There are four lessons you should learn before you get involved in dividend investing.

1. There are no guarantees
Many people decided to ignore this lesson in the years before the recession hit. While collecting interest on other investments, such as CDs and bonds, is something you can count on, the same is not true of dividends. The board of directors get to decide whether or not shareholders will be entitled to cash dividends. Most companies recognize that it is in their best interest to maintain or ideally increase payouts. Continuing to pay dividends is a good sign of a company’s financial health. A financially strong company can also attract more investors, enabling them to grow.

2. Do not go after high yields
In the last few years there were many investors that got too greedy and started taking higher and higher risks to find yields that were acceptable. This was possible because interest rates and market yields were very low. However, this turned out to be a bad decision in the long run. To minimize risk, investors should avoid any yield higher than 2.5 times market average. For example, the current market average is two percent, therefore you should stay away from anything five percent or more.

3. Cash flow is king
Do not just look at a company’s earnings this year, but also look carefully at the cash going out and coming in for the last five years, at least. If you focus just on earnings, you will not have a good picture of a dividend’s sustainability. Also try to account for capital expenditures as well. The remaining amount is called the free cash flow and is what the company has available to either pay dividends or buy back shares. Also check how much the company pays out in dividends every year. The free cash flow needs to be greater than the dividends paid so the company can maintain dividend payouts.

4. Don’t put your eggs in one basket – diversify
No matter what the current financial situation may be, diversifying your portfolio will help you weather even the toughest situations. Diversification is the basic rule in your building your portfolio and this is a lesson that should learnt in your stock market basics class. The financial industry was hurt worse than others over the last few years, and even those who diversified were hurt. However, they were also less affected than people who put all their money into high yield financial stocks. Diversifying is still important even if the yields are lower.

These four tips will ensure that you have a much easier time building your portfolio. You will be able to find companies that have a sustainable dividend payout with a higher than average yield.

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.

Where to go to get good information? Well that could be anywhere. I’ve learned to take information from all sources to assist me and my trades. The one thing to keep in mind is to make sure you follow up on the information to assure that it’s correct and valid. There are more mistakes made in the stock market than there are not. Traders and Investors make mistakes everyday and that’s just the way it is. To help limit your mistakes, you need to do your own research and due diligence before you invest.

Getting stock tips are not the only information you should be looking at when it comes to buying and selling stocks or investing your hard earned money. What about the condition of the economy? Is it stable? See what’s going on in Washington. If the U.S. Treasury is printing out money like it’s going out of style, then realize that the dollar isn’t worth what it was before the increase of currency. Unemployment plays a major role in the condition of the markets and when you see the unemployment rate climbing, then it’s going to push the overall markets down.

What about the new tax laws (or the end of old tax breaks) that will effect your gains? In 2011, the Bush tax credits will come to an end and traders as well as investors are going to pay more in capitol gains taxes. The will be increases across the board when it comes to investment taxes. There will also be increases on dividends.

Have you given any thought about investing in precious metals? Gold, silver and platinum are a good way to hedge against the falling dollar. No matter what happens to our currency (or any other), gold will always be the investment of choice when the economy is getting worse. Gold has been a great investment during those times of trouble.

Just remember that looking for stock market information, you need to look further than just a bunch of stock tips.

A great and popular stock investment software on the market right now is the StockPicker RT. Recommended by most financial analysts, it scans the current market status on a daily basis and points out companies that seem to be worth investing in. It bases its data on the type of trading that appeals to you the most. The product has been praised for its ability to help you both earn and save money, and keep you away from potentially bad investments. It was awarded the Best-Selling Stock Picking Software award by Investing Network Inc. in 2006.

Another great piece of software is the Stock Signal Pro, which is available from most retails for an affordable price. It is specifically designed to stop you from buying too early or buying too late, maximizing your overall investment in the long run. It gives you alerts for when it believes you should buy and sell, and tracks all your favorite stocks on a daily basis. It lets you know which stocks are on the way up and which seem to be faltering, and also gives you calculations of how much money you can make or lose depending on the stocks you choose.

Playing the stock market is a risky business, but it can ultimately be incredibly rewarding in the long run. Buying stock in a company shows your support and dedication towards them and your confidence in their stable financial future. You could make serious money by playing your cards correctly and making the right decisions when choosing your stocks. These stock market trading software programs can help put you on the right track. The two products listed here are just a select few of the many different programs that are available to you at affordable low prices. Do some research and decide which program is the best one to suit your interests. Good luck!

Globally, stock markets have been performing pretty well in most of the countries, especially, India and China. However due to the economic downturn in the United States initiated by the sub-prime crisis, the stock markets of the US have not yielded much return to their traders and investors.

This gives rise to the role and importance of stock market trading software. Stock market trading software is extremely essential for the investors, and more importantly for the short-term traders because all different types of calculations have to be done before entering into a particular stock.

One such software available in the market is the ‘JStock’. It consists of a watch list for stocks, a snapshot comprising of the Intra-day price movements of the stocks, a Stock market indicator. One can sign up for receiving alerts via both SMS and e-mails. There are features for managing the portfolio as well as giving useful tips. People have found it to be one of the best stock market software ever. Traders have reviewed that the technical analysis done by this software has really helped them in taking intra-day decisions.

Atomic Trade Pro is excellent stock market trading software specially designed for traders and investors of various risk appetites. It encompasses some magnificent tools for designing charts on the basis of predications and researches will be made. It comprises of a predictive score which is built on the basis of advanced technology by the usage of neural networks. One can do the trend analysis for the markets with the help of this software thereby helping in the buy/sell/hold decisions. They are beneficial to traders not possessing very honed analytical abilities to predict the movements of the markets.

E-Gate is comprehensive stock trading software which provides the traders and investors with web-based service for getting the quotations regarding the real-time stock price movements. The software is totally reasonably priced and will not pinch the pockets of the trader. They not only do a thorough technical analysis of the stock, but also conduct give indications of the fundamentals of the stock, thereby enabling decision-making with respect to the stock. They also provide latest news about the company and its corresponding stock. Fibonacci tools are used in this software along with different chart tools like OHLC, Candlestick and Close Line. One can also check his profit and loss statements by exporting the entire sheet on an excel file.

Basically stock market software should provide indicators for studying the Price-to-Earnings Ratio, Earning per share and the different trends the stock has shown over a period of time. They should also help the Pigs, i.e. the investors with a very high risk appetite to take decisions quickly so that they can make big money in a short period of time. For all these reasons, the need of stock market software has increased over the past two decades.

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.

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.

1. Research and Due Diligence
This is a must if you want to be successful in trading stocks and investing in your future. Before you buy any shares of any company, you must know how fundamentally solid they are as a business. Look at their balance sheets and their financial reports. Any company traded on any of the major indicies must report periodically to the Security and Exchange Commission (SEC). Are they profitable? What kind of guidance are they given for the near (next Quarter) and the distant (annually) future.

2. Buy and Hold
The name speaks for itself. Once you find a company that has great growth potential and has a good grasp of their industry, you buy stocks of the company and hold on to them for a long period. This strategy doesn’t work out in cases where an investor puts his money in just before the markets go through a correction period like we saw in 2007 -2009.

3.Day Trading
Another strategy that isn’t hard to understand the concept by the name. This type of trading is not wise for the new investors and traders to get involved with. You need to understand the markets as a whole before doing so. In a unstable market, the price per share for most companies fluctuate greatly to give opportunities to experience traders to make money

4. Trailing stop
I like doing this type of treading in almost any type of market. In doing a trailing stop you are trying minimize your loses especially when you don’t have the time to monitor your portfolio on a regular basis.
When you put in a buy order (limit or market) with a trailing stop you must include a sell activation price too. If you buy 100 shares of XYZ Corp. at $35 per share, and you set your sell price by either percentage or points of the price of the stock. Let’s say we put a trailing stop of $1.00. as the price moves up in value, the sell price moves up also. If the stock moves up to $40 per share your sell price will be $39. If the stock comes down without going below the activation price if $39, you will still hold to those shares. Once it falls below the activation price, the sell order will trigger.
If instead it never falls below $1.00 of the highest price it hits once you’ve placed the order, you will continue to make gains in the stock and minimize your loses.

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.