investor is remote and should be avoided unless they consider themselves a trader. If they are a trader they should be trained to look for these types of trades. Without proper training, you will surely make some losses.
9) Do not get attached to companies you know and like. There are many big companies are household names, but many good investments are not necessarily household names. Smaller companies have actually produced better returns over a period than larger companies. Usually the smaller companies produce good growth as they go through growth phases when bigger companies have already experienced this.
10) Taxes are important, but not that important. Your primary goal is to invest or trade to increase your portfolio, not to minimize tax. Speak to your accountant about your tax structure, but not which investment to get into.
Conclusion
In this article, we have covered 10 solid tips for the long term investor and touched on active trading as well.
Adrian Monterosso is chief editor at ImageFn. Image FN specialise in education and stock market funding.
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Article Source: ArticlesBase.com
