Before you plunge into stock trading/investment, think twice
By shahamed
@shahamed (92)
Singapore
July 17, 2012 2:57am CST
Yes, recently there has been a craze about investment. Everywhere you turn, you see stock broker advertisements painted on cabs, buses and streets. Everybody is talking about what to short and what to sell. You , just like me, will slowly be drawn into spending your cold hard cash on buying and selling stocks. But before you do take note of these warnings (from my point of view)
1) Stock investment needs capital. Huge amounts of it. If you have less than $1000 usd, you are better off trading in forex via leverage
2) Investment takes patience. Companies pay dividends usually annually (some quaterly). Quite a few companies do not give dividends at all
3) Knowledge is vital. You cant just trade in stocks as though you are gambling in a casino. You need technical analysis (monitoring stock trends) and fundamental analysis (reading news, economic conditions)
4) Get used to losing money. Not every stock you trade will end in profits. Sometimes things can take a sudden twist (remember the recent financial crisis). So get used to losing, however with good knowledge your profits will cover up the losses.
5) There is no best method of investing. Read some books, learn some tips, and formulate your own investment plan.
6) Most of the times, High Risk = High Returns. If you dont plan on taking alot of risks, dont expect much returns from your investments
Happy investing
(Criticism of my points of view are welcome)
5 responses
@niairen01 (1018)
• Philippines
21 Jul 12
as of the moment I'm reading all about stock investment. Why? because I'm really interested to participate. I wanted something to look forward to when I'm old and ready to retire. Well, actually I'm jobless... (full time house wife) but I earn money online and I just wanted to use that earnings as investment in stock.
you're right, we need to study first about stock investing before diving into it. I'm really learning sooo much about it. Plus it's money that we are talking about it. We should first know where we put our doe right?
Although I'm not planning to participate in Stock trading, which they say is really risky. ^__^
@shahamed (92)
• Singapore
20 Jul 12
Not entirely true. There are some low risk investments offered by bank and even by yourself investing in blue-chip counters and reputable trusts is also low risk. I understand that some of the us have a mindset that stock market purely means speculation and gambling and its very high risk.
@o0jopak0o (6394)
• Philippines
17 Jul 12
1.) stock investment needs huge capitals
$1000 is high enough for stock investment to get returns. There are online stock sites that requires your first deposit to be $500 or even $100 in some other sites I know. Much lower in certain countries other than the US.
Trading in forex is not better. It might be cheaper to invest on forex but the risk is greater.
2.) Investment takes patience
Forex also takes patience to profit higher in the long run. You can use forex in short runs but the profit would be lower(losses too).
Dividends are an added benefit but not really the reason to invest in stocks. Companies that does not give dividends use their money to strengthen their company making it more profitable. This means that your stocks will be higher than those that pay dividends in the long run.
3.) Needs knowledge
Forex included. Getting huge returns in stock markets may require you to read news, the economy and such but for that wants good returns does not need to learn stock market investment like it is rocket science.
In Forex, if the country's currency you bought have announced some bad news then your money is definitely in the red zone. Because of fast fluctuations, forex is more gambling than investing in stocks.
4.) get used to losing money
That is why you invest your extra money and not "needed to survive" money. The same with forex.
Minimize losses by buying stocks from different companies(also minimize profits).
5.) no best method
You are right. Best advice is follow your gut. A man that has vast knowledge on technology should follow his gut and invest in tech companies. Don't follow stock tips if you think they are wrong even with people that are on the field for years.
Stock market analysts of CNN lost so much money in facebook stocks.
@SinfulRose (3527)
• Davao, Philippines
17 Jul 12
This is a very good reminder to those who were planning on investing in stocks. Only invest money that you are ready to lose. One really does not need to become a risky investor. In whatever one decided to do there is always risk and one should be responsible enough to be able to manage those risks.
By the way, only invest in small amounts. Take it slow and later one will really become a very good investor. Once one is sophisticated enough, one will be able to invest in anything and no matter what happens to the market, one'll be able to benefit still from them all.
@pringu (151)
• India
19 Jul 12
Hi shahamed, i appreciate that you have pointed out just about everything rightly. Trading stocks is never an easy thing nor it's any sort of gambling. Most people who speculate on price movement of stocks more often than not end up on the losing spot.
There definitely needs to be some analytical calculation both, fundamentally as well as technically, if not too much, to keep making profits from stock markets consistently.
And also the point you made that, it's alwez best to buy or sell a stock according to one's gut feeling or one's own calculations. There isn't any better alternative for picking stocks in my opinion.
