You need to consider some basics before you enter the world of investing in stocks. The main reason: the stock market is a field dominated by savvy investors, who know the ins and outs of making profitable trades. For people who are not on the inside, Wall Street can be a very dangerous place. Here are a few tips that can help you in your beginning stages:
1) Don't even consider "tips" that tell you about "hot stocks". Consider the source: if you had a huge, cannot miss, money making investment tip, would you offer it the world at large, free of charge? You wouldn't, and neither would anyone else. If someone is touting a can't miss stock, they most likely have a financial interest in seeing the stock rise. Conversely, if they are rooting for the stock to miss, you can almost rest assured that have "shorted" the issue.
2) Always do your due dilligence. You'll hear this advice over and over again, and that's because it's extremely important and bears repeating. You must always do your own due dilligence. Relying on the advice of others, no matter how well intentioned it may be, is almost always a recipe for disaster. Make sure you dig in and really examine the public numbers and financial releases from companies. Nothing tells the story more clearly than the numbers. Ignore basic touting techniques like press releases which have very little substance, and rely instead on hype to tell the company's story.
3) Only invest money you can afford to lose. Sure this is a basic point, but tons of people miss it. You should only invest money that you can honestly afford to lose, and without any tears, if the worst case scenario comes to fruition. Everyone enters into investments with the right idea of earning big profits, but in many cases, this never pans out. If you lose your rent money, you can rest assured that your days of dabbling in the stock market will come to a very quick and bitter end. ut asides small amounts of money each week from your paycheck for savings and investment and use that.
The learning curve for investing in stocks can be steep, but in the final analysis is well worth it. In no other endeavor can you make the types of returns that are associated with the world's greatest stock investors. But make sure to take your time, and keep detailed records of all of your transactions, with particular attention being paid to what you were thinking when you made the trade. Over time, this record will become an invaluable instrument for helping you determine what type of trade makes you the most money, and it will also give you insights into your character as a trader. There's plenty more to learn, of course, but hopefully these basic ideas will help you on your stock investing journey. Good luck.
The Foreign Currency markets (Forex or FX) were deregulated in 1997 and no longer the private domain of the banks, insurance companies and other large financial institutions. Private investors quickly discovered what the large trading companies knew for a long time. Which was, it is much easier to invest in currencies for a profit than invest in stocks for a profit.
In every currency transaction there is one winner and one loser. The winner simply needs to make more than the commissions (Pip's) charged them by the brokerage firm they are using. When purchasing a stock, the seller of that stock could be selling that stock at a loss, and the person they bought it from could have sold it at a loss and the person before that could of sold it at a loss and so on and so on.
One of my biggest pet peeves when watching the business broadcast on television is when an investment banker from one of the stock brokerage firms come on and says, investing in the stock market over the last 100 years has been proven to produce the largest capital gain when compared to any other form of investment. At that time I wish I was a TV host so bad, because I want to ask the lying banker, exactly which companies would you have bought 100 years ago that are still in business today?
Can't you just hear them when you ask that, I am sure they would then mention some more fabrications like this, well there aren't too many, but if you sold this company after 2 years and then bought this other company and held it for 5 years and then sold it and bought XYZ firm and held it for 8 years, just a bunch of useless trash talking. That's my opinion anyway.
In essence, purchasing currency is a lot more like gambling on two sports teams than it is similar to purchasing stocks. When gambling on sports teams there are two participates and one wins and one loses. The winner pays the commission (Vic) to the bookmaker. There are quite a few differences between gambling and investing in currencies though.
First, the quantity and quality of information the currency has at their disposal when attempting to decide on when to buy and when to sell is vastly superior to gambling on sports teams. In fact, if you follow a few simple principles and don't get greedy this information can be used to virtually guarantee profits. The next difference is the upside potential verses the downside loss in trading currencies.
When gambling a gambler will normally invest in a one on one situation, in other words they invest one dollar to make one dollar. The currency investor on the other hand can limit their losses to what of percentage of their upside gain they believe is possible. If a gambler is correct 50% of the time they are still losing money. If a currency trader is correct 50% of the time they are traveling around the world on their own yacht trading with their wireless internet connection visiting every exotic know location. That is quite a substantial difference.
There are quite a few more reasons that investing in currencies is the best form of trading, but I am only going to mention one. If you manage your money correctly and have a low tolerance for risk then you only need to be correct somewhere around 20% of the time to break even. Even a blind monkey can do that. Really if you just throw darts at a chart you are going to be right 20% of the time. Since most of the people reading this will be new to the currency markets I highly suggest you acquire a quality education before attempting to trade. Yeah, it is not too tough, if I can do it, surly anybody can. But, I got my education before starting.
Both Darren Mclaughlin & William R Alheim, Jr. are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.