Investing in the stock market used to be something that almost every American wanted to be able to do either for themselves or with a broker via single stock trades or mutual funds. One of the biggest barriers to investing in the stock market for most people (after the necessary capital to invest) is the lack of knowledge as to how to invest properly to make profits in the. This is no different when you are a day trader. Most people think that you can call any broker and they will be able to make money for you. That is the farthest thing from the truth. Their goal is to make some money for you and more money for themselves.
Following are several stock market day trading investment pitfalls to avoid. The first investment pitfall to avoid is not having enough knowledge about what you are investing in. The best way to make sure that you will pay the best attention to your investment is to put your money in a business segment that you have interest in, not just business that someone recommends because it is the latest ?hot? industry. Too many hot industries cool off rather quickly and can lose a great deal of money for people in a short period of time. If you already enjoy reading about a particular business channel then you will have a better feel for how the companies you are investing in will perform as time goes on. You will be able to pick up trends and make trades accordingly that will allow you to make money on your stocks.
Another one of the stock market investment pitfalls to avoid is the tendency to go for the high yield stocks (that is ? high risk stocks) to make money in a short period of time. Keep in mind that high yield and high risk can lead to very quick high losses. If you are trading on margin you should especially avoid extremely volatile stocks or at least protect your self with puts and stops on your day trades. Too much risk in your investment will also cause a great deal of stress; not only for you, but for your family (read spouse) as well. This can lead to ill advised trades to make up for losses that will only lead to more losses.
Other stock market investment pitfalls to avoid are listening to the consensus. Common market advice is to sell when optimism is at the highest and to buy when pessimism is rampant. When people are pessimistic about the market it is probably at its low point and you can buy low and sell as it rises. Avoid greed when deciding when to get out of an investment position. If you think it will go a little bit higher it is time to sell. Also do not try to wait out your losses in the hopes that the stock will rise again past your original buy price. Avoid these stock market investment pitfalls and you can be sure to not lose money and you may even make a little bit as long as your information is up to date.
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Source: http://stockapi.com/stock-market-day-trading-pitfalls/
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