Before Starting In The Stock Market
What kind of trader are you??? That depends on what level of your trading skills are you at. You need to be able to know who you are before you make a trade that might cost you everything. Before buying penny stocks, here are some things to consider about your trading level.
Beginners
No one likes to say that they’ve just started in the stock market, but all of us started out at the beginning. Sometimes it’s the new guy who does well. (in my first three months, my portfolio grew 68%) and when you look to the experts, you will see that they’ve lost more money than you’ll ever see in your life time. They’re human too, but with an arrogance to them that sometimes bites them in the butt.
As a beginner you may want to just start with a “mock” portfolio and watch the stock market until you get more of an overview of how the stock markets work.
Amateurs
The amateurs are beginners with an attitude. They are the type that have been doing this for a short time and have had some positive results during that time. They look at what they’ve done in a few months and think that this whole stock market thing is easy. HA! They are also the first ones to think that they have it all figured out and they’ll be quitting their jobs in pursuit of trading stocks full-time. Once you have a good understanding of the stock market, your next step is to possibly stick with ETF’s (exchanged traded funds) or Mutual Funds. You can sit with an adviser to help make the choices that you need. Be aware though that these managers get paid by how much money you invest into their funds. The commission can range from .01%-5%, which can make all the difference in the world
Semi-pro
These are the type that got burned when they thought that they knew everything. They’ve done a lot of homework on how to reduce their losses, but they’re still not doing enough research into the companies that they want to invest. What they do is they trade in penny stocks (share value <$5). They feel that the risks are low since each stock is “only” $1.22. What they don’t know is that penny stocks are much more riskier than other stock (company) in the markets. Penny stocks are not a sure thing. Just because the share price is less than $5 doesn’t mean that it won’t go down more or even become bankrupt. When you play at this level, you must be aware of changes that will occur without warning and be prepared. If you feel that this is the way you want to go then make sure you check out each company in great detail.
Professionals
This last group is not the guys who work in Bear Sterns or Morgan Stanley (remember these are the type of guys who cause the housing and credit crisis from their immoral ways. A real professional doesn’t let his emotions get in the way of his trades. They do their due diligence and detailed research into each company they’re thinking about. They don’t just dump money into a stock because the herd is doing it. They take their time, they know that it’s a matter of patience and discipline. If you are at this level (or think you are), don’t sit back on your laurels. Just keep doing what professionals do…study and practice.
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3 Responses to “Before Starting In The Stock Market”
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Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
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Thank you!
fred_tremblay777 at hotmail dot com
Thank for your posting.
Nice articles