Money Management

As more and more of us look to the stock market for our future, we have seen a massive increase in the number of people trading shares themselves, both online and via telephone services. For those looking to make a killing on the stock market, we have listed some very useful tips below :-

Do Not Over Stretch Your Finances

An investment in the stock market can bring great pressure with money which you can afford, never mind when you are over stretching your finances. If you have over spent your investment pot then there is every chance you will make the wrong decision - stay within your limits and reduce the pressure as much as possible.

Always Sell Too Soon

While this may seem like a crazy bit of advice, you will soon find out why it has made many people many millions of pounds in the past. As Lord Rothschild said, the reason why I am so rich is because I always sold too early - and that is coming from a man who made billions. You only know the price of a share NOW, if you have a sale limit of 70p and the price is 69p, is it worth waiting to see if you get your 70p? What happens if the market collapses tomorrow?

Simple, yet so very very true - do not be too greedy!

Never Follow The Herd Without Knowing What You Are Buying

There are many people who have just followed the “herd” in the stock market, often not even knowing the activities of the shares which they are trading. It is essential that you know what you are buying, why, and perhaps more importantly how far you think the shares can go. If the leader of the “herd” is wrong, where does that leave the rest of them?

Never Get Emotional About Investments

The best investors in the stock market (and any other investment arena) will never get emotional about a stock, they will always look at stock in the cold light of day. Emotions can be very strong and can often force you to miss what may be staring you in the face. Treat an investment as just that, and never get emotionally attached.

The Trend Is Your Friend

While it is essential that you do your own research with regards to your investments, always keep an eye on the trend - the trend really is your friend! In basic terms the stock market is an information dissemination vehicle, a place where all facts rumours, hopes and wishes are thrown in together. There will be many times that you believe a share looks cheap, but the price keeps on falling and falling, very often prior to some kind of negative statement, disappointing figures, or worse.

On the other hand you will always see situations when a share may look expensive, but you cannot understand why they keep rising - possibly just prior to some good news, like better than expected figures or even a takeover. While the trend is one element of your investment decision, it should never be under estimated - listen to what the market is telling you!

Know When Company Announcements Are Expected

There is nothing worse than buying a share only to find out that their results are due tomorrow, and you see your investment fall back. The time just before and just after the announcement of company results is more often the most volatile time for a share price. Always be aware of what news is expected, and always keep this in mind when deciding whether or not to buy or sell.

Always Monitor Your Investments

While there are many investors, e.g. Warren Buffet, who make money by investing on a long term basis, you still need to monitor your investments very carefully. Situations change and you need to be able to see the signs, and act accordingly. Do not be fooled into thinking that every investment should be held long term.

Economic News

Always be aware of expected economic news, both in your local markets and overseas markets which may well have a knock on effect. This is demonstrated by the effect which US economic figures can have on world markets, many of which follow the US very closely.

Spread Your Risk

While there is no better feeling than taking a big gamble on a share and seeing a massive return on your investment, it is not always the most sensible thing to do.. While it is essential to spread your risk by investing in different companies, it is also essential that you do not spread yourself too thinly. Keep your investment unit amounts clear in your mind, and decide whether a full unit, half unit, etc is in order. Spreading your investments will flatten the often volatile nature of investing in just one share.

Charges v Service

While it is important that you keep your investment charges under control, it is also essential that you find a balance between the quality of service and cost of a service. There is no point paying for a cheap service and having delays in dealing times - delays which can prove very expensive.

Conclusion

Finding the balance between the cost and standard of a service is not easy, but it is essential that you keep the quality of the service ahead of the price.

The above factors will set you in good shape for your career of investing in the stock market, a career that more and more of us are looking to become involved in during our spare time. Take note of the advice above and you should not go too far wrong!