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Apr/10

22

Basic Stock Market Trading Tips

Staying away from bad practices in stock trading refers to acting on a tip from anyone who you do not know will give good advice.  Stock trading can go bad quickly without proper knowledge. Avoid being a day trader, spending all day in front of a computer, trying to buy low early and sell high before the markets close. It is more related to playing slot machines rather than investing. This rarely yields satisfying returns, losing a lot of money fast. Also avoid penny stocks, often promoted by companies paid to send tips via email, it’s a fundamental error.

Practice, study, and learn to increase your income.  The internet will often offer numerous free sites where beginners can enter favorite stocks in a portfolio, watching what happens over a period of time, but the longer the better. Know the stock being considered, about the company and study its history as an investment. Get an idea on what experts say and don’t bet with any single one.

Diversification is important- because different types of stock follow different patterns of growth.  Companies in a sector may or may not follow the pattern set by other stocks. Some stocks will rise and some will fall within a diversified portfolio, but the average movement should be positive.

Investors should know themselves – investing always involves risks, be aware of your own amount of risk tolerance. A lot of people want to get into the stock market for there is money to be made. It takes a little knowledge and awareness about risks and market behavior. Familiarize yourself with the terminology and about the stocks. Do not speculate with the stocks, rather you should develop a strategy that works.

In order for you to make money with your stock trading, you need to have the proper amount of discipline.  You need to be able to make good decisions early, and stick with them.  On the other hand, if a decision looks bad, get out early.

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