Saturday, October 3, 2009

Tips for New Market Investor


Find the right stock which to invest into can sometimes prove very difficult. Sometimes finding good investment advice can prove even more difficult. Investors will continue to invest no matter how difficult the task.

Investing is no longer only for the elite and powerful. Numerous people can invest into the stock market and you do not have to hold a degree in finance in order to perform this task. The reason people will continue to invest is due to numerous reasons. Some love the thrill of the investment; some have a dream of hitting the "big bucks" where some genuinely depend on the stock market for their income.

Buying stock is easy. Virtually anyone can perform this task. The hard part of dealing with stocks is knowing when to sell the stock. Knowing when to sell your stock is always easy. Sometimes investors are ruled by their emotions and you must take your emotions out of the objective when learning when to sell your stock.

You will never be able to sell your stock at every peak time when you are investing and you will never be able to always buy stock that falls dramatically. When you purchase stock, you should purchase stock with every intention of selling it for a profit in the future. You must place careful planning into what we call an "exit strategy". This will enable you to research what truly motivates you in making investments in the first place.

Great investors always know when to cut their losses while allowing their profits to run. When dealing with the stock market, you should always have an exit strategy. In a perfect world, you will ride the winners to the top while minimizing the damage.

You must keep in mind that no system is ever fool proof. In dealing with volatile stock, you can get stopped out of a price far worse than what you had hoped for. Once a price is triggered, the price will become market price sale and this is a sale at what the market will bear. Typically, this is not a problem but with volatility, this can make your price impossible to fill.

US stocks do not accept trailing stop orders. If you are dealing with thinly traded stocks, the US does not accept "hard" stops. Outside of the US exchange rarely, accept stop orders at all. Keep in mind that trailing stops are constantly on the move and based on the price of a stock. Normal hard stops are placed on a specific price while remaining regardless of what the stock actually does.

Trailing stops change according to how the stock performs. The higher the stock climbs, the higher the trailing stop is placed. If the exchange will not accept this order then you will have a few alternatives. Your broker can place a mental stop on the stock or you can place a mental stop on the stock. You must have a trailing stop strategy and remember there is no guarantee of not losing money with the stock market.

Before jumping into the stock market, ensure that you seek the advice from seasoned professionals who have been performing within the stock market for awhile. Most stock market veterans are more than happy to share their advice as well as tips to beginners of the stock market.

Mike Downs, former automotive quality manager and operations manager turned entrepreneur, assists the average individual understand trading and market dynamics to help achieve profits in today's evolving market. In his latest project, "Trading The Recession", he shares how to use technical indicators to gain insight into the validity of a trend. This can be found at http://www.tradetherecession.com and you can follow his insights athttp://www.mikedownsblog.com.

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