Land Shark: Core Foundations of Trading
By: Jon Harris
Stock Market Investing Tips
Being a successful stock market investor is no easy task. Millions of people buy and sell stocks and closely follow the stock market with great success. We all can successfully follow the stock market by following a few simple principles. Developing a great investment strategy is the first thing you should do before investing in any stocks. You need to learn to follow the stock market regularly and alway avoid any financial risks.
- Never Take Unnecessary Risks.
We all have a risk tolerance where you feel a certain level of anxiety based on the risks you are taking. As you become a more experienced investor different stock investments may seem less risky to you. As you gain more knowledge on investments the stock market becomes less risky because you have a better understanding of different markets rise and fall. Just because an investment may seem less risky doesn’t mean you should be open to it. You should always avoid any investments that makes you feel uncomfortable. You should never invest in stocks based on your emotions. When you are anxious you may begin to fear taking certain risks. You always want to have a clear head when you are investing in any stock. You shouldn’t develop an emotional connection to a stock, or just decide to gamble all your money away hoping for a successful outcome. You should always use logic and analytical reasoning when deciding to sell or trade stocks. Always remember to control your emotions and make logical decisions. Never make any investments based on rumors, speculations, or personal beliefs. The entire stock market is based on the emotions of investors. When investors feel uncertain about a specific stock, its stock price will probably decline;and when investors are very positive about the outcome of a stock, the stock price more than likely will rise. Emotions can drive investors crazy. Deciding on selling a stock to avoid a potential loss will make some investors feel uncertain and uncomfortable. When you feel uncomfortable and insecure you need to avoid making any rash decisions out of fear. If emotions are the main reasons for you actions, then you're doing something wrong. Just always remember to have a good logical reason for any of your investments. LandShark Education offers informative classes that offer great stock market investing tips that can help take your investments to the next level.
2. Learn the Basics
You should always take the time to learn the basics before entering the stock market. Here are some key terms you should know about:
Know the difference between market orders, limit order, stop market orders, stop limit orders, trailing stop loss orders, and other types commonly used by investors.
- Margin: A margin account lets a person borrow money (take out a loan essentially) from a broker to purchase an investment. The difference between the amount of the loan, and the price of the securities, is called the margin.
- Spread: This is the difference between the bid and the ask prices of a stock, or the amount someone is willing to buy it and someone is willing to sell it.
- Understand the definitions of metrics such as the P/E ratio, earnings per share (EPS), return on equity (ROE), and compound annual growth rate (CAGR).