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Trading Tips

     Many individuals succeed by repeating in their minds the steps they need to accomplish to achieve a goal. In the same way its good for investors to regularly review some of the steps recognized that will make them successful. Many of these ideals are familiar to us all, but are worth repeating. Diversify; don't put all your funds in one. All it takes is one earnings warning or a single product mishap and you can end up down 30 or 50 percent. Spreading your funds across at least 6 to 10 stocks is a prudent minimum. Allocate funds across different industries and different exchanges to buffer yourself against market gyrations. A number of times in the past year we've seen dollars shift out of the NASDAQ and into the NYSE for a brief period to just see them return again. Use stops; set a percentage- or support- based loss limit when you enter a position, and stick to it. Keep in mind that a small loss can be recouped with an easily attained small gain, while large losses take much larger gains to just get even. On winning positions move a trailing stop up behind your position to lock-in profits. There are times you can benefit from selling stocks short, buying options, or writing covered call options, but most brokerage accounts require that separate account documents be in place before you can make these types of trades. Get these forms submitted early, because the firm won't be in a hurry to update your account when you're in a hurry to place one of these trades. Trade based on your intellect, not your emotions. Most short-term traders should also have a longer-term portfolio. Some trades turn into longer-term positions. Plan for retirement. After large gains in the market many investors should consider shifting a portion of their profits into other assets, real estate, or even consider paying down a mortgage.

    Learn as much as possible about the investment markets. Subscribe to daily, weekly, and monthly financial publications. Learn about technical and fundamental analysis. Watch for trends. The people who bought Yahoo!, and AOL early in the Internet craze have done very well. The investors who bought Microsoft and Dell early in the personal computer boom smiled all the way to the bank. Cures and treatments are on their way for AIDS and cancer. Fuel cells and other innovative power generation methods are getting noticed. Cleaner burning, agriculture-based, and Middle East independent "bio-diesel" is being developed as an equivalent for petroleum-based diesel fuel and heating oil. Buy and use a computer. You can trade at substantial savings and receive e-mail about your investments. Understand what major factors are moving the markets. Over the past year Wall Street has been enamored with the Fed, interest rates, and inflation. More recently the concern has been corporate earnings and oil prices. Go back two decades and the concern was on M1 and M2 money supply.

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