Stock Market Basics – Four Tips
If you’re trying to understand stock market basics, I’d like to start you off with just four tips that will help you become a better trader.
1. EMOTIONS- If you involve your emotions into trading stocks, it will impair your judgment as well as cause you to over-react in your trades. You do not buy a stock because it has a sentimental meaning to you. If a stock that you like is going up in value, don’t worry about not getting in on the gains and jump into it after it’s gone up 5% or better (it will come back to you in time). If you see that the stock you bought is losing value, don’t instantly panic and dump you shares (it may be temporary).
2. RESEARCH- Like I said before, don’t just buy a stock for a emotional attachment to it. The only reason you get into a company’s stock is that you did the research and the company has strong fundamentals. You need to look into the company very closely before making a decision on if it’s a good investment.
3. ADVICE (TIPS)- Don’t just take the advice of someone who says he/she has a great stock tip. There is no such thing as a great tip. If the person tells you that they received a HOT tip on a particular stock and say that you need to get in on it. Don’t do it until you do your research on the company to confirm what the person said is true. If you think he has information that you are not privileged to, don’t think that since if he did have inside information and shared it, it would be legal and both of you would be in a heap of trouble.
4. BUY INCREMENTALLY-Never buy into company all at once. When you do buy all at once and the stock loses value by 3%-8% you won’t have any capital to buy any more and reduce your cost basis.
I know that these tips will help you as you trade stocks. They have helped me many times over the years.
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