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5 Tips to Investing Successfully in the Stock
by: Chris Strudwick

Here is a simple 5 Step process to help get you started out on the right track..

1. Finding a stock.

This is the most obvious and most difficult step in stock trading. With well over 10,000 stocks to trade in a good guideline is to consider first in which sector you wish to trade in first.

Of course you would be looking at a sector that is receiving good media coverage and in which the stocks concerned are going in in value.It stands to reason that you would not be looking too hard at a sector that was experiencing a severe downturn.

Once you have decided in which sector you want to invest in, you can then commence to start researching for a stock.

It is always best to have a system of rules already in place that will be used before buy each stock.

2. Fundamental Analysis.

A lot of short term traders might argue with the need to do any Fundamental Analysis at all, however knowing the stocks past history and the latest up to date news regarding the stock can be very crucial.

A good example would be the earnings season. If you are planning on buying a stock that has missed its earnings target the last 3 quarters, I dare say caution might be very wise.

3. Technical Analysis.

This is the part where the indicators play a part. Stochastics, the MACD, volume, moving averages, RSI, CCI, support levels, resistance levels and all the rest. Whichever batch of indicators you choose, whether they are lagging or leading, may entirely hinge on where you get your information from.

Keep it very simple when you first start out, for using too many indicators in the first place is a guarantee to achieve big losses. Get comfortable using one or two indicators first. Learn their intricacies thouroughly, and you’ll be on the road to making more profitable trades.

4. Follow your choices.

Once you have committed to a couple of trades you should then start to manage them properly. For instance if the stock is meant to be a short term trade you would then obviously be watching it more closely for your exit signals. If it’s a longer term trade you then of course need to set up different time frames such as weekly or monthly checkups on the stock.This effectively frees you up and gives you more time to do other things.

You can use this time wisely for keeping up to date with the news, determining your price targets, set stop losses, and keeping an eye on other stocks that you may want to purchase in the future.

5. Keeping an eye on the bigger picture.

This is best achieved by following the particular sector in which you bought your shares .For instance, if you are expecting a share price to go up on an oil stock you purchased and nearly all of the other stocks in oil sector are also rising, then this is cofirmation that you may have made the right decision.

But of course the reverse holds true as well. If the oil sector is starting to show a decline then it might be a good idea to take your profits and run. By knowing in advance and being aware which sectors are hotting up or cooling off stacks the odds in your favour.

For more information on Researching and other related articles go to our Education Section here at Asxnewbie

You just never know which GEM of information might turn up which could lead you to your next profitable trade.

First Foray Into Making Money in the Stock Market
by: Joel Weihe

It all began 3 years or so ago when my insurance and finance company offered me 16 free trades with their brokerage.

It sounded like fun, although I knew absolutely nothing about the stock market, didn’t even really know what a stock market was. So I took the bait, sent them $500, and I was a “trader”. And I made sure everyone knew it, too. I researched companies to death, requested info packages in the mail, called public relation departments, all to purchase 5 or 10 shares of their stock. Great fun. Then I began reading books about investors. Warren Buffet, Peter Lynch ect. ect. and I was hooked. The 16 trades lasted me about 2 months and when it was over, I was almost $100 richer. Sweet. Just playing around, easy money! So they write me an e-mail telling me my free trades are up and from now and forward, that will be $20 a trade please. I’m not a genius mind you, but even that math didn’t add up to me. That next $100 will cost me $320 leaving me with a $220 deficit. Nope, I’ll have none of that. Way to smart to fall for their scheme. Now I’m looking around the Internet about stocks and trading. Good God, there is a whole universe out there. A whole nother world. Brokers and blogs and services and…..well, a lot of stuff. And it all looks so FUN!!!!!! Then, and then I see the “free 2 hour stock market class in your city”. Well, if it’s free, what have I got to lose?

I guess the proper word, the one they used anyway, was seminar. The “seminar” was hosted at the best hotel in town, here that’s the Hilton, and was actually very professionally done.

I arrived, not knowing what to expect, but absolutely knowing what I wanted. Them to teach me, in two hours mind you, how I could get rich fast and easy. And to my surprise, they did!! Well, almost. I had to come back for a weekend course, and it was there that I was to be enlightened on how easily I could make tons of money, just like all these guys had, by just clicking the mouse when the arrows turned green.

I was dizzy, intoxicated by visions of wealth. Quit my IBD subscription (I didn’t), I won’t need it anymore, they told me. Hell, I was thinking, I can even quit my job.

But why then….isn’t everyone doing it? How exactly did it all work? Remember “if it sounds to good to be true….”. Come back for a whole two day seminar, and we’ll show ya. By the end of that two, really two and a half days, I had so much time invested, I may as well give them the $2000 they asked for to get me to subscribe to the web site. So I did. They showed me a whole lot of stuff I already knew from all the books I’d read. So i gave them another five, to teach me about options. They gave me a book, (an online book, and let me watch some guys trade stocks live for a month) that explained what an option was. But…for another $5000 I could learn how to use option strategies. But I’d had enough. Fool me once (fool that I am), fool me twice, but three times. Not you guys, I’ll go somewhere else for that. And I did. (To be fair, the website this particular company offered was actually a very useful and valuable tool. I used it for 2 years and once I figured out that the green arrows weren’t the fountain of wealth, I made some use of it. Just not $7000 worth)

I went to services, guys that told me what to buy, when to, different methods, ect. ect. All to no avail. I just couldn’t make any money. I didn’t really lose money, except the money I spent on services, but stayed pretty even in the markets for a year or so. The people at the services were making money, but not me. Why, Why, Why.

What finally got me off the “pay someone else to do the trading for me” train was when I read about Dr. Alexander Elder and then read his book, Trading for a living. Apart from all the other most useful pieces of information, there a section about the harm you can do yourself by blindly following your “gurus”, and getting off your….and learning to do the work yourself. And I did. And it worked.

There are books about strategies, books about candlesticks, books about Wall Street and books about anything and everything to do with the stock market. There are good books, useful books, worthless books, just all kinds of books. I read them all. Well, not literally, mostly because they begin to repeat themselves and there are so many of them. Seems if you can’t make money trading, you can always write a book about trading. No, that’s not fair, I take it back.

Anyway, I read books and developed a sort of style over some months, an evolving style, if you will, but at least I was trying it on my own. The funniest thing happened after that, I began to win more money than I was losing. Not a lot, but more.

By now I’m well into my second year of being in the market, (notice I didn’t say trading as I was mostly giving) I’ve signed up with a discount broker with really cheap trades and I have discovered options. Yes, options. Sure I read about ‘em and heard about ‘em but had yet to “do it” with them. I had to get it OK’d through my broker and he was willing. Ask, bid, last, open interest bla bla bla. I knew you bought it at the ask price and sold it at the bid price. The first option I bought was one contract of AMX at the money. The very next day was a big day up for the stock, and the option made $100. Did you catch that…One Hundred Dollars on one contract in one day!! Holy crap. My heart was beating so fast, I couldn’t push the button on my computer fast enough. $100 in one day. Of course it continued up, up, up directly after that, but no matter. A hundred bucks. Seriously, that was how I felt. Options were the way to go. Granted, I learned my lesson shortly after that and began to study options and try and learn the proper way to use them. And am still learning today.

When I discovered blogs, it all changed for me. Real people doing real work, rather than paid professionals working 8s. And what a wealth of information and training. Of course, the easy way would be just to match trades, or be an Internet “leech”, as it is called, but I learned my lesson about that with all those pay for trades services. You know the ones. They give you a thousand trades to make, which you obviously can’t afford, and when you complain that your losing, they tell you that you must follow them exactly. All the trades. Smooth.

Instead, I listened to their methods (the bloggers), their madness, the Tech traders and fundamentalists. Listened and read and learned. Blogs. There are loads of them to sift thru. Some, quite a few actually, that are genuine and helpful. Mentors. Yes, mentors. I remember the first. I just sort of stumbled across it and was fascinated. This guy was teaching me more in one night (by reading his site) than all the money I had previously put out. I mean shit about options I had never heard of, VIX(CBOE VOLATILITY INDEX), charting, rules, discipline….I could go on and on and on. It was incredible, the motherlode. I, as well as all of us amateurs out here lurking about are, or should be, eternally grateful.

I started to put all of this advice and learning to use. Follow your rules, be disciplined, set stops and targets, plan your trades ect. ect. And I finally started to make some money. And my account was growing. Whoooo hooooo!!

Boy was I having fun….while it lasted…..

Making money in the stock market, once I started, proved hard to hold onto. I had signed up with a premium research company. My account was growing and against my better judgment, actually I struggled with it at first, I began to with draw cash. It started with greed, of course. I figured I could take out a few hundred, and make it up. Which I did. Right away. Cool. So the next time I took out a little more. Then a little more. Now it was a habit. And a bad one. Taking money out periodically, just to have cash. I took a trip to Sweden, bought an engagement ring for my wife, eating out all the time, was really living it up, and beyond my means, but with real money I had earned. Problem was, my account quit growing. I would get to a number, and withdraw. Always keeping my account stocked and never going below a certain amount. I had learned to make money finally.

I remember when I first started to make some money trading. I had $2000, or there about, when I stopped and took a deep breath for a couple weeks. It was a struggle getting there, and I was terrified of losing it. I read the blogs and paper traded and learned something about forex too. When I came back to live trading, it was all there. I started making good, really good trades, and quite a few. The service I signed up with was giving me great ideas that paid off. Just in small numbers mind you, but real money I was banking in my account. Granted we were right in the middle of an unbelievably strong bull market, but still, I was trading up and down, to the short side, the long side. Cutting my losses early, winners were running, reading news religiously. Remember please, it wasn’t tons of cash like the real traders, but a hundred today, 300 tomorrow lose 70 the next day, and so on.

So now I’m trading, and making money. Now what?

Last year, late in the summer, when it started to go bad, I decided to go to cash with what money I had in the market. It wasn’t easy, cause sometimes the urge to trade was just so strong. I had built my account up a bit, broken lots of bad habits, and finally realized I wasn’t nearly as smart as I thought I was. Here I was, clipping along, feeling pretty good, “banking some coin” and really digging this trading thing, when it started to get a little complicated. It wasn’t quite as easy as yesterday. I started to lose some when I should have winning. Started buying more puts than calls, and it wasn’t always so obvious which way to go.

That’s when I learned about direction and the market has a mind of it’s own. Sometimes it’s up, sometimes it’s down. No one really ever knows for sure which way it will go. Sure, some more experienced traders can make very good educated guesses drawn from quality technical analysis and fundamentals of the economy at any given moment, but not even then can they be 100% positive. So I continue to learn every day, extract what I can from the market and watch my account grow.

And that’s it. My beginning. It’s certainly not an easy endeavor as I had first imagined, but takes work and dedication and time, regardless of all the stuff you’ll read to the contrary. If you read this far, all I can hope is that you take the lessons I learned and fore go the hustlers and scam artists and get on with your studies, then trading and start making money. Remember to be wary of the Gurus and easy money promises. There’s no such thing.

Eventually you’ll want to sign up with a premium charting and research company. There are a ton of them out there. I’ve been through a lot and have landed on and stuck with one that is owned by an ex-floor trader and money manager. The calls and screens they run are generally right on. The key is to find one with lots of services and that will answer your questions fast and honestly. Fortunately for myself, I truly believe I have found that key ingredient for my trading career.

Remember, take your time, learn all you can, use all you learn and be successful!

You can find free video seminars here at my blog as well as links to a place where a Quality education can be obtained through lessons taught be market masters in to live audiences. Links to other quality blogs run by really good experienced traders that have careers in money management, floor trading , running hedgefunds ect. can also be found. My posts consist of ways to be educated without breaking yourself, sometimes trades I have made, some political insights that may effect the markets or economy and just my general opinions.

About The Author
Joel Weihe. Trading Stocks, forex and futures. Real estate agent in Kansas.

http://elditto.blogspot.com