Stock Exchange Tips

The stock market is a popular investment vehicle for all kinds of people with all kinds of unique investment goals. Knowing your own goals and objectives, devising a strategy and being an educated trader are a few crucial elements required to be successful when trading on the stock market. No investment strategy is foolproof, but by following a few simple tips and tricks, you can be more successful with your stock investments.

Have a Trading Strategy
Before you buy or trade even a single stock, be sure to have a strategy that you can stick with. If you are constantly switching your objectives and strategies, you won't be as successful as you would if you stick to one strategy that works for you. In order to figure this out, you need to evaluate your objectives. For example, are you looking for slow and steady growth through long-term investments, or do you want big gains quickly? Can you afford to take risks or do you want to play it safe? Warren Buffett has a very successful value-based strategy that you can read about in the book "Think Like Warren Buffett."
Get Smart about buying and selling
Now that you have objectives and a strategy in mind, they should come into play with every stock-investment decision you make. It isn't enough to follow the latest hot tip or buy penny stocks hoping to spend a little and get rich quick. You need to research each opportunity and decide if a) you believe that the company has potential for upward mobility, and b) the stock fits into your overall strategy.

Knowing when to sell can be a little tricky. There is never a surefire way to know when to sell, but there are some general rules of thumb. Don't set rigid limits that apply to all your stocks, such as "I will sell this stock once it doubles or triples or quadruples in value." By doing this, you may actually be missing out on even higher returns. Evaluate each stock individually---don't generalize. Another tip: don't be afraid of slight fluctuations in the price of your stock. If you are in it for the long-run and believe in the stock, ride out these bumps and dips.

On the other hand, if a stock price continues to plummet, seriously evaluate the stock and know when to cut your losses.
Diversify Your Portfolio
Diversification is an important aspect of being successful in the stock market. Your portfolio is diversified if you have a variety of stocks from companies in different industries and even on foreign stock exchanges. The idea is that if some of your stocks plummet, other stocks may be fine, or even go up. For example, if you own stock in a print media company and an online media company, you can protect yourself from big losses--if print ad sales are down but internet ad sales remain strong, you may lose money with the print media company's stock, but may gain money with the online media company's stock.


Information for Investors
About Diversification

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