The stock market is a wild beast that can't be tamed. Sometimes, a raging bull is what causes all stocks to go up into the sky. Sometimes a raiding bear uses brute force to smash all the stocks to the ground. You have to ride this beast if you want to get into the stock market. Depending on how you handle yourself, it can be a rough ride or a smooth one. But, hey, you can be careful and plan your investments well if you keep in mind these five things:
- No one can time the market. To know how the market will move, you'd have to be God, which you're not. So, be happy when you get in, be happy when you get out, don't regret, don't worry, and SMILE no matter what you do, as long as you do it right.
- You can't let your feelings get in the way. Never let yourself get attached to a stock. Stocks are a type of asset, and you should think of them that way. If you don't, and you keep a stock no matter what, you will miss out on many chances to make money.
- It pays to know: If you understand the stock you are buying, you will do well. How does it make money? Is it making money or losing money? Is the price on the market fair? Are the people in charge honest, or are they sons of Enron? Is there a lot of hope for the industry? Look, if you know what you're doing on the stock market, you can make a lot of money. So, get good at numbers and trends in the economy and around the world. Look at all the things that affect a stock and then take action.
- Keep track of your profits and stop your losses. Profit is like a thief: if you don't catch it, it will run away. If you don't shake off loss, it will stick to you like an insurance salesman. So, you should always take profits and cut losses on the stock market. Even the most successful investors have done this, and they are people just like you. So, what's stopping you? Do you understand?
- There is always a limit: No one should bet more than they can afford on the stock market. In the end, if you play more than you can afford and something goes wrong, you will lose face and your family will feel the effects. When playing the stock market, it's best to keep your risk-taking and sense of adventure in check. After all, it's a market, not a jungle that needs to be explored.
Well, these are some basic things you need to know before you start trading stocks. You will make mistakes, but that's normal. Everyone who plays the stock market does. Just make sure to play the market by the rules, and you'll be able to take advantage of booms and survive busts.
