The purpose of trading stock is to grow your capital and the way to do that is to find the best online stock trade site on the Internet. Once you have made your selection, there are essential tips to follow.
First, pay careful attention to the charts. At first blush, a stock may look like a real winner but in the light of day, it may be more like a loser. How come?
Well, the company is sound and the financials are all above reproach. Management is excellent. But, there is no market for the stock, no one is buying. Rational behavior is not always at play.
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That is why technical analysis, or simply reading the charts, is vital. This will allow you to pinpoint the direction in which stocks are headed. Even using the best online stock trading site will not lessen the need for you to do some technical analysis.
Second, make use of a stop-loss. No one is perfect and sometimes an obvious winner turns out to be a clunker. However, the proper use of stop-loss will stem any initially bleeding.
Don’t just use stop-loss orders liberally. Use them on every trade. This will prevent any rude awakening to the reality of an account that is wiped out due to a bad trade or two. Cutting loses early is a vital dictum to keep in mind.
Third, when a stock is cascading downhill, don’t try to muscle it to a stop. A lot of investors adhere to the myth of always buying low and selling high. Forget what kind of thinking.