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Stock Market Tips

The stock markets are at all time highs and just like the last time around when the market was at its previous high every one thinks that nothing can go wrong and there is just one way where the market can go which is UP. Nothing could be farther from the truth and this will be clear from the way the market behaves in the next few months. Here are a few tips that would hopefully save you from losing a lot of cash in the current frenzy.

Time and again investors have burnt their fingers in the markets and here are some tips to you so that you do not end up burning your fingers in this market.

The number one tip at this point would be to sell if you have stocks and not to buy them if you have cash. The golden principle in the markets is “Buy when everyone else sells and sell when everyone else buys”. Simple enough right? Not really. Why? Because of peer pressure pure and simple. When everyone else around you seems to be having a ball at the markets you would feel like a fool if you didn’t participate now.

OK so you can’t resist buying at this time then at least do yourself a favor and stay away from unknown Penny Stock and hot tips that your barber gave you. True that the stock has tripled in the last fifteen days but that was before people like your barber started buying the stock. Chances are that the Promoter of the company have started buying into the stock and have spread rumors like acquisition or a big export order to fool investors and sell out to them at a later date.

Another tip that would serve useful is to value a stock based on its future growth and not its past performance. For instance many investors say that I will not buy stocks of X company because it has doubled in the last year. Well it may have doubled in the last year but that should not be the thing you should be telling yourself. Rather you should ask yourself why has this doubled in the last year and can it do so again? There should be a solid answer to your question like the launch of a new product or reduction in the prices of raw material. And indeed if the answer is in the positive then by all means go ahead and buy that stock regardless of what has happened in the last year.

Another tip would be to remember what you are buying. Quite simply investors often forget that when buying a stock they are simply buying ownership in the companies. Most of you would know that nothing spectacular would happen in the company that you work for, in a month, they are not going to double their revenues and certainly not double your salary every month. Then why expect anything different from the companies that you are investing in. Why expect the prices to double in a month or two. Give time to your investments; don’t reduce it to a gamble. Only when you invest in fundamentally sound companies and then give the investments sufficient time to grow will you see some healthy returns on your investments. Ideally a minimum horizon of one year is a good time.

Hope these tips will prove helpful and you will make a lot more in the stock markets than you have already been making. Happy Investing!

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What Stock Market Risks Are You Willing to Take?

Stock market trading can be a difficult and risky process. Investing here is not for the faint of heart, especially for those with less disposable income. Some stocks are clearly a higher risk than others.

Consequently, it is important to ask yourself whether you are willing to venture into some risks with your money to determine if the stock market is right for you.

If you are a risk adverse person whose stomach churns when taking chances with money, then you should probably avoid the stock market altogether. However if you don’t mind at least some risk, investing at least a small portion of your money might not be a bad idea.

Of course there are innumerable investment options outside the stock market that are lower risk, such as CD’s and mutual funds. So it is not like publicly traded stocks are your only investment choice. Don’t allow yourself to be pressured into ANY investment you’re not comfortable with.

Do You Enjoy the Thrill of Gambling?

If you are the type of person that loves taking risks – for example, playing casino games – then you would likely enjoy trading volatile stocks rather than going for less risky alternatives. Volatile stock options are more unpredictable than the rest of the market, but some of them also hold the potential of being a gold mine.

Before drooling at the thought of winning it big with stocks, high risk investments also have a lot of potential negative consequences. So on the one hand, you could wind up with a lot of money, but on the other, you might well lose most of your stock investment. And with risky stocks, there is often almost no way to accurately predict the outcome.

For the wild ‘n crazy, it is easy to become addicted to the short term trading options, known as “day trades.” These can be every bit as addictive as gambling in a casino, potentially leading to devastating consequences.

Keeping Your Emotions in Check

It is very easy to become too involved with gambling and just lose everything you have. You might tumble into major financial troubles when taking on too many large risks. If you ever get to a point of finding yourself not being able to stop making risky investments, then you may need to seek help just as you would for a gambling addiction.

If you’ve had problems with gambling in the past, you definitely should try to stay away from the risky day trade investments. They are never a good choice for someone who is already a high risk for a gambling problem.

Day traders have such a high potential for addictions to their trading that there is even a specific support group in Gambler’s Anonymous for people addicted to day trades.

Having thrown up some red lights above, the risks of the stock market don’t mean you should avoid it completely, but they do mean you need to be careful with ALL decisions you make when investing money in stocks.

Stock Market Investing – Planning Your Financial Success

Making money by trading in the stock market requires learning just how the market functions and using prudent strategies to gain a great return on your investment.

You need to become comfortable with the basics of stock market terminology and strategy to help determine how to approach your investment strategies. Upon understanding the basics, you can learn how to maximize trading opportunities for maximum gains. The stock market is definitely NOT a get-rich-quick scheme.

How to Succeed

It is nearly impossible to be successful with trading in the stock market until you know what you are doing (though some claim a monkey throwing darts at a “buy” or “sell” target could be as successful as any investor – but that’s another discussion…). Success requires proper planning and preparation as well as a great deal of knowledge about the market.

You need to make calculated, well-informed decisions to succeed with your investments while learning what to trade, when to trade it, and what techniques and strategies to use for maximizing the return on your investment.

Following are a few skills and techniques to help improve your stock trading proficiency.

Learn the Right Timing

You want to gains a sense of how long to hold on to your investments before selling. Knowing whether to hold onto your stocks for only the short-term or to hang in for the long-term is one decision you have to get right – at least when you have a lot of money invested.

A successful trader must be able to discern when the timing is right to buy, sell or hold. Timing is everything in the stock market, because selling too soon or late can make the difference between earning and losing money.

Make Decisions Based on Logic, not Emotions

All your decisions should be made based on a prudently calculated decision that takes into account all pertinent factors of the stock market. No matter how tempting it is to act off a hunch or your emotions (“This one’s a winner – I feel it in my bones!”), you should do your utmost to avoid it.

Sometimes your intuition may be right, but you want to be extremely cautious when making rash, expensive decisions.

This principle goes both ways: you also cannot allow your emotions of fear to paralyze you from making good, solid moves. Some decisions may be difficult due to the risk involved, but may be the best choice in the long run – such as “cutting bait” and selling when your stock price is spiraling downward. Weigh both the likely short-term and long-term scenarios.

Permitting your emotions to guide your decisions may work in a card game, but it’s a recipe for disaster in stock market trading. The best decisions are made drawing conclusions from the enormous amount of available data you have about the performance of the stock market and the specific stock you own.