The ultimate stock market tip is very simple make sure you buy your stock before the price goes up and even more important be sure to sell it before the price goes down, I know this seems to be stating the obvious but it’s amazing how many stock market investors forget this simple rule.
For nearly all stock market investors both newcomers and also very experienced traders the main consideration seems to be deciding on which stock they are going to buy. In reality this is a mistake the stock you are considering is definitely not the most vital part of stock market investing.
Anybody who has any reasonable experience of the stock market will know that the majority of shares always move in the direction of the market, “A rising tide raises all ships and falling tide lowers them”. This means if the whole market is moving up the stocks that you buy will also move up, unless you are very unlucky, in a falling market your shares will go down, unless you’ve been very lucky. The most important factor in whether or not you make money on a particular share trade is how you handle that trade after you’ve bought the stock.
Stock market investors are always on the lookout for a good tip, for inside information and its probable that that is what you thought this article was about, but the truth of the matter is individual stock tips are less important to your overall success than the way you handle your trades.
The most important stock market tip I can give you is that it doesn’t matter how high your stock rises in price, you have not made any profit until you sell the stock and put the money in the bank, if your stock falls in price you will keep on losing money until such time as you cut your losses and get out of the position. What I mean is, it is important to take a profit when it’s available to you, but it’s even more important to cut your losses.
Two of the best ways of keeping your losses under control are first never fall in love with any of your stockholdings they are only a means of making money and secondly always remember your stock will not go against the general direction of the market. We all forget these two basic rules from time to time and end up losing money.
To maximise your gains it is important to remember not to be too greedy, before you buy a stock decide on your profit target and once you’ve achieved it realise a profit by selling the stock, it is almost impossible to exactly catch the top of the market. If your stock goes up in price but then starts to fall back be prepared to reduce your profit target and take the money that is available to you now.
If you’re new to stock market investing it is worth paying the extra charges and using a full-service stockbroker, but make sure you ask them lots of questions, why are they recommending a particular stock, how did they reach that decision, you’re paying extra charges make sure you get an education for your money. Once you feel confident, start making your own decisions, when they work out and you have several successful stock investments under your belt it will be time to move on to a low-cost online stock dealing service.