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Beginners’ Tips for Trading on the Stock Market

Trading on the stock market is one of those areas that I find really grey and hazy. One of my earliest memories of CNN is hearing people talking about Wall Street and seeing what looked like a hundred people in a room with two hundred televisions. It looked like a mass of confusion and chaos. I know now that trading can take place in a very calm environment that’s controlled and organised the complete opposite of the CNN visual imprinted in my mind.

I’ve thought about trading on the stock market a few times, but I never made any attempts to do so. I would not know what steps to take. That’s exactly what led to the creation of this post. I asked around and came up with a list of tips for  trading on the stock market.

  1. Be clear about what you are trying to achieve – I guess most people trade on stock markets to make money, but others trade to preserve their income and even as a method of planning for their retirement.
  2. Get an advisor – This is someone who you should trust or who comes highly recommended and has a good track record.
  3. Get a trader – Make sure that this person is not your advisor. You should also  have some trust this person.
  4. Do your own research and read up on the companies that you’re interested in.
  5. Diversify your portfolio
  6. Understand relationships within the various industries – e.g. the performance of automobile stocks can be affected by oil stocks etc.
  7. Don’t be fooled by big words
  8. Past performance is not always a definite indication of what will happen in the future.
  9. Monitor your portfolio to see how it is performing
  10. Keep abreast of current affairs because they could ultimately affect your portfolio
  11. Make use of the free resources that are available – For e.g. the Financial Times, Investopedia