How to Be Good at Stocks
If you want to trade stocks successfully, there's a few techniques you should learn and a few guidelines you should use and apply to every trade you make. You don't have to be Warren Buffett or Jim Cramer to be successful in the stock market, just like you don't have to be Bill Gates or Steve Jobs to have a successful computer or internet business. Anybody can win in the stock market, as long as they know what they're doing and make wise decisions when trading.
Don't Let Emotions Affect You
Your number one enemy when trading stocks is your own emotions. We as humans are emotional by nature, and this plays a huge role in how many people choose to operate financially. The stock market makes and breaks people every single day, and most of the increases and decreases you see in a stock's price, are related to people's emotions. If bad news comes out, people get nervous and dump their stock. If a person is familiar with a brand and visits a store everyday, like Walmart, they may be more likely to invest in that stock because they are emotionally attached to it. They feel a sense of familiarity with that brand, and so they choose to invest in that brand over many other choices. This can be good because they can be more familiar with a companies strengths and weaknesses. However this can also be bad because a person may be putting their money on a company purely based on emotions, which can be catastrophic if it's a company that is not financially sound or making progress.
Play it Safe
If you want to gamble, then you should place all your bets on a single stock and look for the hottest stocks and biggest daily movers. But if you want to play it safe, then you may want to avoid investing in newer up and coming companies. While the daily movers and upstart companies can bring in much bigger gains, they can also bring in much bigger losses. If you want to use the stock market to get rich quick, this advice doesn't apply to you. Just be careful, because those who are trying to get rich quick can often turn out to be the ones who lose it all.
Stay tuned in to your stocks and stay on top of the situation. The stock market is constantly changing, consistently fluctuating. Anything can happen to your stock at any time, and you need to realize this if you want to succeed. It's best to stay informed, by keeping track of what's going on with your stocks. If something affects your stock halfway through the day, you need to know about it. But while it's best to keep an eye on your investments, you don't want to overdo it and get nervous too easily. Many people end up making mistakes in the stock market, because they are nervous when they are trading and very jumpy. So you'll want to find a comfort level, but find a position that is in the middle. This way you're still on top of things, but not too comfortable or too nervous.
Watch the Share Volume
I hate to admit it, but not everybody who trades stocks is an honest person. In fact, there was a way to see all the people in the world who trade stocks, face to face, I bet you'd find more dishonest people involved in the stock market than you'd find in any public grocery store or shopping mall. This is because of all the money involved in stocks, and the cunning business-type people that you usually find around large sums of money. Most of them do not like to bet on something unless it's a sure thing. So while the SEC does try to catch people who are partaking in insider trading (Martha Stewart for example), they can't catch everybody. This is why it's always best to keep your eye on a stock's share volume. Whenever you see a large drop in share volume in a single day, without any current news updates that could have affected the stock, it may be an indicator that something is about to happen. The same could be said about sudden, large increases in share volume as well.
Divide Your Money
This is also called Diversifying. This is one of the more important lessons that every stock trader must learn. It's not safe to put all your money on a single stock, and many people have found this out the hard way. It's best to spread your money out and invest in stocks that belong to different sectors. If you split your money up and decide to purchase two different stocks, don't just purchase stocks in the same sector. For example, let's say you purchase some shares in a stem cell company, don't go and buy more shares in a different stem cell company. If you must invest more money into the market, try to diversify and instead of buying another stem cell stock, maybe try a technology stock, or a natural resources stock. Just make sure that you don't diversify too much. If you divide your money into separate stocks, try not to divide it so much that you have trouble with watching over each stock. You should always be able to pay close attention to your stocks, so you know what's going on with them.
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