How to Pick Stocks for Investment

If you know a neighbor who suddenly got richer by half a million because of some stocks investment, don’t automatically scoff and say it’s luck. Luck plays a part of course, but the prowess of stocks investment is a learnable thing. You too could enjoy significant rewards using common sense, guts and discipline. The following are standard tips from the experts regarding the buying of stocks.

Step 1: Buy what is familiar to you – even if your best friend tells you that the stocks of company XYZ1 will turn you into a millionaire, don’t jump. As a newbie in the game, caution will save you from a lot of painful losses.

Step 2: Do not think of charts as God – they serve well as a general rule, but solely depending on them will be a bad idea.

Step 3: Do not trade so often – many people do this and as a result, they made fifty percent gains in 3 months, only to go totally broke after a year.

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Step 4: buy then hold – this is one of the popular advices of topnotch experts, and for good reason. In buying good stocks, let it move up then hold on to it for some months, if you sell before the fullest potential, you would be wasting opportunities for a bigger chunk of money.

Step 5: diversification is only for Bill Gates and his ilk – why is this so? Well, these people would not lose any sleep losing 2$M overnight, but regular Joes should be pragmatic. Spend on 3 good stocks you are sure of, instead of spreading your money on 10 companies you’ve never heard of.

Step 6: If your extra savings are slated for your daughter’s matriculation fees, then let it be. If it’s money you could not bear to see go down the drain, and your stocks go down, then you are in for a great deal of sleepless nights. Set aside money that is earmarked for stocks buying, and let it become a habit.

Buying stocks for investment is in and of itself, a gamble but really good investors will call it a very calculated risk. You probably will not stay in your day job forever, so it is actually a good idea to do something else to put in some cash in reserve. Follow these tips and earn from the stock market.

related questions:

1. Is trading frequently a good idea?
2. Should a beginner in stocks investment do diversification?
3. How useful are technical charts in the stock market trends?

related blog posts:

Portfolio Management – Choosing a Portfolio Management
Penny Stocks – Tips on buying stocks online
Stock Market – Tips for the stock market

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