some question about stock, pls help?

Question

i'm new to stock :) just some simple questions...

1. stock up and down, so i should buy when they're up or down? and when to sell?

2. how to know a stock is going to change up or down?

3. i should focus invest on 1 stock or buy each one 1 little?

4. do you have other advise for me, thanks.

Answer 1

There are no simple questions nor answers to any questions pertaining to the stock markets. In fact, for each of your questions, we need to write a thousand page book just to completely explain it and still not be thorough enough.

There are quite a number of things you need to learn before you can even start thinking of the stock markets ...

1. You need to understand how the stock market works and what it is exactly about.

2. You need to know what are the different styles of trading in stocks and shares.

3. You need to read about why so many people lose their shirts in the stock markets so that you can avoid their mistakes and also decide if this is a risk you want to take.

For all these issues and more, you can read about them from some of the articles that I wrote at http://www.mastersoequity.com/articles.htm

After you are adequately armed with the basic concepts and ideas, you need to know how to find profitable stocks to trade or invest in. You can do that the easy way by subscribing to stock pick services (example http://www.stockpickmaster.com ) or you can learn to use charting tools and softwares to find stocks with parameters that you can pre-define. (example http://worden.mastersoequity.com/ )

Remember, the slogan "Just Do It", Just won't do for the stock markets. If profiting in the stock markets is as simple as buying a single stock , then why are so many people still poor?

After you have all the above mentioned knowledge, you need to ask the following golden questions before you can decide whether a stock is worth buying or not :

1. Why are you of the opinion that this stock will rise?

2. Is your opinion valid in the first place?

3. When are you expecting it to rise? Can you hold on for that period of time or longer?

4. What is your expected entry price? After what price would your expected profit margin be too thin to enter upon?

5. Where is your expected stop loss point? What is your stop loss point based on? Where will you tell yourself that it is time to take a loss and get out?

6. Where is your expected profit taking point? What is your profit taking point based on?

7. Does the way you are buying the stock allow you to hold on until your expected profit taking point?

8. How much of your money should you dedicate to this one trade?

9. What is the level of primary, secondary and idiosyncratic risk you are undertaking when deciding how much of your fund to use?

10. What is your cashflow need? Does your cashflow needs allow you to hold the full lifetime of the stock?

After you are able to answer all these questions confidently, THEN you are ready to... PAPER TRADE your stock strategy. Yes, even at this point, you are NOT READY to trade for real. You should trade on PAPER for at least 6 months and become consistently successful BEFORE you take your stock strategy into real life.

Then.. you are ready to start... but there is still no guarantee of success as paper trading is very different from real trading. You will need another maybe 1 year or 2 trading very little money and be consistently successful BEFORE you are ready to increase your stakes.


So, as you can see, success in the stock markets is not easy at all the the less knowledge you have, the more risk you undertake. I lost hundreds of thousands in the stock markets before I become successful.

Take heed and good luck.


All in all, investment and trading is a lifelong education and non stop learning. No one is ever done learning and catching up with changes in the markets.

If you care to read about how I went from completely broke to retired millionaire trading stocks and options by 28 years old, you can go to http://www.mastersoequity.com/

Hope these information helps.


http://www.optiontradingpedia.com/

http://www.mastersoequity.com/

.

Answer 2

Ahh yes, you've asked the billion dollar questions:

1) Personally I'm a fan of buying stocks when they're down. The trick is determining WHY a stock is down. For example if a company misses an earnings estimate by a penny or two and drops significantly this may be a good buying point. However if the stock reported that its major competitor is releasing a better product/or that its main product gives people cancer/etc and drops, you'll probably want to avoid it.

2) Unfortunately there's no good way to tell.

3) You don't want to stick all of your money in one stock (you never know what company will turn out to be the next Enron.) Generally buy at least 5, or get a mutual fund.

4) Unless you find the stock market fascinating, I'd recommend buying exchange traded funds. These are mutual funds that trade on the stock market like stocks, and allow you to buy a little stock in a large number of companies. This saves you the trouble of picking stocks, and effectively eliminates the possibility that you'll accidentally buy the next Enron.

Two examples that hold the stocks in the S&P 500 (the 500 biggest US companies) are the SPDR fund (SPY) and the iShares fund (IVV). This strategy is also highly recommended if you have less than $5000 to invest because its hard to properly diversify a smaller all stock portfolio without paying a lot of money in commissions.

Answer 3

I don't have the time to fully answer your question... but here are some quick 'bottom lines";

Statement #1; There are many people that feel buying a stock at its "high" is the best. They're called Growth Investors.
Those that try to buy at lows are called Value Investors. You should own both types.

Statement #2; There are many books on this subject. Each with different opinions.

Statement #3; Learn "Asset Allocation". Dollar cost averaging would be my suggestion (for now).

Statement #4; Don't take "tips". Don't buy penny stocks until you've traded for at least 5 years. Stay clear of anyone or website that claims "easy" or "quick" money. Spend the next year or more reading on investing. It's not nearly as hard as some would like you to believe. On the other hand, if you buy without understanding what (or why) you're buying... you're doomed to fail. LEARN "ASSET ALLOCATION". READ READ READ.

Answer 4

well i know u buy a stock when it is down, but only when u know it will go back up. which u never really know, but u can usually guess