ABstocks: Learn Stock Market

Never borrow from the brokerage account or bank to invest (this is also called buying on margin). What this means is that the broker will give you ie. 2x or up to 10 times the amount you have put in to invest in. For example if you put $1000 cash in the brokerage account to invest, you have up to $10,000 (for a 10x margin account) to buy in stock market. Although this is tempting, it is always a mistake for beginners or any investor (unless you absolutely know what you are doing). Many people lost all their stocks this way ie. in September 2008 recession and credit crisis. We will explain this later.

Have Discipline and Monitor Closely

Start with a certain amount of cash and closely monitor where it is going and don’t keep put money in if you are not going anywhere or if you are keep losing money. If you are successful add more cash and slowly increase your investment money in stock market.

Don’t be Greedy

If you are day trading, short term or even long term holding, set a certain amount of return that you are happy. For example if you want to hold a stock until it gives you $200 return before selling it, do that. Do not hold the stock longer if your $200/day minimum gain you have setup and you speculate that it might even go up higher the next day. You never know what is happening with stock market the next day. If you are happy with the money you made, don’t let greed take over,  sell to take some money off the table and sleep better that night. Remember it is always good to make a little bit money (just a little bit) than losing it big time or be in the red.

Have Patience, Don’t Panic

Have patience and wait, it could be even few years for a stock to go up or for a stock that lost value to go back up. Don’t panic sell when there is a sell-off and the stock drops significantly or even appreciates significantly. Wait until it settles. Don’t follow the heard. Unless you need the money absolutely and you know for sure what will happen next day or so.

Listen to Professionals and Knowledgeable Friends, but Take the Final Decision Yourself

You can listen to many stock analysts and banks and they tell you what to do and recommend what to buy, but never base your decision on what you hear and always make the final decision yourself after all our research. When you are pressing that order button, make sure this is what you are sure of, and not based on what someone else said.

Friends and coworkers can also recommend stocks and tell you when and what to buy and sell, but always do your research before clicking that mouse button to buy/sell and when you are confident and sure this is what you want to do.