50 Stock Trading Tips To Improve Your Trading

If you want to make money in the market or put your money into something that will pay in the long run, doing it haphazardly is just short of flushing your wallet as far as being smart goes. Lucky for you, we are here to make sure that you have a decent idea of how to do it intelligently. Here are 50 tips to making smart investments with your money.

  1. Diversify – putting all of your money into a single sector or investment is a recipe for disaster.

  2. Do your homework – due diligence on where you invest is a must. You wouldn’t buy a TV without shopping around and reading reviews. Spend a lot more time on your investments.

  3. Buy companies that do global business – Think China or India. Expanding markets are where growth happens. Companies with good relationships with countries that are growing are safer bets.

  4. Don’t sell every time there’s a dip – Markets will move, or no one would put their money there. If there’s a good reason to get out, do it. If the market is naturally fluctuating, ignore it.

  5. Take emotion out of your equation – Buy and sell with good reasons, not out of fear or excitement.

  6. Learn to take a loss – You won’t always be right, so you need to learn that your first loss is your best loss.

  7. Know what your overall strategy is – Doing anything without a plan is ridiculous, but investing your hard-earned money without a plan is stupid.

  8. Write down your strategy and keep it – Having a written plan will keep you on the track you start on, not changing with the shifting winds.

  9. Know why you own each holding – Why do you own the investments you own? I hope it’s not because someone gave you a hot tip.

  10. Make your own decisions – Again, you wouldn’t hand over money to someone and tell them to go buy a TV for you, you would buy what works for you yourself. Be much more careful with your investments.

  11. If it’s on the news, it’s old news – If you see some big story about a company on the nightly news, rest assured that the professionals knew about it yesterday, and you’ve already missed that boat.

  12. Always buy with limit orders – Buying with a market order is for suckers, and the market makers take advantage of suckers every chance they get.

  13. If you’re buying property, buy the land too – Homes and buildings can be good investments, but they’ll never be as good as the land they sit on.

  14. Never buy on margin – No one should need to be told to stay away from easy credit these days. Just for the record, though, if you don’t have it, don’t spend it.

  15. Always re-evaluate your portfolio before the end of the year for tax reasons – Get rid of losers and write off the loss.

  16. Follow the leaders – If Warren Buffett buys it, you should probably buy it too.

  17. Invest with money you can afford to lose – never invest money set aside for something else, like your children’s college fund. Only invest it if you won’t miss it.

  18. Buy IPOs after a few weeks or months – You probably won’t get in on the ground floor, and the initial rush and price rise usually settles out before too long and recedes a bit.

  19. Invest for a minimum of two years – If you are investing, not trading, don’t get in and out of stocks every few months.

  20. Learn to sell covered calls – This is easy money that you can make on stocks that you have large holdings in.

  21. Blue chips are usually safe – The latest tech stock is sexy, but a solid blue chip company is safer for the long-term.

  22. Options are for the short-term, stocks are for the long haul

  23. Markets have cycles – knowing them increases your chances for gains substantially.

  24. Know the best time of year to buy stocks or add to positions

  25. Start with options to build a nest egg – You can start with less money and make gains quicker.

  26. Don’t buy stocks unless you are investing at least $2000 per stock

  27. Buying with a dollar cost averaging is smarter when the price goes up than when it goes down

  28. Only invest in a small number of stocks – Concentrate on 6-10 stocks maximum.

  29. Start slow – Learn what you are doing and ease in to the market.

  30. Pay attention to future trends – Being aware of changes that are taking place in sectors will help you to get in early.

  31. Analyze charts for trend lines and channels – Stocks follow fairly predictable paths when they have solid and consistent trends.

  32. Candlestick methods are pretty accurate – At least in my experience, knowing 5 or 10 forceful candlestick patterns will help identify entry and exit points.

  33. Pay attention to volume – Movements with low volume usually don’t have staying power.

  34. Know your stock better than your kids – Figuratively, of course, but know the history of the stock, how it reacts to circumstances, etc. like the back of your hand.

  35. Practice, practice, practice

  36. A rising tide lifts all ships, a sinking ship will take others down too

  37. Set up news alerts for your stock, it’s sector, and any closely related stocks

  38. Buy the rumor, sell the news – By the time a story is confirmed, the play has been made.

  39. Technical indicators are great, but they don’t tell the whole story – Again, know the history, financials, and as much information as you can about your stocks.

  40. Do historical analysis on earnings and warnings for your stocks – Does your stock go up or down after good or bad earnings? Usually they are fairly consistent.

  41. Traders will take profits, it doesn’t mean your stock is tanking – Don’t sell on every downturn.

  42. In a bear market, prepare for the return of the bull – Look for signs that indicate that the bottom is near or that the upturn has started. Watch monthly charts over yearly time frames.

  43. A bull market won’t last forever – Don’t get greedy.

  44. If you have a goal and you hit it, sell-NOW.

  45. Get a good discount broker – This can make showing a profit much easier.

  46. Don’t buy mutual funds – These are for people who don’t want to do enough research.

  47. Subscribe to good market news sources – Investors Business Daily, Wall Street Journal, etc.

  48. Don’t take tips on stocks – Especially from friends or family. Do your own homework.

  49. If you are trading, trade. If you are investing, invest. – Don’t try to turn a trade into an investment. Stick with your plan.

  50. Slow and steady wins the race – Never try to make a fortune in one trade or investment. Build your future brick by brick.

There are more tips and more specific things you can do to be successful in the markets, but if you follow these you will be off to a great start.

On a side note, a big thanks to Investing Answers and Mypersonalfinance for including me in the recent carnivals.

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