Stock Investment Tips
For anyone looking for stock investment tips, you need to be careful with the information that you receive. I’ve been investing in the stock market for many years and in the beginning I didn’t know what I was doing. What I did to get some help was to approach a co-worker that was trading stocks for decades and has done quite well for himself. I asked him if he would mentor me. As it turned out, he enjoyed talking about the stock market and all things dealing with investments. For months we spoke regularly and I listened to everything he had to say.
Unfortunately not everyone has the opportunity to have someone mentor them, but that doesn’t mean that you can’t learn on your own. With all the information on the internet as well as books and news networks, you can learn so much.
In my opinion, principles are more important information to learn than actual investment advice. When trading stocks, you must follow a solid line of principles if you want to be successful. Not every trading technique is 100% successful, so you need to know when to get out. That also includes when you’ve made some great gains. Here are a few of my principles that I stand by when buying and selling stocks.
1. Before you ever make your first trade, you must do research into the company that you want to invest in. Read the company’s quarterly report, find out about their balance report and their financial statement. See if the company has a high debt-to-income ratio. Doing your due diligence will help you make the right choice when you get ready to buy.
2. Never “fall in love” with a stock. Bringing your emotions into the stock market will burn you every time. You buy a stock because the company has strong fundamentals, and a positive cash flow not because you like it for some emotional reason.
3. Don’t buy all of your shares at once. If you plan to buy a total of 100 shares in a company, buy them in increments. Stock prices fluctuate all the time, so if you buy them all at once and then the stock price drops 5%-8%, you won;t be able to purchase some more shares. I start off buying 50 shares and if the stock price drops, I can pick up more at a lower price which will lower my cost basis.
4. After you buy shares into a company, you must continue to do your research about the company and their activities. I invest an hour per week per stock towards research and following the the stock movement. This way you’ll know if you need to sell off you investment before you loss too much or if you should buy more shares in the company.
5. There will be times when you will make great gains and must be disciplined to know when to sell. You can not be greedy when it comes to stock trading. If a stock price gains 15%-20%, I sell off at least 50% (sometimes all) of my investment in the company. Typically after a stock has moved that much, investors start taking profits. You can not try to “catch the top” of the stock, it’s not worth it. When the price has a 5%-8% pullback, I will start building a position in the company again.
Following these principles will help you be a better trader. Just make sure you stick to your principles if you want to make money in the stock market.
Tags: debt to income ratio, financial statement, income, investing in the stock market, investment, investment advice, Investment Tips, Investments, positive cash flow, selling stocks, Stock Investment Tips, stock market, stock price, stock prices, trading stocks
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