
Eric
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If you are a beginner like I was, you probably don't have a large amount of starting capital.
If this is your case, I would recommend a stockbroker like ShareBuilder. They offer $4 buys, no minimums, and no maintenance fees. They also allow you to purchase partial shares. Because they allow you to buy partial share you can buy stocks that you normally could not afford.
Also begin investing in ETFs. These exchange traded funds are like mutual fund in that they invest your money in many different companies. Some examples of ETS are:
DIA - Dow Jones, Invest in the 30 Dow Jones stocks
SPY - S&P 500
QQQQ - The NASDAQ 100 index
IWV - Russell 3000 index, invest in 3000 companies at once.
After investing in a few ETFs, look for companies you know, and trust. Research thier strengths, and weaknesses. Read finincial articles. It also doesn't hurt to read books on (or by) people who are considered "masters" like Peter Lynch and Warren Buffet.
The main objective is to "be in it for the long haul." If you don't plan on having your money in the market for 5 or more years, then stock may not be the best choice for you.
Good luck! |

stevecarter_99
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Start learning. Start by learning how to invest, determining WHAT to buy through Fundamental Analysis and determining WHEN to buy through Technical Analysis.
Start with Investors.com, it's William O'Neil's online version of Investors Business Daily. The How To Invest section is the best place to start learning the importance of Fundamentals and the basics of Technical Analysis. The site has the IBD 100, a cross index list of the market leaders, the Stock Checkup, a great tool for checking fundamentals on any stock, and articles and analysis of stocks and general market conditions. They also run various screens every day which in addition to the other lists, (IBD100, New America, stocks under $10, CANSLIM select, ect) are very helpful for finding investment ideas with solid Fundamentals that are ready to move. The CANSLIM method alone is a very successful and popular trading system, but I prefer to use a combination of Fund & Tech Analysis, rather that just the rating system alone.
From there you can move on to more detailed study of Technical Analysis.
Start with StockCharts.com, they have an excellent free Chart School which helpfully explains various chart patterns and Technical Indicators and overlays. Pay particular attention to the Chart Patterns section, and make sure you learn about Zig Zag patterns, Bollinger Bands, Moving Average, Volume, RSI, the MACD (Mac-D), The Williams %er, Stochastics, and the Chaikin Money Flow. Sounds complicated, but when you start chart reading you'll want about a half a dozen or so of these overlays and indicators. I personally rely heavily on the ZIG-ZAG, MACD, Chaikin Money Flow, Volume, Moving Average and RSI.
StockTA.com is also an excellent Technical Analysis site, with charted Fibonacci resistance and support lines and will tell you if the stock is bullish or bearish in the short, medium and long run. The site also has an extensive Candle Pattern Glossary and a fantastic technical screener.
The above sites do have premium services, but all the services I mentioned are free. After you've absorbed some of the Technical information, do some reading on Fibonacci numbers and Elliot Wave theory, there are good links in the "School" section of StockTA.com. I've been using Elliot Wave and Fibonacci's to help refine my in and out points. StockCharts.com's "ZigZag" overlay helps me plot and count the waves and that helps determine where I am in the overall pattern.
So basically I'll find interesting stocks through the screens on Investors.com or StockTA.com, run them through the Stock Checkup at Investors.com, if they measure up I'll run them through the Analyisis & Fib Analysis at StockTA.com and do an extensive chart study, examining the 2 yr, 1 yr, 6 mth, 3 mth, 1 mth & 5 day. I'll also do my due dilligence, studying the profile, key statistics, headlines, etc. through Yahoo Finance and web searches. If it all measures up and the stock is in a base or in a pull back and it's starting a wave 1 or wave 3, it's time to buy.
Remember, always protect your downside with a stop loss or a trailing stop loss. Once you have absorbed a few of the things I've mentioned, the fog will begin to lift and you'll start seeing which stocks should be bought or sold and you'll be able to do your own analysis on any stock.
If it's all too daunting or confusing, stick with it, it takes time to absorb. Start by paper trading. Yahoo Finance lets you track portfolios for free, try picking a couple stocks and see how they do. Be realistic with your buy and sell prices if you paper trade, seeing for example if you can actually get in at the price you want during intraday trading. If Mutual Funds are more to your liking, the same principles mentioned above can be applied to those as well.
Good luck, hope it helps. |