One strategy that should be followed is never investing all of you capitol into one or two companies. The typical amount of money invested in a company should not surpass 20% of your total portfolio. Keeping your portfolio diversified will help prevent major losses during any particular time. Invest your money within several different sectors (ie: commodities, equities, precious metals and bonds).

The buy and hold method is a strategy that doesn’t require too much work. Yes of course you’ll still have to do your research into the fundamentals of the company. What I don’t like about this type of investing is the fact that you are not paying attention to what is really go on with your investment. If you what to make the most out your investments, you need to be active and watch what the company as well as the overall market is doing

Shorting stocks is one of the more popular ways to play the market. The idea is that a trader believes that a certain company’s stock price is going to go down in price. A treader will go ahead and borrow share from an investor. Within a certain period of time, the trader will have to replace the shares he borrowed. The trader in turn sell the shares at the current price. When the price per share has dropped, the trader will buy shares to return to the investor. This type of trading is not for those who are just starting out in the stock market. You’ll need to get a good understanding of the stock market before you start shorting stocks.

After you’ve been trading stocks for some time you might want to look at day trading. Be careful though, many average investors have lost more money than they’ve made doing day trading. You need to be quick and alert to what is going on in the markets on a daily basis. Many day trader will trade penny stocks because of the higher percentages that can be made in a day, but you can lose just as much just as quick.

Whichever stock market trading strategy you decide to use, make sure you do your due diligence and follow the news on the companies you’re invested in.

When I started trading stocks years ago, there weren’t so many websites available that I could go to to get my research done. I used to (and still do) subscribe to IBD (Investor Business Daily). A newspaper which would cover everything I needed to know about the stocks I was investing in as well as other that I was thinking about building a position in. I would also call the companies and speak to the Chief Executive Officer (CEO) or the Chief Financial Officer (CFO). As years went on that all changed. I can now go to dozens of websites to find everything that I need to know about the stock market. I do on some occasions still call the company to get a good idea of what the company is up to.

But what websites do you go to to get what you really need and omit the unnecessary information? Everyone need a stock market guide to help them make the right decisions, but be careful. I know that there are many sites out there that offer to send you e-mails on a daily basis to clue you in on the hottest stocks of the day, but the problem is that most of them are only out there to make a buck for themselves.

The internet has come so far that every company (big or small) has their own website. That is one of the first places you should go when you’re doing your research on a particular stock. If you what to know which ones I use, it will be a very short list. There are only two websites that I use to get any news wire information on a daily basis. The first one is Yahoo Finance and the other is TheStreet.com. Both site offer many tools and up to date information on all stocks that are traded on the major indicies as well as the Pink Sheets and OTC:BB (penny stocks) Why else go anywhere else with two great sites?

Using other websites can give you more work than you need to do when it comes to doing your research.

First, one must understand the basics and the foundation of stocks. Stocks are nothing more than parts of ownership in a company. Basically, a company offers stocks to the public to finance their company. Buying stock makes you a shareholder, and in essence, you own part of the company even if you are buying penny stocks.

There are different types of stock that one could buy. First is common stock. Common stock is exactly as it is stated, common, and holds no preferences. When the company offers a dividend, you are entitled to it. The next step up is preferred stock, which means you get a higher priority when it comes to dividends, meaning you get paid first.

Voting / participating stock is also available, where you can vote on issues of the corporation. Stocks of large publicly traded companies are traded on the open market, at such places such as the New York Stock Exchange, NASDAQ, etc. At the New York Stock Exchange, deals are done face to face in person. Prices are determined by an auction format in essence, meaning whoever pays the most, gets the stock. While this is going on, people can sell stocks at that price, and you are actually “trading” stocks. You may never meet the person you are trading with, but in essence that is what happens in two separate transactions.

Stocks can change constantly, due to many different things. It works on supply and demand, meaning if more people want a stock, the stock prices go up, and conversely, less interest equals a lower price. The most common way to purchase a stock are through brokers.

There are in person brokerage companies, such as Merrill Lynch, or you can go online and trade online yourself or through a broker. Online sites such as Scottrade, Etrade, etc let you trade stocks on a real time basis, and only cost a few dollars per trade. Many people may be enticed to buy penny stocks, but those are almost a sure bet to make you lose money.

Overall, there are some basics that were outlined that are important to trading stocks, but to really be successful, there is a bunch more to learn.

What is a penny stock? A penny stock is just like any other stock that you would buy in a company. The difference is the value of the shares in the company. Basically it’s a stock that is valued less than $1 per share (some would say less than $5).

When you look into penny stocks online, you mostly see these site that tell you that they made a 300% gain on a stock trade and typically that can happen when you deal with stock shares that are less than $1. If the price per share was $0.25 and it gained $0.15 in one day (which could happen a does), you would be up 60%. Quite often stocks that are valued in this price range will have those types of moves, but what often happens is that in just a few days of gaining anywhere from 60% to 150% it will drop back down to it’s original price before it made those gains.

Penny stocks are usually companies that are relatively new and are trying to raise capital to increase the size of their business. Since they are new it can fail in it’s attempts and close their doors forever. How do you know which companies to invest in when you want to but into these types of stocks?

Research is the key. Most times it’s hard to find any information out on these companies because they are new. Most of them don’t trade on the big boards (DOW, NASDAQ), so they don’t really file their financial reports on a regular basis. In some cases you will find that these companies don’t even operate in the United States, so they don’t follow the rules of the SEC (Security Exchange Commission).

What you can do at times (which is something that I do), is to call the company and talk to the highest executive that you can to get a feel for the condition of them. You will be amazed to see how much you can learn from the person with just a few phone calls. I do have to say that if you call, you must let then believe that you are a shareholder or they’ll think twice about really talking.

Be careful when dealing with penny stocks, you can get burned more times than hitting it big. Remember, it’s estimated that nine out of ten business’ fail.