7 Stock Market Tips and Tricks I Found Useful
Looking for the best stock market tips and tricks? There are many stock market investing tips that you can read online. Most of these tips has only one purpose; to help you succeed in investing. I assume you already know how to start investing money in stocks.
Today, let me share to you some of the best tips I found useful. I am using these list of tips as a guide whenever there is a time for me to decide whether or not to buy or sell a stock.
Diversification is one of the most read tips on the internet and even on investment books. What is diversification anyway? Diversification simply means putting your money in different vehicle so that you will minimize the risk and minimize the loss of capital.
But “diversification” is a broad term in investing. Can we use “diversification” as one of the best stock market tips and tricks? I think yes! Continue reading and find out how can you diversify your stocks portfolio.
7 Stock Market Tips and Tricks I Found Useful
1. Diversification
In stock market investing, the word “diversification” simply means buying stocks of different companies from a different industry.
Say for example, it is recommended to buy stock belong to a pharmaceutical industry, real estates, telecommunications, electronics, food and banking industry. If your stock under “telecommunications” industry didn’t performed well, you still have more chances to make profits for other industry.
Maybe you asked, how can I know the best stocks to buy? There are different sources that can teach you what stocks to buy. Say for example, this year, Forbes.com, NASDAQ and Time releases it’s top stock picks for the year.
2. Buy Low Sell High
Are you familiar with the term buy low sell high? The question is how do you know if it is the right time to buy a particular stocks and when to sell those stocks.
Image Credit: Gidzy on CC 2.0 via FlickrIn a simple sense, you have to find out the “undervalued stocks”. Those stocks that has room for growth. Of course if you want to take advantage of capital appreciation, you must find undervalued stocks, buy them and sell them when the stock price increased.
Related: How to Buy Stocks Shares Online in 5 Steps?
3. Make Use of Dollar Cost Averaging
Dollar cost averaging simply means buying stocks every month with the same amount. Example, if you are planning to invest $200 in the stock market every month, you should still find out the best stocks that has room for growth.
| January | 5 |
| February | 4 |
| March | 1 |
| April | 7 |
| May | 9 |
| June | 2 |
| July | 1 |
| August | 9 |
| September | 12 |
| Average | 5.5 |
Study the table above. What have you noticed? There are times that the stock price are very low but suddenly increased. The average is what matters most. I just use the 9 months here. What if you started buying stocks with a price of $3 per share and after 20 years the stock price increased at $300 per share. Imagine the average and the profit you can get when you invest money every month using dollar cost averaging.
Related: Dollar Cost Averaging Vs. Lump Sum Investing in Stocks
4. Invest in Giant Company
When buying stock shares, you must buy stocks of a stable, big, giant, successful, large capital, have good balance sheet company. But you must also buy stocks of a company that you are familiar with. You should know the products and services of the company you are buying and most of all, you should buy stocks of a company you are comfortable.
5. Invest in Many Big and Stable Companies
Imagine if you have lot of shares from a different giant companies. It’s just like investing in a mutual fund equity. take a look of the top performing mutual funds and observe which stocks they includes in their portfolio.
One stock or many giant stocks? They choose many giant stocks and preferably those stocks that pays high dividends.
6. Invest in Long Term
If you want to succeed in stock market investing. Don’t trade! Invest! The difference between a trader and an investor is how they buy, sell and hold a particular stock. A trader will buy a stock now and sell after few minutes. While an investor will analyze the bests stock to buy, then, buy it and hold it forever.
7. Be Consistent
Be consistent in doing your investment strategies. When you found a effective strategy, stick to it until you achieve your investment goal. If you found dollar cost averaging is more profitable than lump sum investing, then stick to DCA.
Additional Stock Market Tips and Tricks
Don’t be too lazy reading investment books and invest in yourself by attending stock market investing seminars and workshops. These can help you become skillful as an investor. You have to choose both growth stocks and income stocks.
Also, when buying stocks, you need to know how can you make a lot of profits in “capital appreciation” and “dividends”. Stocks that pays dividends consistently can help you generate passive income. So, choose stocks to buy wisely.
Summary
Here are the 7 stock market tips and tricks I found useful and effective. The first one is diversification. You should buy undervalued stocks and make use of dollar cost averaging when investing in the stock market. Invest money in a stable or large companies and be do it for long term. Do not forget to be consistent. Find effective stock market investing strategy that works and stick to it.