Tuesday, October 24, 2006

10 things the new kid on wall street needs to know

10 so you want to play the stocks kid! Well, gather around and let us share 10 things that we have learned to stick this game out for the long haul.

Being a new kid on the block of investing is a lot like being a small fish in a big pond. The new adventure of a big pond can be scary, adventure, and fun. Some keys for the new kid on wall street would be:

1) Learn to make your own decisions.

Everyone will give you advice. Most of it is worthless. You need to make your own investment decisions. It’s your money, and believe me, no one cares if you lose it. In fact, many are rooting for you to, because they want to make money off you.

2) Never blindly trust information.

You need to independently confirm every thing you hear about a stock or a company. Through good solid research yourself. People will lie, because they stand to make a ton of money from stock sales. They’ll gladly mis-represent information, so insist on looking at the real thing, real facts, and real research.

3) Do the work and understand what you’re buying.

Stock investing a fairly complex topic. It could take you many months or even years to master the basics. Mastering the basics is what you need to be concerned with. If you really thing there’s a fast buck coming your way, you need to wise up. One key that we always want to state is always investing thinking long term. Not to many people win short term though it can be done it's done by the experts!

4) Develop a trading style or system.

Don't just make up a system, but research systems, so what others do and continue to do. But, then make some small changes and make your own unique system. Don’t always base all your ideas from other famous people’s systems. In every system has it's strengths and weakness. There is no peferct system to get rich fast. A key is to come up with your own personalized investing methods and systems that work for you, your budget, your personality.

5) Ignore “HOT STOCK TIPS”.

Most hot stock tips are SCAMS!! If they were as hot as Shakira, then they would be implemented by the person who has them. The only information about investing that’s released to the masses is outdated.

6) Most people who recommend stocks do so because they have a financial inducement.

Really, just be real with yourself. Don't be so silly to really think that recommendations are just that. In the real investing world rarely are these stock or investing recommendations are not done free. Please not that most of the time the recommendations come after many, the inside guys, etc have already purchased at a lower price then what you would be getting in at.

7) Concentrate investing with a focus.

Don't go read and learn everything you can about every company or stock. You would be better off starting with a trend, or familiar with a few stocks and really research them down to the penny. Again, ALWAYS stick to your guns aka your investing plan, your investing style, and your investing strategy!

8) You need to put big money to see big profits.

Don't go quitting your day job on $5k of capital. It’s not that much money,
BUDDY! You would need a big bankroll to make decent money. This is true, but don't get the wrong idea as well. It's okay to start of with only $5k in starting a good solid investment focus. Balance is a the key, don't go to one extreme of not investing or the other extreme of quitting your day job to become a day trader on $5k of capital.

9) Don’t over due it on the diversifying or put away too much money into too many stocks.

If you do, you can expect to have a hard time getting good solid returns. If you start with a small amount of cash, you need to concentrate in one stock or few stocks to have the best result. Wait until you get some experience, some research, and before you go jumping into the deep end of the stock market.

10) Use stop losses.

Don’t ever lose more than we suggest 8% others might say 10% on any trade. If you use a stop-loss, you can guarantee that your downside is never less than 8% to 10%. This could save you in the event of a free fall. Also, a major key in this to, is to be discipline enough to keep putting in those stop losses even when the stock goes up. So say if your stock has gone up 15% well put a stop loss of a new 8% based on the 15% gain! This is discipline, but that's what it take in investing and in life!

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