People interested in stock market investing often search
long and hard for solid, valuable stock trading tips. The truth is, there is really no secret to
trading the stock market. By following
a few principles and taking the time to research and learn, just about anybody
can be a successful stock trader. Below
is a presentation of several valuable stock trading tips.
Don’t Be Greedy
This tip was placed first for a reason. Greed will devastate a trader’s portfolio
faster than anything else, especially for the novice trader. It is important for the stock investor to
understand his or her own tolerance for risk and trade within those parameters. Trading stock derivatives, such as options
and futures, carries with it incredible volatility and risk that is not
suitable for all investors.
Solid blue
chip stocks, one the other hand, generally carry less risk as long as adequate
and thorough research is conducted.
Inexperienced traders may fall into the trap of chasing a “winning
stock” that has had an incredible run, only to lose a large portion of their
capital placating their greed. One of
the best stock trading tips that can be offered is to set loss and profit
limits. While this strategy limits
profits, it will also reduce loss in capital.
Understand Commission Structure
Most, if not all, stock brokers charge a commission for
utilizing their services and trading software.
While paying commission is generally accepted as the cost of doing
business, it is important to compare commission rates when choosing a stock
broker. Caution must be exercised, as
extremely low commission rates may indicate inferior customer service, limited
stock availabilities and unreliable trading software.
When executing a trade, the stock trader
must consider that each transaction will carry a commission charge. These charges can quickly add up, especially
if dozens of trades are entered daily. A
good rule of thumb is to calculate commission charges into profit, loss and
break even points.
Use a Reliable Trading Platform
Many online brokerage firms offer stock trading software to
facilitate trade executions. It is
incumbent upon stock investors to conduct adequate research to ensure that the
trading platform that their broker offers is suitable for their desires and
trading preferences. Reliability in a
trading platform is one of the most critical components to stock market trading. The software must be able to instantaneously
process and execute trades as specified by the trader.
Trading platforms that fail to promptly
execute trades often leads to entering a position that is undesirable and sometimes
costly. The key is to find trading
software that allows for timely, reliable trade execution and processing.
Overall, it can take years to master the art of stock market
trading. Novice traders would be wise to
practice trading using “paper money” so that trading strategies can be
perfected and loss of capital minimized.
Most legitimate online brokers offer paper trading accounts as part of a
comprehensive stock trading package. Patience, perseverance and adherence to these
stock trading tips can help all stock investors become better traders.
No comments:
Post a Comment