Stock Trade

Some people are making a killing on Wall Street trading stock. Others are breaking even. Many are losing their shirts. Which one are you or will you be?

Everyone wants the quick kill, and a pile of cash, but it rarely happens. Some theorize that the stock market is homogeneously random, with only a small portion that can be predicted. If this is so, then you could do as well playing Russian Roulette. There must be some way to bring the odds for stock market success more into line with your needs, which is to keep an inflow of money rather than an outflow. It is a fact that the stock market is still one of the best wealth creation tools in the world. Take comfort from that, and then go on to put yourself in the winner's circle.

The first thing you should do, if you are completely serious about risking your hard earned money is to familiarize yourself with the language of the stock market, and the myriad ways of using it to make...or lose money. You'll find that the basics, which you could use to start, (but isn't advisable) is just the beginning. After that, the variations to make or lose money branch out like the limbs of a very old and prolific tree.

Just starting, you could belly up to the trading bar and trust your dough to a veteran full service broker that wins more often than loses. That might be fun...but it wouldn't be like doing it yourself.

A lot of money has been made in the stock market since the low days after Obama assumed office. The stock market, seemingly oblivious to the turmoil around it has been a steadily building volcanic island of cash. Just think if you had invested a buncha money back then, how well off you would be doing today. The stock market, usually sensitive to the flap of a butterfly's wing in Paw Paw, Botswana, has ignored every crisis to date and slowly but steadily climbs upward. It would have to be a pretty dumb broker indeed to lose in this enviroment. Much less so for a neophyte trader. Even so, the stock market volcano has a history of blowing its top every once in awhile, and you'd hate to be near the top when that happens only to find yourself flying through the air and dropping like a chuck of lead nickels. The stock market can be good to traders, but she's proven herself no lady, time after time.

So, here you are, thinking that the stock market is your way out of whatever place you are in. It could very well be, if you handle it properly.

It may be that you have built up a little poke of money working conventional jobs, and are just itching to spend it in the stock market, since social security isn't going to be around when you reach 80 or whenever it is you are allowed to start drawing then.

Simply put, always look to purchase stock in companies that have good prospects for growth. It doesn't do much good to buy stocks from companies that are already successful to where their stock prices are up. What difference does it make what the stock value chart shows, if it's nearing the apex of its trajectory. It's much better to buy stocks from companies that are on their way. That's where you need to understand, and even better, enjoy doing research. If you can't do this, then you better stick with a full service stock broker, or just forget the whole thing.

To give you an even break in the process, after you become fluent in the lingo and workings of the common tools of the stock market trades, then you need to adopt a trading system that is a proven winner, and one you can live with. The majority of stock market trading sources agree that the simpler your plan is the better.

But, a plan is not the end. The end will come when you actually execute the plan, live with it without freelancing, and turn a profit by doing so. Chasing the next greatest thing is not only a waste of precious research time, but also a sure way to investing disaster. Find a plan, adopt it, tweak it if you must, then, if it creates a positive cash flow more often than not, then stick with it. This isn't to say that you are prohibited from doing research and tests with another plan, or a variation of the one you have been using. It does mean, however, that you need to stick with the old rusty trusty for your bread and butter, having set testing parameters for the next new thing to prove it out our lose it. Throwing your main reserves into an unknown investing scheme could cost you the game. Don't do it.

After all is said and done, you need to inventory yourself after a spate of trading. Have you behaved as a businessman or a gambler? Knowing when to end a bad stock relationship is as important, if not more so than knowing when to sell for profit. Patience, a plan, and knowing when to call it a day is the key to success in the exciting realm of stock market trading!

Of course, there are two ways you can do your part to do your utmost to insure stock happiness and that is to invest in The Prudent Speculator, a Forbes Publication, and the Forbes Special Situation Survey. As investments go, this is pretty much a no brainer. Buy at a low cost, and reap HIGH rewards!

 Further reading in this series: 

• What Kind of Stocks For Your Stock Pot?
• Trading Insights for the Wise Stock Trader