A young investor’s decision

6 06 2010

When you are just starting out in the stock market, especially as a younger person, you have to make very good decision. You need to make sure you don’t let emotion make decisions for you, and I strongly advice you read multiple resources and books on any kind of stock market subject you can think of.

So say as a young investor, you know what kind of strategy you want to implement. You might say for example, you like the idea of day trading. Which is of course the strategy of buying and selling multiple stocks all in the same day. (Sometimes in the same hour) So now what? RESEARCH! If you have picked this strategy, and you did some research, you would know you can not truly be considered by law a day trader unless you even at least hold a minimum of $25,000. You must perform multiple trades in a day (though this is not a requirement) You would know what kind of analytical techniques are necessary to learn.

Now a very good decision would be to make sure that you are trading with capital that you can afford to lose. Because I’m not going to sugar coat it when I tell you, you will probably lose money. Unless you are a lucky person, you will have lost trades. This is actually a good thing though. Ask any day trader, he has losing trades every day, BUT here’s the difference, his winning trades out number the losing trades. That’s a big part of the day trading strategy we picked as an example. You make sure you make small trades (no trade should take more than ten percent of your total capital) and you profit off of the small percentage fluctuations.

Of course though the whole point of all that was to give you an idea of the things you should be thinking of when you venture into the stock market. You need to literally think of all the ins and outs of your strategy, and you need to think about your own tolerance to risk and stress. Not every strategy is for everyone….

One more consideration, take long term investment…This could be an extremely boring strategy, and not a very short term profitable one for sure. With this strategy, however, you eliminate a lot of risk, a lot of stress, and a lot of time needed to research. I can tell you a couple blue chip stocks right now you could throw some money in and see a yearly return of maybe 20%

So to recap, observe yourself and what kind of trader/investor you are, pick your strategy, and then finally research the strategy as much as you can everyday.

I hope you have enjoyed this post. Please leave me comments!


how to trade stocks for beginners.

5 06 2010
Trading stocks, options, and forex is a big big very big world. There is a lot to learn and if you are a complete beginner than I advise you to please research the hell out of it all. You can lose money if you are not careful.
This blog is in its infancy so to begin I just want you to have a few tips on understanding what kind of trading you really want to accomplish. Once you picked a strategy, research it and make sure its a strategy you want to stick with.

  1. Day trading. Day trading is the trading strategy that consists of waking up every morning, (sometimes at the crack of dawn) grabbing your cup of coffee, reading the latest trends, and start trading. You see day traders perform multiple trades throughout the day, sometimes 3 trades a minute, Maybe more, maybe less. The key here is they purchase multiple stocks and trade them on the short term. They won’t hold their position very long and sell as soon as they reached a desired profit. The reason they buy so many stocks is to reduce the chance of losers and let the winners ride an up trend. A little tip about when to exit, when you see one stock reach close to a 25% gain, take profit and leave. Here’s a tip for your losing stock, if your stock falls below 10% of the starting price, exit and take the loss. That is the beauty of day trading, it is a very stressful strategy, but can yield incredible results. It is not uncommon for a day trader to make over $500 a day…and that is an easy day. On the flip side of that, it is not hard to lose that much a day if you’re not careful and patient. The key to this is to not be greedy.
  2. Swing traders. Swing traders usually hold their positions for a few days. It is like day trading, but on a longer scale. Here you are looking for more of a trend that will develop in days not minutes. It is easier to use technical analysis with this trading strategy. Look for stocks that you think may rise in the next few days. There is a ton of information on how to identify stocks that will rise. The information is too great for me to go into detail in a short amount of time.

3.  Long term investors. These are the people that are in it for the long haul. They are not persuaded by simple daily fluctuations. They watch the news regularly to see what is going to happen. If you plan on making good profits with this strategy, you need to invest a good amount of money into blue chip stocks (big companies like apple, ibm, etc) The profit increases on these companies don’t rise very much, sometimes only a few dollars a stock a day, if you are lucky that is.

so that’s the gist of the basics. There’s a lot to cover though, and I plan on covering more every day in this blog.