Buying stocks is not difficult, but you’ll need a few days lead time if you haven’t done it before!

On the other hand making money consistently from buying stock is very difficult – the fact that most managed professional funds do not beat the index, tells you that even professionals dont find this easy. So take everything you read with a grain of salt.

STEPS

1. Do nothing until you have chosen a system, rules for buying and rules for selling. So read widely and study. Watch the market and then paper trade ( that is pretending on paper you bought the stocks!) : prove you can make money at stock speculation before you ever part with a single dime. Once money is in your account, the temptation is too high to spend without careful thought.
2. Decide on a system. And then decide on the best vehicle to trade. If stock speculation, not long term investment is what you are after, maybe contracts for difference , spreadbetting or binary betting could be a better way – depending on local laws and tax rules – and how quickly you intend to get in and out of the market. Investigate all of the options.
3. Then if you have decided on trading raw stocks. Sign up with a stock broker on their website. A broker is registered with one or more “stock exchanges” (e.g. NYSE, NASDAQ, etc.) to execute stock trades on your behalf within that exchange’s market.
4. Send the broker an initial deposit of funds. (Your broker needs this money to purchase your stocks.) The usual minimum is $2000 but can be as little as $500.00. Some websites don’t require a deposit at all.
5. Your broker must report your stock trades to the IRS. You will need to fill out the required forms and mail them back to the broker, possibly even before they will allow you to make your first trade. (Your broker will send you the forms.)
6. Select your stock, notifying your broker of the company’s “symbol” (a 1-4-letter code), the price you’re willing to pay per share, and the length of time for which your offer will be valid.

TIPS

• Before you buy anything - stop. Watch. Learn. Paper trade. Don’t trust anyone’s advice until you have confirmed that what they say works consistently. If you are considering buying a trading system from anyone, look at some of the reputable financial forums such as trade2win or moneytec. You will find most of them there….and a heap of dissatisfied customers.
• Decide before every trade on a stop loss. And exercise it ruthlessly. Don’t make decisions on the fly!
• Don’t buy too much of one investment, so you be better able to deal with temporary setbacks; balanced portfolios increase in value in the long-term.
• Index funds provide a balanced, low-cost (low/no management fees) way of investing, and have consistent long-term gains.
• Instead of offering a specific amount (and a timeframe) for the stock, you may purchase the stock “at market value”, which executes immediately.
• Although you should “diversify” your stock portfolio by owning stock in several industries, buy stock primarily in industries you are familar with. (tech stocks if you’re a geek, auto stocks if you read a lot of car magazines, etc.)
• Search for “online discount brokers” on a search engine to find a list of brokers that you can use to buy and sell stocks online. Scottrade, Etrade, and TD Waterhouse are just a few of the many options. Be sure to compare their fees and see if they have any hidden fees before signing up.
• “If in doubt, do nought”.

WARNINGS

• Before buying stocks, make sure you have a decent idea of how to choose which stocks to buy.
• There is plenty of free advice from reputable people. There is also plenty of free and seemingly credible advice that is both misleading and wrong.
• Many of the established text books and bibles on trading – particularly on technical analysis – contain assumptions repeated so often they have gained the status of fact without ever being proven! If you find that hard to believe then download a stock price into a spreadsheet and test the moving average crossing methods repeated in every book on technical analysis and shudder at how much money you would have lost! It just isn’t as simple as it is painted.
• Make sure your broker is registered with the SEC. Stick to the brokers advertising on network TV if you are unfamiliar with the industry.
• Depending on the brokerage fees, it will be difficult (or take a long time) to recoup an investment of less than $1500 on any single stock purchase.
• In addition to the price-per-share that you offer for the stock, your broker will charge you a flat transaction fee, as well as an SEC insurance fee. The SEC fee is about $5. You pay these extra fees when both buying AND selling a stock.
• Realise that people who promote a stock often do so because they want to sell it. In other words they hype a product in order to sell it. This way of looking at things is called “Contrarianism”. So when people say “BUY”, its actually time to “SELL”, or if you don’t hold stock already, it maybe not the time to buy at all! Always DYOR (Do Your Own Research) and then some.
• Most day traders lose money, and very few fund managers beat the indexes over any length of time. Stock trading is easy. Making money is hard. So look for a system, prove it to yourself, and then dont deviate!

How to Get Rich

It seems that everyone wants to get rich. There are books out on that subject, classes that are headed by someone who can show you an easy way to get rich, rich people willing to drop advice on how to get rich, and many other schemes that guarantee you will get rich fast. Getting rich is one of the main goals of most people, and while it is never easy, there are some sensible techniques that will increase your chances of getting rich.

STEPS

1. Define “rich”. It’s one of those subjective words that everyone uses but no one defines. What are your standards for being rich? In other words, what do you envision when you think about being rich? This can be different for everyone. Usually it whittles down to a few common goals:
   
   
   • Prestige. For many people, the idea of getting rich is tied to getting respect. It’s not so much about how much money you have, but about maintaining a luxurious standard of living–exotic vacations, nice cars, swimming pools, etc.
   • Retirement. Some people want to get rich so that they never have to work another day in their lives. In this case, the standard of life one wishes to maintain once retired is critical to understanding how much money is needed to get rich.
2. Keep your eyes and ears open. All the time interesting people and chances appear and disappear. Get a feeling when to step forward and when to wait.
3. Delay gratification. If you’re looking for information on how to get rich, then you’re probably not rich right now, and there’s a reason for that. Are you spending money on things that won’t get you rich? Are you sticking with a job that doesn’t make that much money to begin with? In order to get rich, you’re going to have to give up some of the things you enjoy doing now, so that you can enjoy those things without restriction later. For example, you might like having free time, so you give yourself a few hours a day to do nothing. But if you were to invest those few hours into getting rich, you could work towards having 20 years of free time (24 hours a day!) with early retirement. What can you give up now in exchange for being rich later?
   
   
   • Cut expenses
   • Get a job that pays more or get a promotion
   • Downgrade or give up your car
   • Downgrade your apartment or house
   • Reallocate your spare time
4. Save money. You’ve heard the phrase “It takes money to make money.” So start socking away the extra money you’re making now that you’ve delayed gratification as outlined previously. After all, what’s the point in giving up the stuff you like if you have a hole in your pocket? Start building a “get rich fund” at the bank. Always pay yourself first. This means before you go and blow your pay check on a new pair of shoes or a golf club you don’t need, put money aside in to an account that you don’t touch. Do this every time you get paid and watch your account grow.
5. Invest. Once you’ve stockpiled your savings, start thinking of ways to invest it. This is where your definition of “rich” really comes in handy. If you’re looking for prestige, for example, a good investment would be education. Save up enough money to attend an Ivy League school and obtain a degree in something that will make decent money but, more importantly, earn great respect (doctor, lawyer, dentist, any kind of professional). If your goal is to retire early, on the other hand, invest that money in stocks, bonds, or other vehicles of investment that will give you an annual return on investment (ROI) that’s enough to maintain you in your retirement. For instance, if you have one million dollars invested and you get a reliable 7% ROI, that’s $70,000 per year! Invest in relatively stable assets – rental properties or potential development land in steadily growing areas is a good example. Put your money not in luxuries that will be worth nothing in a couple of years (a fancy car, for example), but in things that will increase in value over time, and that will earn you supplementary income in the interim.
6. Stay rich. It’s hard to get rich, but it’s even harder to stay rich. Your wealth is always going to be affected by the market, and the market has its ups and downs. If you get too comfortable when times are good, you’ll quickly drop back to square one when the market hits a slump. If you get a promotion or a raise, or if your ROI goes up a percentage point, don’t spend the extra–save it for when business is slow and your ROI goes down two percentage points.
7. Network with the Rich It’s always an excellent idea to surround yourself with other rich people; whether you have already become very rich or whether you are just starting out and clueless. Understand how the rich think and the way they manage their money. Fly first class or business class once in a while, spend a weekend at a luxury golf course; if you can’t afford to do too much traveling and spending, then use the internet instead.

TIPS

• Surround yourself with self-made millionaires. Learn from them. It’s been said that “like attracts like”. Get all the information you can about how rich people started making big money and what they are doing now.
• Every night before you go to bed, empty all of your spare change (coins in particular) into a jar. This takes time but after about one year you may have at least $150 saved up in coins.
• If money is burning a hole in your pocket for something specific (a new car, for instance, when your current model works fine), force yourself to wait a month before buying. Ask a family member or very trusted friend to hold your money for you if it’s that much of a temptation. Spend time considering the real cost of what you want to buy, the pro’s and con’s, how much it will set you back in your aspirations versus the immediate satisfaction, and how that money might be put to better use. If you still can’t live without it after a waiting period, it’s yours, but often you will find that an immediate desire looks less and less attractive once you stop and think about it.
• If you find yourself wanting something big to gratify you immediately, divert yourself with a small indulgence rather than giving in to the large one. Walk away from the designer suit or purse, but on your way home, buy an ice cream cone or catch a movie instead. The $8 movie ticket is a lot less expensive than the $800 purse, but gives you the same feeling of doing something “just for you.”

WARNINGS

Get rich quick schemes are invariably scams. Avoid them. There is no such thing as free money unless you inherit it. Then you must handle it wisely, or you will lose that as well.As there is no free lunch, nothing can be obtained without struggling for it.The best way to get rich quickly is having a plan and able to implement the plan successfully,if possible with a team that is well experienced and interseted in helping you.

Articles, Basic Knowledge article, Tips&Trick

Buy Stock Online

As the Internet grew and grew more and more companies emerged online. Over time that has come to include online brokerage firms. An online brokerage firm is nothing but a brokerage firm that operates completely online. Some brick-and-mortar firms have also moved to the Internet and are available in both venues, both online and off.

Should you buy stocks online ? Isn’t it risky to deal with your money over the Internet?yes, to a degree buying stocks online can be risky, but so can buying stocks off-line. If you are concerned with security, you just need to make sure you get involved with a very reputable company with excellent security features on our website. Over time, these websites have become better and better with security and other features, so it shouldn’t be hard to find a great one. Just make sure shop around and look forward reviews.

The great thing about buying stocks online is that it is cheaper and easier. By executing trades online, brokerage firms can save money and therefore charging smaller commission fees. It is also easier because you just need to go to your computer, enter in your trades, place them, and you’re good to go. It really is that simple. If you’re looking for a way to buy stocks, whether for the first time or whether you’ve done it before,and you want to save money doing it, buying stocks online is the way to go.

To buy stocks online requires a membership into a brokerage firm, or a minimum purchase amount to purchase them directly from an individual company. Those interested in this should be at least minimally educated in the process of the stock market and the risks associated with purchasing. Choosing a broker or financial advisor requires careful research and referral. Some of the most well intentioned people in the world may be nothing more than salespeople who have been trained to sell investments. Many financial advisors will offer free advice to purchase assets on the Internet, but commission only advisors will only get paid when the purchase is actually made. There are however, the options of hiring a fee-based financial planner. Rather than charging a commission off of each investment purchased, a flat fee is charged for services, or to manage a client’s assets.

These types of planners have no incentive to sell the client a particular stock and are therefore impartial to the specifics of the client’s purchases. The client should be well aware of the definition of assets before actually investing any amount of money to buy stocks online or through a brokerage. When a company needs money to fund its business activities, it will sometimes “go public”. This means that they sell shares or pieces of ownership of itself. These shares or pieces of ownership are called stocks. When an investor decides on buying stocks, they are buying a small piece of a company. The term most appropriate to describe this ownership is “equity” in the firm. Shares of these pieces can be bought and sold 5 days per week during business hours on the exchange happening at Wall Street.

If the company does well and the future of the company looks bright, then buying stocks prices rise as more investors are willing to pay a higher price for equity ownership in the company. If the business loses money, the equity will also decline, and so will the investor’s money. The most important rule to buy stock online or through a financial advisor is to diversify the investments. In other words, don’t put all the eggs into one basket. One of the safer risk options to buy stocks online or through a financial planner is to purchase mutual funds. A mutual fund holds hundreds of individual stocks. This is a way to gain instant diversification, even though a limited amount of mutual funds have been purchased. When purchasing assets in mutual funds, all are broken down into three broad styles: growth, value, and blend.

Growth buying stocks are shares of companies whose earnings and revenues are growing at a rapid rate (for example: technology stocks). These are riskier because they will eventually stop growing, but the investor does not know when, or they may crash suddenly. Value buying stocks are “unloved” stocks. These shares may be with companies that have recently hit a rough patch, or have a soured industry in the market, and the share price is believed to be lower than the actual company’s value. Those looking to get these over the Internet in the budget category tend to choose the valued assets, hoping that they will rise in price once the company gets on their feet again. Mutual funds that contain both growth and value are called blend funds. In addition to the three types of funds, there are also three sizes of funds. These sizes are referred to as: small-cap, mid-cap, or large-cap.

To buy stocks online that are small-cap means purchasing ones from smaller companies. Many times, these small companies are the newest and fasted growing firms. Mid-cap buying investments are a bit larger in company size, have already established themselves, but do still show tremendous potential to grow at a rapid rate. Finally, there are large-cap funds. These funds are considered the most safe. These shares belong to incredibly large companies or firms that have established themselves as the forerunners of their particular industry in this nation, and usually around the world. The last characteristic that needs to be understood about buying assets and mutual funds is whether the fund is actively managed or unmanaged. Most mutual funds are actively managed. They need to be, in order to offer the best combinations of stocks to sell as a whole to an investor.

Index funds are typically unmanaged. An index fund simply tracks an existing market index. The most common Index fund is the Dow Jones Industrial Average which is composed of only 30 stocks. The other popular Index fund is the Standard and Poor’s 500 stock index. Index funds have typically outperformed the majority of actively managed funds. The biggest reason being that investors are charged less in transaction fees, which in turn boosts their net return. To buy stocks online in the form of an Index fund can be the first step to entering the exciting market exchange system of stock.” Through wisdom a house is builded; and by understanding it is established.” (Proverbs 24:3)

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Investing Stock Market – Sooner Rather Than Later

You enter a trade. It goes well for the first few moments. Then without warning, it turns and goes the wrong way! Horror of horrors! Now in the heat of the moment, you battle your wits for the best decision to make as the trade gets worse … cut now? … or wait a while more?

The same thing happened last month. You decided to cut your losses fast. And as soon as you did, the trade turned around and went on to be a big winner had you not cut and run.

• “Why didn’t you wait?”
• “Why were you so hasty?”

Then last week, the same thing happened again and being smarter, you decided to hold out. The trade continued losing. The longer you held it, the more you lost. But you knew then that as soon as you cut your loss, it would have turned around. So you held on and the losses kept mounting.

• “Why didn’t I cut sooner?”
• “Why did I hold on for so long?”

By the time you made that cut, the loss was insurmountable.  And the trade turned around right after the cut.

Let’s resign ourselves to one fact;

Whatever the decision, it will always be the wrong one.

So a simple lesson in this is that if we are going to make a decision, it WILL always be the wrong one. Cutting losses fast will return the trade. Cutting too late will continue the trend. What ever you decide, the market is going to take the mickey out of you.

So to overcome this dilemma, ask yourself a simple question:

“Investing Stock Market ….. Is it better to make the wrong decision sooner or later?”

The answer is obvious, isn’t it? I don’t know why anyone, in their right mind, would want to prolong an agony. If any decision you make is going to be the wrong one, then get it over and done with it quickly. Here’s another line of investing stock market logic  …

You know that the moment you cut, the trade will return. So why don’t you cut it quickly and be ready for another entry as soon as the trade returns? (okay, that is speculative … but it works for the psychology!) At least it is obviously better than running the losses deeper.

Likewise, you know that you are always going to take profit too early. So what can you do? Answer: Make the wrong decision early because making it too late will surely eat away your profits or could even end up with profits becoming losses.

But in profit taking, you do have the advantage of taking some profit and leaving some to be greedy. It is always a good way to manage your profits. Take it when you have it but do it in stages.

For example, if you have 10 lots long and they’re making some money, take half off the table when you reach your time/profit target. Let the remaining five lots run. The worst that can happen now is you can still get out at break-even if the trade turns against you.

If the 5 remaining lots continue the profitable trend, when the trade hits a resistance, or if it stalls, take three more lots of the table and see what happens to the last two. At this point in time, you’ll have no fear and nothing but greed to manage. Should the remaining two lots reverse, your worst case scenario is that you can still get out at breakeven on those two lots and still get to keep the profits of the first eight lots.

In a best case scenario, you are now in a position to put on a trailing stop and let the profits of the last two run to the sky.

So avoid procrastinating on your trading decision. Make it quick, make it sensible and make it happen … make it sooner and never later.

Moral of the story is that in Trading (investing stock market), it is NOT “better late than never” because in Trading, late is as good as never.

[posted by Conrad]

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