When I first started trading the stock market, there was not the wealth of information available online like there is today. I read a lot of books and learned the terms and thought I knew everything necessary to make my fortune trading the market. I found a discount broker and started plugging away, and immediately lost my shirt.
Even though I had read these same tips in numerous places, I really didnt understand the importance of them until I had learned them the hard way. As they say, experience is the best teacher, if you survive the lesson.
These are things that I wish I had really used when I first started trading.
1.Never invest money you cant afford to lose.
2.Never invest money you are afraid to lose. If you are too uptight, you are guaranteed to make bad decisions.
3.Never buy a stock you receive in an unsolicited email or in a mass mailing. Many times, these turn out to be low cost, thinly traded penny stocks that some one is trying to pump up the price and dump them.
4.Most of them time, you should not buy stocks at the open of the market. The first hour of the trading day typically has a lot of volatility. Stocks tend to stabilize after the first hour; you could end up paying too much trying to get a stock, only to have it settle down in price 30 minutes later.
5.As a new investor, never buy stocks on margin. It is ok to have a margin account; just dont use the margin until you have enough knowledge to keep yourself out of trouble.
6.Dont worry if you think you just missed the biggest trade of the year. Never chase a stock trying to get on board, if you wait 30 minutes, another trade will come along that is just as lucrative. (This one tip would have saved me a fortune)
7.Learn how to use a trailing stop. Immediately after buying a stock, put in a stop loss order, and keep raising the stop limit. This will preserve your gains, but more importantly will preserve your capital.
8.Never buy until you have determined when you are going to sell. You need to know what point you will accept a small loss and move on. Then when you buy, keep that stop loss point; never change this point in the heat of the battle, because this is guaranteed to cost you money.
9.Never get greedy. The old market saying is Bears make money, Bulls make money, Hogs get slaughtered is very true.
10.Dont treat the stock market like it is your private Las Vegas gambling casino. Its ok for a small portion of your portfolio to gamble, but its called investing for a reason.
If you follow these simple tips, they will save you some of the misery that I went through early in my trading career. Try not to get bogged down in all of the information overload that is coming at you from all directions. Slow down, there will plenty of good trades available to you tomorrow, if your trading capital is still available.