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Do you want to start a stock trading investment by yourself? But worried that you would lose money? And not sure how or when to start? There are several things to think about before jumping into the stock market. If you do it right, the stock trading is rewarding investment, but if you buy stocks without preparation, you will lose the money. Take my three simple advices to buy stocks.
Start with extra money that you would not mind even if you waste all. In the bull market, the prices keep increased, and it feels like the great opportunities are slipping away. So they tend to put large amount of money, even borrowing money by using the margin account. And they end up paying off the dept. Even if the market was sunny today, there could be storm coming on the next day. Believe me, the feeling would be devastating when your stock drops 50% or more. Remember Netflix? It was almost around $300 but fell to $70 range. Always start with minimum amount of money that you are comfortable with.
Monitor the major stock indexes. And buy stocks in a bear market. The market is always about the fight between the bear and bulls. Year 2008 and 2009 were for the bear, The period 2010 through the 1st quarter of 2011 was for the bulls, but eventually European financial problem lead the market to bear during the second half of 2011. So I think it's time for the bulls to run. But when do you jump in? You need to periodically monitor the Dow Jones industrial and S&P 500 points. You can easily find the long term chart graphs for the indexes with additional technical indicators such as RSI7 or MACD. When you have low RSI or MACD for longer period time, I say that would be a good time to buy some value stocks. When the technical indicators remain on the upper side over 70, you should just wait until the market excitement settles down.
Choose a large value company if you are a novice. In the past, I have bought some never-heard-of company stocks after reading blog article advocating possible 10 bagger ( Earning 10 times). Especially the penny stocks. But the result was terrible. The price fluctuation is too severe for regular people to handle. One of the penny stocks was going out of business completely. I mean they are penny stocks company, so they are very dangerous for the long term investment. So my suggestion is to buy a good valued company such as Google, Apple, and IBM when they are cheap during the BEAR period. And it is for sure that they would not likely to go bankruptcy.
Thank you. That was the major three ideas for staring stock trading. To buy stock, you would need to do some study to make money, but it is surely worth the time. Please check out How to buy stocks blog. It has the detailed information on what to do to start trading stocks.
