To learn how to invest in stock market can offer many tips, it is really difficult to follow. I have received many tips during my career investor, some have been truly disastrous, because it did not fit my personality. Stock investing is not generic, or is there a unique and exclusive recipe to serve for everyone, simply because we are not equal and do not react the same way to the same stimuli.
Índice del artículo
- 1 Why invest in stock market?
- 2 Tips to invest in stock market as a trader
- 3 Tips to invest in stock market long term
- 4 Tips to invest in stock dividend
Why invest in stock market?
Before starting I would like to ask you a question. Why have you decided to learn how to invest in stock market? Most likely you want to monetize your savings, but keep in mind that the returns on the stock market are not safe, you thought of a time deposit? The risk is null, the time you have to devote to your training is nonexistent and not run the risk of being hooked by the markets. Are you still insist? Are you really involved and want to learn how to invest in stock market? I’ll tell you, for me there are three types of investors in the stock market: traders or aspiring, the buy and hold (buy and hold) and finally those seeking dividend yield. I think there are tips that could apply to any of the three groups, but then there are specific to each of them.
1. Books to learn how to invest in stock market
Read books to invest in stock market is one of the first steps to give. The knowledge that I have I owe much to the books I’ve read. If your focus is on the Trading, you must read books on Trading (Trading for a living), if you are a long term investor or dividends, you should read appropriate books that discipline (the Intelligent Investor, for example).
2. Business investment forums
The forums are abuzz with thoughts, often contradictory and in which there are some people looking for notoriety, offering advice on investments that are sometimes really disastrous. It’s okay to share opinions, but not be swayed by thoughts of others, the only way to make money in the stock market is having discretion.
3. Should we listen to economic news?
I recommend not listening economic or political news. It is true that economic decisions made by politicians, can move the stock markets, but if you learn to read charts, or study the balance sheets of companies (depending on how your focus) what happens outside your world will not matter and also you will be free of stress that cause the news.
4. Find a good broker to invest
Choosing a good broker does not have to be a headache. Traders need a broker with low commissions and have many assets available. Long-term investors and dividend investors, one that is cheap and not charge maintenance fees. We all need one thing: security. No need to dig too hard to find a decent broker, and the broker will be the cause of your success or failure. Visiting forums, sometimes I have read of brokers that have swept stops, or have done some unethical technique. I have had to be lucky enough to not run into anyone, and most of my failures have been due to my personal clumsiness.
Tips to invest in stock market as a trader
Want to be a trader, it’s fine, but you should know that trading is one of the toughest and most demanding professions in the world. Are you still interested? Read:
5. Apply a system of Trading
Before placing a single euro on the market you must have a trading system. Having a system is not able to analyze, technical analysis is highly overrated. A system is to be clear that conditions are about to enter the market and which are going out.
6. Mathematical Hope
Trading Any system must be tested and have positive mathematical expectation. You know a failure Lynx 60% of their attacks? That is only 40% of the time successful, but survives. A good system is not what is right often, if not when correct, it wins more than when you lose.
7. Check fear
Fear is one of the worst emotions that may suffer a trader and therefore must be under control. There are several kinds of fear, but I’ve found as worst are: Fear put on the market after a losing streak, or fear of losing the accumulated earnings, which makes closing a position prematurely. If you do not control the fear to stop doing Trading.
But if fear is bad for a trader, are no less other feelings as revenge, anger, despair … for Trading have to have the cold precision of a machine, and if you’re not at that point to 100×100, is better not to operate, rest, do something else, take some time for reflection. The trader is the fundamental part of the Trading system and if it fails, the rest is irrelevant.
8. Keep a diary Trading
The only way for a trader to improve is constantly examined to know it is good and that fails logically polishing faults. You must keep a diary, which put a graph of your entries and your exits, the reason to go and reason to leave, and study you can improve.
9. Managing Your Capital
Money management is essential. Even a trader who earn only 40% of its operations can be very profitable. In the time I’ve done Trading, the formula that has worked best is flexible. As you win, you can increase your money earmarked for each transaction, precisely because your capital has increased, as they lose money, the size of your positions must be smaller.
10. Apply stop losses
Stops are the best, the worst tools that can have a trader. Sometimes a jump stop when it should not, because then the operation is for your expectations, but without you. But … what if it’s not? the stop I would have gotten rid of bulkier losses. Another thing is that the stop had been located in the right place, that’s what the diary Trading, check whether stosp are placing the right or wrong, or if the transaction had the right risk-reward ratio.
11. Courses in investments in financial markets
Trading courses are of all colors and taught by people of all colors. I will not recommend any, because I have not attended any, but I recognize that if you give a good trader, attend a course Trading can get on the right track and reach your goals much sooner.
I like it more. If you know a good trader, if it would be interesting to consult with even ask for advice and help you in your day to day, to review your operations and will advise how to improve. That if you put on the right track much, much earlier.
Tips to invest in stock market long term
Investors long term buy and hold are not the most common in a world where everything is chewed and crushed at an accelerated rate, but we have examples of success: Warren Buffett. How to see the stock for these investors is entirely different from the trader, so the advice for them have nothing to do.
13. Practice patience
Patience could be applied to anyone who wants to learn how to invest in stock market, but the long term investor needs to sit and watch the world. You can not buy shares at any price, even though the company concerned you really like. You must be at the right price.
If fear is one of the worst enemies of the trader, greed is the long-term investors. You know the saying, be greedy when everyone is fearful and fearful when everyone is greedy. This principle has made Warren Buffett one of the world’s richest man, he has always bought when nobody wanted big companies, at bargain prices. When the bag is placed face is better to stay out.
15. Feeling part of the business
Here comes the fundamental analysis. If you want to invest in stock market thinking long term, even for life, you have to study very well the company you’re buying, knowing how you will react when things go wrong, which generates income, expenses, etc. You have to know that you are buying a business, not just a few actions.
16. Buy simple business
There is a maximum of Warren Buffett that I love, buying businesses that are easy to understand and operate, companies that even a fool can run, you know what your excuse? It may someday be governed by a fool. For that reason was not crushed by the crisis punto.com he did not trust those companies that also there was nothing behind, only expectations.
17. The margin of safety
The safety margin is so simple that everyone can understand: buy shares of companies less valuable than they might really have. This advice, although it involves a simple scandal is not so simple to carry out, unless you have the necessary skills to understand company accounts. Therefore it is necessary to prepare properly investor profile you want to be at.
18. Search competitive advantages
There are companies that will never be at bargain prices, because they have competitive advantages that makes them market leaders and ensure that they will remain in the future (Is anyone going to move to Coca-Cola or Google?). In this case the only thing left is to buy at «reasonable prices».
19. Diversify just enough
Diversify, we must diversify. Diversification can be done in many ways: temporary, making regular contributions in sectors, seeking sectors uncorrelated or even countries. Everything has a limit, if we have 1,000 euros and invest in 1,000 different companies are limiting our power to generate wealth. Here comes into play a lot of the above: study business, buy safety margin, etc. If you get a good company, you should invest, but of course, not just one.
20. Discipline, prudence and patience
Everything said for those who choose to learn how to invest in stock market for the long term could be summarized in three words: discipline, prudence and patience. Discipline, to buy only when the business really worth. Prudence must govern all our actions, especially not to buy when you should not because the price is too high for what they offer. Patience, I said that patience is key to long-term investment, precisely those looking for good prices that will make us earn money.
Tips to invest in stock dividend
Much of the above for the long term investor, could apply to the investor dividends, but with special emphasis on the dividends generated by the company and its ability to continue generating them in the future. This way of approaching the market is that I like, especially if you have read my presentation, which is seeking financial freedom, and the only way to not live to work, is to get passive income. This is what we can offer you looking to invest in stock dividends.
21. Search strong companies
Strong companies are usually mature companies, which have long been working and have shown that they are able to generate profits (with those paid to its shareholders) over time.
22. Companies with assumable debt
We must look for companies with bounded debts. I do not mean you have to invest in companies without debt, that in some sectors it is necessary to borrow for normal operation of the business, but we need to know if the company will withstand adverse situations. A clear example is Telefónica, a company with heavy debt, which in a very tough period has had to cut its dividend and when it has again spread has been much lower than before. Sometimes high dividends are masking a problem, or are the result of the decision of a board of directors with very poor judgment.
23. Investing in profitable companies
Investment in dividend Seeking mature companies, precisely because over time is when profitability is demonstrated. It is very difficult for a company that is starting to be profitable and if it is, much of the capital generated will go to growth. Therefore they are not exactly interesting for all those seeking dividend yield companies.
24. Growing Payouts
The payout is part of the benefits that the company intended to shareholders. Ideally, the company has a history of growing Payout, while retaining prudence. You have to invest in companies that have a reasonable Payout, because if at a certain point the benefits diminish, shareholder remuneration may be retained. I like companies that maintain close Payout 50-60% and of course there to flee companies that borrow to pay dividends, or have high Payouts, simply because they are not sustainable over time.
25. Dividend History
It is good to know that the company you have decided to invest cares for its shareholders, a good thing is to look at the evolution of dividend payment, whether is suspended on occasion and that was the reason. These are my top 25 tips to learn how to invest in stock, maybe I’ve left some in the pipeline, or perhaps think that I have not mentioned any aspect that you consider interesting, feel free to record your own advice.
final note (term, I promise)
You know what the dozens of 13 eggs? Any marketer knows that always give more customer what he wants, or have the feeling that you have paid more for your money. In this case, I’ll give the advice number 26 absolutely free: the best asset you have in your wallet you. You must grow, learn, falling, become a lift, but always learning from mistakes. If you can be a little smarter today than yesterday, sure when spending a few years you will be immensely rich, and if you are not, at least you’ll be immensely fortunate.