Never take the word of someone else as an investment tip. If someone is giving you the “inside scoop” on a particular stock, you need to make sure for yourself. There are laws against inside trading, so for an average trader or investor to have any good information, it’s highly unlikely.

Never buy all of your shares at once, you should buy into any position incrementally. Stocks rise and fall all the time so to lower your cost basis. Most likely you’ll never be able to buy at the bottom so you need to be prepared to buy more when the price falls. Typically I wait for an 8% pull back from the stock’s recent high or 5%-8% drop from my cost basis before buying any more shares.

If you’re still looking for good solid reliable information, but not sure where to go. I use Yahoo Finance as well as The Street.com. Jim Cramer has been a never-ending resource of good stock leads for me. Not only is he entertaining, but very well aware of the stock market. I listen to his “suggestions” on what stocks or sectors are looking good, but I still don’t buy into the company because he thinks it’s good. I do my own research into the company to see what he sees or doesn’t see.

Diversifying your portfolio is very important if you want to protect your you profits or minimize your losses. If you go ahead and invest of your money into one company or sector, you could lose a big portion of you portfolio in the process. As I said before, all stocks rise and fall and that also goes for complete sector at times. That is why you need to invest across the board (equities, bonds, precious metal and other commodities). Divide your investments into several different vehicles, typically no more than 20% into any one sector or stock.

Look for companies that offer dividends, larger companies are the ones to look towards. Dividends are a return of the company’s profits that are distributed among the share holders. Let’s say the company’s stock is $20 per share and they have a 10% annual dividend. Each year you would receive $2 per share (paid quarterly) for just own the stock no matter what the stock price is. So even if the company loses 5% value on the stock price, you’ve still made 5% on your investment.

In later posts, I will offer other stock tips that will also help increase you gains.

First thing you have to ask yourself is, how old are you? Depending on your age will determine what kind of risk you should take. Starting young in your financial future is the best thing you can do to secure your later years. If you’re in your twenties then you can take a little more risk than a person in their forties. If you experience a setback in your portfolio, you’re have time to make it up.

What about if you’re going to retire in just a few short years? You need to start moving your retirement account into “safer” investment. When you reach the time where you are soon to be retired, you should have built a decent looking portfolio, so you’ll want to secure what you have than risk a good chunk of it if something goes wrong.

Where can you go to find reliable stock tips? In my opinion, you should only trust yourself and the research you do on each of the stocks you are going to invest in. I find many of my leads by just following the daily blogs and media sites. I’ve found some great leads on twitter and Facebook as well, but just because someone gives me a “good stock tip” doesn’t mean I just jump into the stock. I follow up on each of these leads myself by looking into the company’s financial reports and balance sheets as well as listening to their conference calls and earnings report. More times than not, you’ll receive some bad tip and lose a bunch of money in the process.

Learn how to read the technical charts as well. Many traders and investors learn to do technical analysis. Technical analysis is looking at a stocks performance by studying the charts. history repeats itself and that holds true in the stock market as well. It’s too much for me to get into here in this post, but I will in a later one.

Never buy all your shares at once. when you decide to build a position in a company, you need to do it incrementally. This way when the stock price drops, you can buy more on the temporary weakness of it. This will help reduce your cost basis and increase profits.

Just recently during earnings report season, Bad economic data was coming out through the week, but the earnings reports were beating the street’s expectation. The DOW’s closings for the week were so erratic which swung over 400 points. Bad news came out on Tuesday, but the DOW finished up 250+ for the day only to come down 300+ on Wednesday.

So when it comes to knowing what stocks to buy, you need to do your research and your due diligence. If not, you’re not going to be able to make profits in your portfolio. It’s been said many times that for each stock that you invest in, you must do at least one hour per week on researching the company as well as the sector it’s involved with. What may be a good solid company when you first bought the shares may not be a few weeks or months later. Stay informed and you won’t get taken by surprise.

I never buy all my shares at once. I buy incrementally to help lower my cost basis (average price per share). I know before I buy any shares of a company how much money I’m willing to invest in total. If I’m going to invest $20,000 in a company, my first purchase will be for $5000 in shares. So if the price per share is $50, I buy 100 shares. If the stock drops 5%-10%, I’ll purchase another 100 shares. But if it drops more than that for no apparent reason other than it was dragged down by the entire market, I’ll buy 200 shares instead because I know that the company is still solid and doing the right thing that when Wall Street realizes that the stock was oversold, the price will be right back up to $50 or better.

A lot that goes on with making money on Wall Street has to do with timing. you need to be in the right place at the right time. To make sure of that, you need to do your research to know what stocks to buy.

One of the key thing you need to know before you start trading stocks is that you need to do research on each of the companies that you want to invest in. You can’t just say I like a particular stock and buy shares of the company. You have to know if the company is doing the right thing and making a profit. Is the Chief Executive Officer (CEO) a successful businessman? Does he have what it takes to make the right call for the benefit of the company and it’s shareholders? Is the industry that the company in on an upswing or head in a downward motion? A company can be doing the right thing, but if the industry and it’s competitors have a bumpy road ahead of them because of the economy, it’s most likely that they may suffer along with the rest of them. Of course that is not the case all the time, but it can play into the price of the company’s stock.

When you go to build a position in the company, you must do it incrementally. You have to figure out how much you are going to invest in the company (usually no more than 20% of your portfolio). Buy 20% first just in case the stock pulls back a little. After a healthy pull back (typically 5-8%) you invest another 30-50% of your total investment in the company. if it continues to pull back, well then you buy the remaining shares to help lower your cost basis ( average price per share).

Another Stock market basic you need to realize is that there is no sure thing as a good stock tip. If anyone has inside information on a certain stock, they wouldn’t be telling you. It’s against the Security Exchange Commission law to divulge any information that could give anyone a leg up on the other investors. Martha Stewart went to jail for insider trading within her own company.

In future posts I will list a few other stock investing basics to help you get better and to make more money in the stock market.

I’ve lost money over the years and in the beginning in bothered me quite a bit. Whenever that happened, I’d look at what I did and looked to see where I went wrong. Sometimes it was my research wasn’t thorough enough, other times it might have been the way I bought into the company. There were also those times that I didn’t do anything wrong, but because of the condition of the stock market as a whole, I would be on the losing end. Either way, I learned something for the next trade. Education is the key to wise money investments especially when you’re a beginner.

In this post I want to talk to you about “core position”. A core position is the stocks that you originally buy at a particular price. I’ve mentioned before about buying your shares incrementally and not all at once. So the first batch that you purchased would be considered your core.

In this example I’ll talk about company “XYZ”, which has a a price per share at $50. For this example I will also state that the cash in my portfolio is valued $50,000.

I never put more than 15% of my portfolio in any one stock. With that in mind, it would mean that I won’t invest more than $7,500 in “XYZ”. That tells me that I can only purchase 150 shares of “XYZ”. My first purchase will be 50 share at the price of $2,500, while keeping the rest for later buy-ins. The stock drops $5 per share in the nest week. I will go ahead and buy another 25 shares of “XYZ”, which will cost me $1,125. Another week goes by and the stock has been going up and down between $45-$50. I will simply sit on the sidelines and wait before doing anything. If the stock takes a dive because the markets have dragged it down I’ll buy my next buy at $40, costing me another $1000.

I now own 100 shares of “XYZ” with my average cost basis being $46.25. I’ve only invested so far $4,625 into the “XYZ company. If I had bought all of the shares at once, it would have cost me $5,000 (saving me $375).

When the stock goes back up to $50, I’ll only sell 50 shares of the stock (the ones the I bought at $45 and below). I will make a profit of $375 for those shares that I sold. While at the same time I continue to hold on to the original 50 shares.

When the price drops back down to the $45 range I will again pick up another 25 shares and start the process all over.

It the price had gone up after buying the first 50 shares that would have been fine also. I would pick up another 25 shares at $55. Once it rose above the price I would either waited for the price to drop back at the $50 level or if it kept going, I would just ride out the gains as it went up in value.

If you want to make it trading stocks in the market then you will need to be aware of the dangers and common mistakes that the average trader makes when they make their trades.

I’m sure that you’ve heard many times that the basics behind trading stocks is to buy low and sell high. No kidding, I’m sure you already knew that even before those foolish commercials on TV told you that. It’s a little more than just buying the stock at a low price and wait for it to go up in value.

Many times you will get in a stock and afterward you watch it come down in value. That happens more times than I can remember. I’m OK with that because I don’t buy all my shares at one time. If I buy a stock at (100 shares at $15.00) and it drops down to $12.00, I don’t panic, I look to make sure that the company hasn’t done something wrong that would cause the price to drop. If the reason that the price came down was because of profit-takers as well as the market falling and taking my stock with it, I will go ahead and buy my next group of shares in that company. Let’s say I buy another 100 shares at $12, now my cost basis is $13.50 per share. When the stock goes back up to the $15 range or better, I’ll sell 100 shares and keep my core position.

If I was to panic and sell the shares when it dropped to $12, I would have been out $300 (100 @-$3). Patience is a virtue and is a necessity when deal with the stock market.

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.