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| Great Ways to Learn Stock Trading as a New Investor
New investors taking their first steps towards learning the basics of stock trading should have access to multiple sources of quality education. Just like riding a bike, trial and error coupled with the ability to keep pressing forth will eventually lead to success.
One great advantage of stock trading lies in the fact that the game itself lasts a lifetime. Investors have years to develop and hone their skills. Strategies used twenty years ago are still utilized today. The game is always in full force.
So far new investors wanting to take their first steps we offer 10 great answers to the simple question, “How do I get started?”
1. Open A Stock Broker Account
Find a good online stock broker and open an account. The purpose is not to trade stocks but to become familiarized with the layout and to take advantage of the free trading tools offered to clients only.
2. Read Books
Books provide a wealth of information and are usually inexpensive.
3. Read Articles
Articles like this one currently being viewed can serve as a fantastic resource and are usually easy to understand and follow.
4. Find a Mentor
A mentor could be a family member, a friend, a past or current professor, co-worker, or any individual that has a fundamental understanding of the stock market. A good mentor is willing to answer questions, provide help, recommend useful resources, and keep spirits up when the market gets tough. All successful investors of the past and present have had mentors during their early days.
5. Ask Lots of Questions
Having a place to ask questions and receive answers is a huge asset for any new investor. Here on the Stock Trading To Go stock forum we have a designated area just for answering stock questions. And with a Community of thousands there is always someone readily available to help the cause.
6. Browse Financial News Sites
News sites such as Yahoo Finance serve as a great resource for new investors. By reading headline stories investors can expose themselves to different stock terms for example. Pulling quotes and observing fundamental data can also serve as another good source of exposure.
7. Consider Paid Subscriptions
Paying for research and analysis can be both educational and useful. Some investors may find watching or observing market professionals to be more beneficial than trying to apply newly learned lessons themselves.
8. Watch TV
When the stock market is open ETV is the #1 source for financial news. Even turning on ETV for 45 minutes a day will broaden an investors knowledge base. Don’t let the lingo or the style of news be a nuisance, just simply watch and allow the commentators, interviews, and comments to soak in. It will all begin to make sense over time.
9. Go to Seminars
Seminars can provide valuable insight into the overall market and specific investment types. Most seminars will focus on one specific aspect of the market and how the speaker has found success utilizing their own strategies over the years. Some seminars are provided free which can be a beneficial experience, just be conscious of the sales pitch that will almost always come at the end.
10. Subscribe to the Newsletter
Receive our free weekly newsletter summarizing all our newest educational content or add our RSS feed to your favorite reader.
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40 Ways You Know You Are an Emotional Investor
1. You pull a quote for your favorite stock and cheer when you find that it is up even a penny.2. You call your broker atleast once a day to find out his or her opinion of your holdings.3. You pee your pants when you find out the money you invested for Grandma is down 20%.4. You get all excited when you get a “big tip” from a friend on a stock you know nothing about.5. You bite your nails while watching TV the closing bell.6. As you watch your positions on your streamer, you give it your undivided attention every time the lights blink red or green.7. When your stock is in the red midday you flip your hat upside down and declare the rally is coming.8. You call every friend and family member after selling a stock for a big profit.9. You break keyboards every other day.10. You pull out a bowl of popcorn as you watch your stock run up after hours when earnings hit big.11. You and your friend get together after every “rough day” in the markets, hug eachother, then proceed to eat ice cream to feel better.12. You exclaim, “That’s right! YES” if you see your latest call being featured on TV,13. You double your position every time a stock you own gets upgraded.14. You declare you are going to Disney World when your price triple after the company announces they are going to be bought out. You don’t have any kids.15. You sell a whole position when it gets downgraded by an analyst.16. While watching your stock tank real time on your streamer you put your hands on your forehead and ask yourself, “why me?” over and over again.17. You tell all of your buddies that you never EVER make money in the stock market, and later that week when you do you spend all of your profits throwing a party.18. You throw your chair when the market doesn’t go your way.19. You pray to the “stock gods” each and every night for a good trading day.20. You yell at the “stock gods” after a bad trading day.21. You place stop loss orders less than 1% below your purchase price because you can’t bare “big” losses.22. You keep an extra mouse or two in the closet because you break them so often by throwing them against the wall.23. You cry more than your wife.24. After a bad day in the markets you spend the whole rest of the evening ranting about your bad luck.25. You celebrate profits while they are still unrealized gains.26. You get pissed at yourself for celebrating those profits after the stock falls 5% the next day.27. Anyone that thinks your picks are bad you tell them to go to hell.28. You take screenshots of your computer screen when your stock is up more than 10% in one day.29. You film your favorite stock’s ticker while its running up in after hours trading because of some big news.30. You stand up out of your chair when you think you see an institutional buyer start to buy up shares of your stock.31. You get drunk after realizing your favorite stock is now bankrupt and you have been holding since the top.32. You drive over to your broker’s office and high five him or her after a big winner.33. You yell when you talk about anything to do with the market.34. You take off your shirt and swing it around in the air above your head when your stock announces its record setting earnings.35. You play “Eye of the tiger” everyday just before the market opens to get yourself pumped up.36. You grab your monitor with both hands, shake it, and yell, “what! what!” or “how could you do this to me!?” when your call is selling off heavily.37. You contemplate what you are going to buy with profits that aren’t realized yet.38. You refresh your portfolio summary page every few minutes like you do your e-mail box.39. You wear the same pair of underwear for good luck everyday until your stock has a losing day.40. You get pissed when your order gets manipulated by a market maker. | | The
Five-Step Market-Beating Formula for Successful Investing
If you want sound, classic investment advice, you’ve come to right place.
The lessons you’re about to learn are timeless and straightforward… but
sadly, hardly ever followed.
What’s more, the financial crisis has actually substantiated this man’s
classic formula for successful investing. Five Simple Steps to Beat the Market
Here’s Burt Malkiel’s five-step market-beating formula:
There’s No Need to Time the Market:
Plain and simple,
buying and selling in the short run doesn’t work over the long term. We talk
about this frequently in Investment.
Use Dollar-Cost
Averaging:
dollar-cost averaging actually does better in a volatile
market (like now) than in a steadily rising one. He cited an example: If you
invested $1,000 a year for five years, you’d have $6,167 in a volatile
(bear-bull) market versus only $5,915 in a steadily rising market.
Rebalance Your Portfolio Annually:
Malkiel found that from
January 1996 until December 2009, annual rebalancing between a stock and bond
index provided lower volatility and higher returns. The best strategy is to sell
your portfolio’s big winners and buy its biggest losers once a year.
Diversify, Diversify, Diversify:
It sounds obvious, but
diversification is crucial. Malkiel argues that simple diversification increases
your returns with less risk (volatility). He uses the following extremely
conservative portfolio: 50% bond fund, 25% stock index fund and 25%
international stock index fund.
Cost Matters:
The vast majority of actively managed
accounts underperform the market indexes over the long run, especially because
they cost more to run. So use non-actively managed index funds by the cheapest
fund company In order to make market timing
work, you have to be right most of the time when you buy and sell. The vast
majority of investors can’t do that consistently. And besides, you don’t need to
time the market to be successful.
By dollar cost averaging, rebalancing and diversifying, you’re ahead of the game
in the “lost decade” when the overall stock market declined.
Now imagine how much better you’d do if you added an emerging markets index
fund and gold to your portfolio. | |
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13 Questions That Will Boost Your Investment Portfolio
When times are good in the stock market, how do you know if you are maximizing your investment portfolio value?
Below I will ask you 13 different questions about how you and your portfolio are laid out. The whole purpose is to challenge your thinking and expose you to possibly different investment strategies.
1.How much cash on hand do you have? When the market is on a tear, having too much cash on hand (or cash available to be traded) can limit your investment returns. The best way to look at this is in a percentage manor. If the market is in a downtrend, you may want to have 50% or less of your portfolio invested in the stock market, leaving you with 50% or more in cash. Some investors will go 100% cash if the markets turn sour, and some investors like being 99.9% invested when the market is good. So take a look at your portfolio and figure out your % cash is and ask yourself, “should I be more invested?”
2.Are you over invested in mutual funds? A mutual fund load is a big scam, and you shouldn’t be paying one. Also, sometimes mutual fund fees can get a bit too high to really give true value. If you have have too many mutual funds in your portfolio you may be limiting your success potential. Perhaps you think stocks are too risky or don’t know enough to get involved which is fine. Exchange Traded Funds for example offer a easy way to play different markets. A good place to find great mutual funds is my list of the 25 top mutual funds.
3.Do you have exposure internationally? This is a more opinionated question, because every investor is different. When the US stock market is hot does it really matter if you have international exposure? Maybe or maybe not, but just looking at your portfolio and seeing where you are vested may help you find an easy tweak or two to really give yourself an upper hand.
4.Do you utilize ETFs? Now more than ever etfs are hotter than hot. Off the top of my head you have the gold etf, south korea etf, which have both been great successes. Even owning the QQQQ or SPY which tracks the Nasdaq 100 and S & P 500 (respectively) can be nice holds long term. Brazil has been hot, China has been hotter then hot, heck just read my list of the Top 25 ETFs that every investor should know about and see for yourself. Unlike mutual funds, ETFs are expense free and can make a great addition to any portfolio.
5.Are you over diversified? I think you can be over diversified, and in fact owning too many stocks at once can eat would be profits away easily. You should put more eggs in fewer baskets then less eggs in more baskets. Why? Because if your biggest position only makes up 5% of your portfolio and even say doubles unexpectedly, you still aren’t making much headway in your overall portfolio. Minimizing your portfolio diversification works, and it is a matter of managing it with a stop loss and cutting your losses. Do you own 5 stocks or 50 right now? Could you sell some stocks that are not up to par?
6.Are you outperforming the index so far this year? Comparing to the market index is very simple way to judge your investment success and actually is THE way to do it for institutional investors (mutual funds, hedge funds, etc.). You always want to look at your performance on a percentage basis, not a whole value basis because making $5,000 in a $5 million dollar portfolio (1%) isn’t nearly as great as making $5,000 in a $5,000 portfolio (100%). Go to any free investment site and pull up a chart of the index. Take today’s close less the closing price of December 31st of last year, then divide by the same December 31st closing price. This will give you the current to date return of that index for the year, which you then simply compare to your own portfolio. If the market is up your portfolio should be too.
7.Is your broker providing you with what you need to succeed? I recently covered 12 ways to compare your online stock broker and suggest reading that and also checking out my list of the best stock brokers to see if you could be in trading under a superior roof. Your broker should supply everything from the tools to the free real time quotes to the flat-fee trades. Is your broker ranked for superior customer support? Now is better a time then ever to consider changing your online broker.
8.Do you know what direction the market is heading? I wrote in the past on analyzing the overall market for dummies, and having even a general grasp of what direction the market is heading can be a great asset. When it comes to maximizing your portfolio value you want to know what direction the market is going because 3 out of 4 stocks tend to follow the overall market trends. How you do this is by looking at one of major indices. I listed 5 places to get free stock charts, so check out the market and check out your portfolio would ya?
9.Are you cutting losses and letting runners run? A fantastic way to maximize your portfolio value is to get rid of those stocks in the red and replace them with stocks that are heading up. The easiest way to cut your losses is with the use of a stop loss order, which should always be a maximum of 5 – 8% below your purchase price. The smart investor always uses a profit vs loss ratio to support their success. If you let your big runners run and cut your losses short I guarantee you will make money, and lots of it, in your investment portfolio.
10.How much time are you putting into research? Could you be spending even 5 more minutes a day reading through free investment sites that could be providing you with great insight? A easy way to maximize your portfolio value is to kick your stock market education up a notch. Perhaps adopting a productive financial morning routine may be the way to give yourself the edge you need.
11.Are you trading on your own or having someone trade for you? This is very simple and straight forward, if you have someone managing your nest egg for you and they aren’t beating out the index then it is time you take control of your own portfolio. There is absolutely no reason why your buddy Joe can’t match or beat out the overall market. Want to know how easy it is to match the overall market performance? Simply buy the index fund and boom, instant portfolio success. The sad part is that even Joe your fund manager can’t even figure that out.
12.Do you have an investment goal for this year? I am a big believer and promoter of setting goals which can be seen from my recent interview with ZenHabits. Setting yourself goals for the four quarters of the year and the year itself is a great way to maximize your portfolio worth. Why? Because if you aren’t reaching your goals you are going to be analyzing and working harder to get your portfolio where it should be. This, of course is the whole point of the article .
13.Are you happy with your investment strategy? I have covered 7 strategies for online stock trading, and perhaps yours needs a change up. I see a lot of newer traders try to utilize strategies such as day trading and find out very quickly how tough it actually is. I’ve also listed 10 great ways to learn stock trading as a new investor, and the focus is all on expanding your knowledge base in different fashions. Bottom line here is how effective is your investment strategy? If you spent some more time could you actually be doing better right now? The purpose of these questions are to get you thinking. Being an independent investor myself I always find it difficult to cover all the angles of what I can be doing better. I hope the list provides you with atleast one way to boost your investment portfolio, and as a result become a better investor. What questions would you add onto this list?
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