Thursday, July 02, 2009

Searching for the Pot of Gold in Stock Trading?

If you have traded the past few months, definitely you are one of those who are rejoicing with gains you’ve got. The news says: The Dow Jones industrial average rose 11 percent during the second quarter, its biggest quarterly jump on a percentage basis since 2003. The Standard & Poor's 500-stock index climbed 15.2 percent, its largest quarterly increase since 1998. Financial stocks rose the most during the quarter, jumping 35 percent, though they are still down more than 60 percent from their peak in 2007.

So have you recovered you’re losses from last years nightmare? If not yet, then maybe it is time to review some trading rules and tips:

1. Make Rules for Buying and Selling. Do not be greedy; determine how much gains or losses you want. Never do it sporadically like a newbie. Make your rules, whatever they are – have them, and follow them. Be comfortable with your rules. For example, you might feel the time to sell a stock is when it has increased in value by 45% ect.

2. Find a Low-Fee Brokerage. Overtime, fees will accumulate, and they are going to be big! You will be amazed how much you have paid after a year or two, so search the market, and choose the best brokerages. Get those that do not charge account opening fees or require you to maintain a specific balance to avoid a maintenance fee etc.

3. Have done your research? Use Google, find out more about the stocks you’re planning to buy.

4. Penny Stocks are not advisable most of the time, unless you’re willing to really gamble. Most penny stocks are not an easy way to make money. Remember, penny stocks are cheap for a reason.

5. Buy Low, Sell High, as always. You should have bought some of these stocks two months ago when they were at lowest. Who can predict? Buy a stock that is near its 52-week low, you at least know it is likely to go higher sometime in the future. Research and research.

6. Wait the market and always buy Low, Sell High which means - have patience. Don’t kick yourself if the stock drops more right after you buy or continues to climb after you sell. See number 1 – follow your rules.

7. Diversify – as in any business, do not put your eggs in one basket. Diversify your portfolio over a number of market sectors. This way, if a particular sector is struggling because of bad news on Wall Street, your holdings in the other sectors will neutralize any temporary dips in the struggling sector.

Lastly, if you are searching for something to help you trade, try this one.

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