The best thing a first time stock trader can do to improve the chances of making money in the stock market is to dive into the research. I’m not talking about grinding away at the fundamental analysis about companies that you may be interested in buying (although that is hardly a meaningless pursuit). I’m talking about learning as much as you can about how the market works and how you can maximize your trading repetroire. There are many valuable stock trading tutorials that can give you a solid understanding of the stock market and the tools available to traders.
One of the first things you will need to do is find an online broker that offers a paper trading account. Once you have an account open you can explore all the analysis tools and different trading techniques. A very common mistake that many new traders make is to jump right in to trading as soon as they open an account. Have a little bit of patience and force yourself to do some reading on stock trading. Play around with your fake money account to get comfortable before risking your own capital.
It’s a good idea to read a little background about how the stock market actually works. I am of the opinion that even if the knowledge doesn’t directly translate into better trading performance, understanding the stock market fundamentals is worth your time. After all, you are going to be putting your money into that very market. An informed investor is a profitable investor.
Once you have the basics of how to trade, you will want to delve into the different order types available for buying stocks. There are quite a few different ways to purchase stock, and you would be well served to examine each of them in detail. Once you can describe exactly when to use a trailing stop and how it works you are well on your way to becoming a trader. Read more about limit types and other stock trading basics at stocktradingtutorial.org.
There are plenty of online brokers out there that charge discount prices for trading stock. Compared to the old procedure of calling your broker and having him execute the trade for you, the online trading world is much less expensive. For your average investor the prices for making a trade are almost a non factor now. This is not true for your active trader. If you are making just ten stock trades a week at an average cost of ten dollars per trade, you will rack up over five thousand dollars worth of commissions and fees over the course of one year. I don’t know about you but that seems like a pretty far cry from cheap stock trading. With the online sites being so easy to use, and every small time investor on a nearly even playing field (information wise) with the bigger stock traders, the possibility of executing many more trades is now something people have to consider when deciding where to put their money.
There is a very easy first step to keep your stock trading costs down if you are active in the stock market. You will be paying commissions and fees, so just realize that this is part of the cost of doing business. The best way to minimize the effect that commissions have on your bottom line is to examine how exactly you will be using your stock trading account. If you know your own habits for trading (how many shares you normally purchase, how many trades you make per week, whether you buy/sell options, etc…) you can make a more informed decision about which broker will give you the best price. Some brokers charge more per trade, but allow you to buy or sell unlimited shares. Some brokers charge a flat per share price. Examine all the options in order to make a more informed decision about your broker.
With the new year coming in, many are wondering where the future of the stock market lies. Many financial experts believe that the year will be promising with an increase in jobs and better return on investments. Others believe that the year will bring bad investment returns along with new health care plans that will only set the nation back as a whole. Despite the current economic depression, there is room for trading stock that can return a really good investment.
While it is impossible to determine what the stock market will look like in 2010, it is plausible to say that it is impossible to determine the direction of the market at all. Just because an economic recession occurs really does not have any effect on the stock market. In some cases, it does effect the value of the dollar; however, a good investor will know how to invest in other currencies to make up for this. While trading stocks is a risky business, that does not mean their is high potential to get a good return back.
Trading stocks is not just about investing in the right thing, but also about protecting your assets. One such item includes trading stock software. This software makes it possible for users to trade in different currencies. The best protection is to trade with currencies that are currently stronger at the moment. This means no matter how bad the market gets, users will still be able to protect their investments. Most of the currencies are in the Euros as well. Get yourself some accounting software to help track all these investments.
Making sure to research an investment before actually making the big move is very important. Most investors have a hard time deciding on which stock to invest on because they might be worried about the economic recession. While this is something to consider, most stock markets go up and down, regardless of the current economic state. That is one fact about the stock market; it is unpredictable, no matter what the circumstances may be. Taking the time to invest in multiple currencies and researching the history of each stock, will be the true reason of the investment return.
Despite what the future might hold for stock trading, it will always be pretty unpredictable. Most investors should not use the current state of the economy to determine whether they should invest in stock or not. In fact, most of the time, stock value has risen in the past when there was an economic recession or depression.
That does not mean that you should avoid the current economic state completely. The economy does have some merit to the stock market and should be taken into consideration. When there is no value to one currency (which does happen time to time, especially with the U.S. dollar), it is best to invest in other currencies that may be stronger. As mentioned earlier, the stock trading software can assist in this. Stock trading is all about evaluating your investments and not putting too many eggs in one basket.
Warren Buffett’s company is buying roughly $3 billion of GE preferred stock, GE is also selling $12 billion more of its common stock to the general public. Preferred stockholders have a greater claim to a companies assets and earnings.
To put it in “average joe” terms preferred stock owners get a better deal.
Does this mean I don’t think you should invest in GE? Well yes and no. GE is a good company, it is also a well diversified company. My point is before you invest understand you are not getting as good of a deal as Buffett is, so your criteria of determining whether it is a good deal or not is different.
Stock investing can be hard, but only for those who have not researched or prepared via reading stock trading tutorials. Not doing the research on a stock and buying it is called gambling.
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Welcome to the first installment of “Stocks I Like” Segment that will be a regular topic on AutomaticPersonalFinance.com.
**Disclaimer** – The information here is for informational purposes only, please do not invest your hard earned money into a stock I highlight here without doing your own research and consult a professional financial consultant or broker. Never ever go by what someone writes on a blog or talks about on one of those crazy financial shows on CNBC as something that is good for your personal finances.**
Ok now that we gave you the “warning” message, lets talk a little HOG.
Warren Buffett says: “Be fearful when others are greedy, and greedy when others are fearful”?
Is this the time to be greedy with Harley Davidson?
HOG’s 52 week low according to Yahoo Finance is $34.10, right now the stock price is at $38.05. This is just about the lowest Harley Davidson has been since prior to 2003.
1st Qtr results were posivtive(this is taken directly from the Qtrly report):
“2008 first quarter net revenue of $1.31 billion was up 10.8% compared to the first quarter of 2007 driven by a 6.1% increase in shipments of Harley-Davidson® motorcycles over the same quarter last year”
In the same report the company notes and understands the economic downturn in the United States right now. They also state that they expect to ship fewer motorcycles than in 2007.
I think given this news the price will fall down to about $34-$36 per share and may be a good time to buy if it fits into your personal financial picture.
Please let me know your thoughts by leaving a comment below.