In today's article I though I would change it up a little and share with you some tips that I wished someone would have shared with me when I first got started. While these are not hard and fast rules, let them sink in and then make them your own.
- As a new investor, be prepared to take some small losses. We can all live through small losses, we cannot afford large ones for very long.
- Always cut your losses at the same point. Many educational services will suggest 7-8% below your purchase price. This inst set in stone. Find a range that works for you and stick to it.
- Persistence is key when learning to invest. Don't get discouraged. No one masters anything overnight. Stay patient and know that many others have achieved what it is you are attempting.
- When getting started, it is important that you pick a brokerage firm that has more than you think you need. As you grow you may want to take advantage of the additional tools and resources.
- As a beginner, set up a cash account, not a margin account.
- It only takes $500 to $1,000 to get started. Experience is a great teacher and it doesn't need to cost you a lot.
- Avoid more volatile types of investments, such as futures, options, and foreign stocks. I like to say "let more advanced products come to you". In other words, you will know when you need them.
- Concentrate on a few, high-quality stocks. There's no need to own twenty or more stocks.
- Don't get emotionally involved with your stocks. Follow a set of buying and selling rules, and don't let your emotions change your mind.
- Don't buy a stock under $15 a share. The best companies that are leaders in their fields simply do not come at $5 or $10 per share.
- Learning from the best stock market winners can guide you to tomorrow's leaders. Study, study, study.
- Always do a post-analysis of your stock market trades so that you can learn from your successes and mistakes.
- A combination of fundamental and technical investment styles is essential to picking winning stocks. Fundamental analysis looks at a company's earnings, earnings growth, sales, profit margins, and return on equity among other things. It helps narrow down your choices so that you are only dealing with quality stocks. Technical analysis involves learning to read a stock's price and volume chart and timing your decisions properly.
- To make big money, you have got to buy the very best companies at the right time. Strong sales and earnings are among the most important characteristics of winning stocks.
- Always pick stocks from the leading industry groups or sectors. The majority of past market leaders were in the top industry groups and sectors.
