If you are trying to figure out how to make money in stocks, here are some guidelines you should always follow.
1. The first guideline you should use when starting your portfolio is, figure out your investment term. Are you going to invest on your own or are you going to use a broker. Remember brokers charge fees for their services, but they also give you a head start on investing, because they know the market and how it all works. Make sure you research your broker before picking one. Make sure they are well founded and have a good track record.
2. The second guideline for growing your investment is to research the companies you wish to invest in. Look at the people running the companies, what is their track record? Have they been in other companies that have failed? Look for Companies with low debt, cash flow on the positive side, and consistent earnings. You don’t want to stick with a company that has consistent losses; on the other hand you should be investing in the long term. Just because a company fell short a few times you do not necessarily want to drop them off your portfolio. Sometimes a company goes through changes to keep pace with the demands of a changing economy. During these changes they may experience lower or negative performance. You need to keep an eye out on what is happening in the company. Don’t be afraid to try new companies, sometimes these will provide the best results for you. Again you should be sure to do your research on each company and who runs them. Start with a smaller investment with them and grow that investment as the company performs.
3. The third guideline you should use when learning how to make money in stocks is to keep your eye on what is going on around the world and in the news. The Market reacts poorly to bad news. Also, as we have seen with oil prices as of lately, wars and unrest in places that produce and export oil severely effect what the market price is going to be. Just be aware that just because a situation is bad, doesn’t mean that you will lose value on your stock. For example as we stated about the oil, When the turmoil creates a lack of oil supply, the price increases, if you had stock in that oil, you would have made money. You need to think through the situation at hand and how it may or may not effect each one of your stocks
4. The fourth guideline you should follow while learning your investment strategies is to have a diversified portfolio. Invest in different companies across different product types and services. In other words, don’t have all your companies that are in your portfolio all electronics distributors, or all oil companies, diversify. If all your companies are all of the same type, if something happens with your product type, your portfolio will start to sink. So, keep it well rounded. Think about bonds and Mutual funds as other investments in your portfolio as well.
In closing, you need to figure out how long you want to invest, there are not too many things, if any, you can do that will turn a profit overnight. It comes down to Working hard, seeking the advice of financial experts, doing your research, and keep up with what is going on in and around the world. Follow these guidelines and you should be well on your way to learning how to make money in stocks.