By: Chad Surges
When I started investing I had no idea even where to begin. I
read books and searched the internet, and found there simply was
way too much information for a beginner to even get a grasp on.
As you begin your investing journey, you will hear many
conflicting opinions on what you should or should not do in
regards to investing in stocks. After a few months of trying
different investing methods and strategies; I discovered the
best thing to do was keep it simple and follow the basic steps
outlined below:
(1.) Never use money to buy stocks that you can NOT afford to
lose. In other words, do not play a game of black-jack with your
mortgage payment.
(2.) Never purchase a stock you receive through an online email
or regular mail. It more than likely is a Pump-And-Dump Scam.
(3.) When you buy a stock always immediately put in a stop-loss
order. This single step could protect you from complete
financial ruin if you can not monitor your stocks daily.
(4.) Learn how to use trailing stops.
(5.) Avoid buying into a stock when the market first opens. This
is because stock prices tend to be wild in the first hour and
you may pay too much for a stock. Stocks tend to stabilize a bit
after the first hour of trading. Trying to chase a stock going
up during the first hour will frustrate you greatly.
(6.) If you are new to investing do NOT buy stocks on margin.
You can use a margin account, but only use the actual cash you
put into the account NOT what the broker is willing to lend you.
(7.) Control your own greed. If you start turning the stock
market into a casino, it will take you for all your worth.
(8.) When you first start investing stay away from buying
individual stocks until you learn how the stock market really
works. Instead start with simple index funds or exchange traded
funds. Investing in individual stocks takes a lot of knowledge
and practice.
In my opinion, if a new investors sticks to these basic
guidelines they will save themselves a lot of headaches. I think
many new investors become so overwhelmed with all the investment
information available to them that they lose sight of the
basics. If you keep your expectations and emotions in check then
investing in the markets can be a fun and pleasant experience.
However, if you let your greed and emotions take over your
common sense; the stock market will become one of the most nerve
racking experiences of your life.
