Tips for Winning at Stock Trading
- One of the most important things you can do when it comes to investing in the stock market is learn how to control your temperament. Many inexperienced investors make the mistake of allowing the market to control the way they behave. When the market is down, they panic and sell their shares. When the market is moving up, they buy as much as they can. If you can instead stick to your investment strategy and research each investment thoroughly, you can be much more successful.
- When companies release their annual reports, you can use this information to your advantage by utilizing financial ratios. Much of the information that you find on financial statements can be analyzed and compared against other companies. For example, you can use the price/earnings ratio to gauge whether a company's stock is trading above or below where it should. You should also look at factors like the beta of the stock, which tells you exactly how volatile it is.
- When you get involved in the stock market, you need to be able to stay focused on the task at hand. With thousands of different stocks to invest in, many people can get pulled in different ways. Instead of allowing yourself to be swayed by the latest media darling company, focus on what you want to do as an investor. Research each stock thoroughly before making a decision and allow your own research to carry more weight than that of a media analyst.
- When you are looking at a company in which to invest, take into consideration how much it regularly pays out in dividends. Many investors forget about dividends and think that you can only make money with capital appreciation. In many cases, large companies pay more out in dividends than smaller companies, which can be a source of passive income. When you add the dividends into the growth of these companies, it is often greater than what you get from companies that do not pay dividends.