The best traders have their own secret share tips that help them trade successfully; yet these tips vary wildly and are often more suitable for those who have a long history of trading and investing. What you really need as a new investor is guidance that will help you navigate through your first transactions. Here are three share tips to help you choose the right stocks the first time around.
New investors have a tendency to prefer to dip their toes into the water with inexpensive stocks or even penny stocks. The logic behind this suggests that these stocks mitigate risk and if they happen to perform well, then, that is a bonus.
However, buying expensive stocks can be strategy in itself. As a beginner, you will do better to focus on a few valuable stocks than to spread yourself too thin. Buy a couple of stocks that are strong and learn as much as you can about them to create a solid portfolio.
General business wisdom tells you to buy low and sell high to create a comfortable profit margin. While this is useful in buying wholesale products to sell at retail prices, it does not translate well to the stock market.
As per tip #1, do not be afraid to buy expensive stocks, especially if they are poised to perform well. Larger investments with larger growth will equal larger profits and the truth is that market leaders do not sell their shares for $1 apiece. Instead of looking for cheap stocks and hoping for a miracle, buy valuable expensive stocks and then sell them higher.
Buying the right shares is more about analysis and assessment than it is about having a gut feeling.
If you are in it for the long-haul, it is important to analyze your trades after they take place to gather concrete evidence on what works and what failed you. Doing so will allow you to improve your strategy and remove inconsistences or bad habits early.
Consider applying fundamental analysis for long-term investments to learn more about your performance. Alternatively, if you are a short-term investor, you can look into technical analysis. A combination of the two could also be beneficial.
Whatever you choose, make sure you are performing some kind of analysis because if you are not assessing, you are guessing.