Stock Trading Accounts: Help and Advice for New Traders have been added below to assist our Readers in learning how stock trading works as well what to avoid.
We recommend a Full Understanding of the basic Stock Market Rules of Thumb, before a Stock Trading Account is opened.
1. Traders should avoid doing trades within the first thirty minutes and final thirty minutes of the trading day as this is when the market is most volatile and when liquidity could be considered much lower than usual.
2. Traders should always remember to account for any commission charges whilst calculating any potential profits from their investments.
3. Over the period of the year traders should always remember to place funds within safe investments such as bonds to ensure they have enough means to pay their taxes at the end of the tax year period.
4. Traders are advised to sell when the anticipate a particular event such as election results and so on where people are enticed to buy as when the occurrence finally happens buying will inevitably slow down.
5. Traders should never over commit their funds as when they have all of their capital on the line then this often leads to irrational thought and actions.
6. Traders should not put all of their eggs in one basket. Traders should try to spread their funds over several investments rather than a single venture to eliminate the risk of losing it all in one swoop.
7. Traders should never pyramid their profits. In the event of the trader making a large profit they should never plough all of the money back into the venture as this will heighten the risk of losing all of their funds.
8. Traders should always expect to lose some money on some of their investments. These things happen naturally as a part of life. If you diversify your investments then it wont seem as bad when one loses its value.
9. Traders should always trade when they have set a clear date to attain their profit objectives.
10. Traders should be very careful when dealing with takeover candidates as most of these fail to occur and on the occasions that they do it usually takes much longer than expected.
11. You should always trade based on the numbers you have calculated and the results of your research. Although guesses and gut feelings may pay off occasionally they should be considered luck and the process will not happen frequently.
12. Traders should never buy stock just because it is being sold at a low price, the stock could drop even further after you have purchased it.
13. Traders should not sell stock just because the prices they are being offered seem high as the prices could rise even further.
14. Traders should only invest in actively traded options and stocks.
15. You should always plan your next moves well before the market opens again. If you leave it too late until trading has started then you may find you do not have enough time to have all the information at hand before you buy.
16. You should always obtain any information you need about a project from multiple sources. The trader should not rely on one source to invest their money in as they may be wrong or out to help you lose your money.
17. You should only invest in a project after you have thoroughly researched the investment. Don’t just invest when you see stock prices rising as this could be a false indication and it could drop quite rapidly in the near future.
18. You should always take into account your reward and risk on each and every investment,
19. Traders should never use their personal money that is needed to survive on investments unless they are in the form of bonds or money markets.
20. Traders should always keep their eyes peeled for investment guru’s, brokers and experts who do not trade themselves. If they were always right with their advice then they would be investing themselves and not advising you to invest.
21. Do not buy stocks that you see being pushed in the media such as monthly magazines and so on. The article you are reading may have been written some time ago.
22. Make sure the Stock Market Trading broker you are using is the right one for you. Make sure you receive the service that you are paying for and if not put your foot down to make sure you are getting it.
23. Traders should always make sure that they read monthly statements and execution reports completely as everyone makes mistakes from time to time.
24. Traders should always learn from their mistakes of the past as you can get away with most of the first time mistakes but if you repeat them then you could be considered stupid.
25. Set goals within your portfolio be it each month, quarter or year. If you achieve your target then celebrate it as you will deserve it.