Basic theory Internet Stock Trading
The first, there is not such things as stock tips
Any person that comes at you with a stock tips, is either an inside trader of stock trading internet or simply passing on a hunch. Truth is that most of the information needed to research a company is on the web.
Particularly like to use the Finance section of Yahoo.com. There, all the information you need is at your fingertips. Company summary, historical prices, company headlines, key statistics, competitors, analyst estimates and opinions, insider transactions, major holders, balance sheets, income statements, and company cash flow are all readily available for consumption.
When it comes to make money, there is nothing wrong with a hunch as long as the hunch is based on solid research. Familiarize yourself with the terms listed above and find out how healthy or unhealthy a company is for you.
The second, stay away from loser stocks on the way down
Many people are enamored by stocks who hit 52 week lows. After all, who would not want to own a $5 stock valued at $25 a few months ago. What a deal, they buy the stock at $5, then at $4.50 a few weeks later, and at $3 a few weeks after that.
They have committed the investor sin of trying to catch a falling knife. An investor needs to remember that when a company's stock tumbles 50, 60 70, or more percent, there are reasons for the drop in price. The reason could be a bad balance sheet, a chaotic board of directors, or the possibility of bankruptcy. In any case, when a stock starts tumbling in a downward spiral, stay away from that knife, the trend is your friend.
The third, a penny for your though
Every investor wants the biggest bang for their buck and the biggest return for the smallest possible investment on stock trading internet. For this reason, some choose to invest their hard earned cash into penny stocks, considered stocks which sell for less than $5 a share.
The problem is many of these stocks are not listed on the same exchanges as the larger publicly traded companies. As a result, Penny stocks do not have to disclose much of the same information that is mandated of companies listed on NASDAQ and the New York Stock Exchange. With limited available information, there is no way to be sure of the financial stability of a penny stock company.
The fourth, do not be afraid to pull the buy trigger
Do not be afraid to hit the buy button after your research is completed. So many times, investors will study a company, check-out the company's financial health, and even visit a store location. After doing so they feel confident about the stock and its price, but find excuses not to invest.
They may not find the time, or may choose not to trust their own research. You have to remember that all the research in the world will not make you any money, only buying a stock can potentially make you money on this stock trading internet. After the research was done, an investor needs to learn to trust themselves. Pull the trigger and then put your knowledge to the test. Otherwise, you will always be talking about the stock that got away.
The fifth, do not afraid to take a profit
Most people would be happy with a 20% return on their investment, yet if their $5 investment in a stock turned to $6, they not might consider selling the stock for what they believed to be such a small profit.
Do not be afraid to take a profit once your investment crosses the 20% threshold. By the same token, do not think twice before selling a stock once it's lost 7% of its original value. It is a hop, skip and a jump from 7% to a 20 or 30 percent loss. Selling a stock on this stock trading internet that has dropped in price does not mean giving up on a stock. You can always buy more shares once it reaches a stable price point and starts to move up again in price.
If you avoid the common stock trading internet related mistakes listed above, you will be that much closer to reaching your investment goals. If you have already committed some of the mistakes outlined in this article, learn from your mistakes and move on. Remember, those who do not learn from history are bound to repeat it. Making money on line is possible, provided you put in some time and effort.