Stock Market Trading Tips

Try virtual trading first
To help familiarize yourself with stock trading initially, it’s a great idea to try a virtual trading game. You can experience the excitement of trading without risking any money. The good thing is if you make a mistake, it won’t cost you a cent. One of the most popular virtual stock trading games is the virtual stock exchange.

Have a trading plan
A trading plan is absolutely essential if you are you want to be successful. It has can greatly help limit your losses and increase your profits. It can also help reduce the emotions and stress that are so often associated with stocking trading.

Take your time choosing your broker
There are so many stock brokers to chose from nowadays, you can afford to be picky. The best broker for you will be dependent on your strategy. If you make a lot of trades, the cost per trade is going to be a massive factor for you.

Try to find stocks that you feel are undervalued
Like all financial markets, stocks go through periods of being overvalued and undervalued. Look at the companies financials, price/earnings ratios and compare them to other companies in the same sector. I know it sounds like an obvious stock trading tip but don’t buy high!

Be disciplined
Out of all the stock tips, this is my favorite. Always do your best to trade in a disciplined way. If the price of your favorite stock is too high, stay out until it has a better price. Even if the opportunity to buy your favorite stock at a good price doesn’t come up any time soon, it’s better missing out than buying high and then having the trade turning into a loser.

Always be prepared for the worst
Stock markets have gone through major booms and busts for centuries. Would you and your trading system survive a financial crisis that occurred in the 1930s? Or more recently the 2008 financial that caused global chaos.

Leverage other peoples trading experience
Many financial channels TV channels can help you to learn about stock trading, Bloomberg for example often has fund managers talking about what they are buying and why. However, it is important to be careful, many fund managers lose money. Try to leverage what they know, never blindly follow them.

Forget the “holy grail”
It’s not worth your time looking for the “holy grail”. To be successful you need to work hard and be smart and have a bit of luck. There are many people trying to sell products that claim to be the “holy grail”. If they had it, they’d be getting rich, not selling it.

Be realistic
This is perhaps one of the most important stock market trading tips. Have a realistic goal for your returns. If you are conservative, 10% per year might suit you. If you are taking more risk, you may aim for 30% or more. Whatever your goal, make sure you are never blind to the potential downside risks. The worlds most successful investor Warren Buffet often says “the biggest risk in investing is ignorance”. I love this statement.

Don’t pay attention to spam
Have you ever received spam e-mails telling you about the next “hot stock”? They are often fraudulent schemes aimed at steeling your money so avoid them!