Your Questions About How To Pick Stocks

Joseph asks…

will the stock market pick up?

John answers:

Hey there !!

If you are talking of US stock market, I think it will pick up….and regarding european stock market ..they are doing good. Commodity market is also doing good. I think gold is perfect in any season.

Good luck

Mary asks…

how do you trade stocks?

I want to learn to trade stocks in order to make extra cash to pay for my college tuition. can anybody help me out ?

John answers:

I see you are interested in investing in the stock markets. Start trading stocks is as simple as opening a trading account and then picking a stock and then buy. However, that simplicity is truly the wolf beneath the sheep’s skin.

There are quite a number of things you need to learn before you can even start thinking of the stock markets …

1. You need to understand how the stock market works and what it is exactly about.

2. You need to know what are the different styles of trading in stocks and shares.

3. You need to read about why so many people lose their shirts in the stock markets so that you can avoid their mistakes and also decide if this is a risk you want to take.

For all these issues and more, you can read about them from some of the articles that I wrote at http://www.mastersoequity.com/articles.htm

After you are adequately armed with the basic concepts and ideas, you need to know how to find profitable stocks to trade or invest in. You can do that the easy way by subscribing to stock pick services (example http://www.stockpickmaster.com ) or you can learn to use charting tools and softwares to find stocks with parameters that you can pre-define. (example http://worden.mastersoequity.com/)

Remember, the slogan “Just Do It”, Just won’t do for the stock markets. If profiting in the stock markets is as simple as buying a single stock , then why are so many people still poor?

After you have all the above mentioned knowledge, you need to ask the following golden questions before you can decide whether a stock is worth buying or not :

1. Why are you of the opinion that this stock will rise?

2. Is your opinion valid in the first place?

3. When are you expecting it to rise? Can you hold on for that period of time or longer?

4. What is your expected entry price? After what price would your expected profit margin be too thin to enter upon?

5. Where is your expected stop loss point? What is your stop loss point based on? Where will you tell yourself that it is time to take a loss and get out?

6. Where is your expected profit taking point? What is your profit taking point based on?

7. Does the way you are buying the stock allow you to hold on until your expected profit taking point?

8. How much of your money should you dedicate to this one trade?

9. What is the level of primary, secondary and idiosyncratic risk you are undertaking when deciding how much of your fund to use?

10. What is your cashflow need? Does your cashflow needs allow you to hold the full lifetime of the stock?

After you are able to answer all these questions confidently, THEN you are ready to… PAPER TRADE your stock strategy. Yes, even at this point, you are NOT READY to trade for real. You should trade on PAPER for at least 6 months and become consistently successful BEFORE you take your stock strategy into real life.

Then.. You are ready to start… But there is still no guarantee of success as paper trading is very different from real trading. You will need another maybe 1 year or 2 trading very little money and be consistently successful BEFORE you are ready to increase your stakes.

So, as you can see, success in the stock markets is not easy at all the the less knowledge you have, the more risk you undertake. I lost hundreds of thousands in the stock markets before I become successful.

Take heed and good luck.

All in all, investment and trading is a lifelong education and non stop learning. No one is ever done learning and catching up with changes in the markets.

If you care to read about how I went from completely broke to retired millionaire trading stocks and options by 28 years old, you can go to http://www.mastersoequity.com/

In conclusion, what I am saying here is that trading stocks and investing for profit is a professional game that takes years and a lot of money to learn, so it is not something that someone in need of college fees should do … Now…. But you should certainly start to learn about it right now.

Hope these information helps.

Http://www.optiontradingpedia.com/

http://www.mastersoequity.com/

.

Ruth asks…

I need some help with stocks?

I need an example of a rising stock (going up) and a declining stock (going down). Please and thank you.

John answers:

Stock LIZ was up for couple months.
FAZ was down for last two month.
You can compare their charts here
http://www.dojispace.com/stock-picks/liz-claiborne-stock-price-LIZ.aspx
http://www.dojispace.com/stock-picks/direxion-daily-stock-price-FAZ.aspx

Linda asks…

Stock market?

How does a person play the market? Like do you have to see someone or pay someone? How do you know what stocks to buy?
ok to some people I am sorry. I used “play” because that is what I have always heard. I know that it is not a game, I want to know how to invest.

John answers:

First you have to open a brokerage account, either at a brokers office or online.
AA broker is the agent that facilitates the transfer of stock from seller to buyer, and the money from buyer to seller.

You have to have the money in your account or in some cases , a couple of days to buy stock, unless you have set up a margin account where you borrow money from the brokerage.

If you want to buy a stock, you contact the broker and tell him how many shares of what company, at what price per share you want to buy.
He gets them for you and you pay that cost plus a trading fee, which can vary from place to place or based on amount of the trade.

Selling is just the same, if you have stock you want to sell, you tell the broker, to sell how many shares at what price, he does this and puts the money MINUS the trading fee into your account.

Picking stocks is the hard part and I would not even think of explaining that to you.

Donna asks…

How do I find the New Wealth Funds stock picks?

John answers:

You set up a google (oops…yahoo) news search that will email you all the news stories that include the words ‘Wealth Fund’ once a day.

Unfortunately there is no regulatory requirement on most wealth funds to release information on which stocks they pick. There are one or two exceptions (like Norway for example) but in most cases they will not provide any information to the market. So the best you’re going to be able to do is read the details in business stories as they emerge and are reported.

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