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Be a Success in the Stock Market

Sep 16, 2008
The stock market is a place where people can create success stories, and their worst nightmares come true in a matter of days. There are more people, who fail in the stock market compared to those who succeed. In order to avoid becoming a part of the majority, there are steps you need to take and learn, and you need to have a long term goal before you can become a stock market success.

One thing to remember in the stock market is that it's hard to know who to trust, you don't know if they truly are trying to help you or just using you as a stepping stone towards their own success. With that in mind, it is best to remember to choose carefully who to trust when it comes to asking for investment tips and advices. But the best thing to do in order to avoid false advices is to become an expert in analyzing yourself. This would take some time and effort but it would certainly be worth it. There are two ways to analyze the market.

First way is by using fundamental analysis which deals with the economic and financial information to analyze the stock or company you are eyeing. Economic details are product demands, product competition and the industry. Financial information is the financial standing of the company. It is the right of investors to have access to public company's financial statements. Second technique is the technical analysis which deals with three principles, price discounts itself, price moves in trends and last, history repeats itself. Technical analysis is harder to master because it would require firsthand experience to learn. Next is to choose the strategy you would want to use.

There are two basic ways to approach the stock market, first is the buy and hold strategy. This form of strategy basically relies on buying a stock from a good, solid company which is tried and tested and gives out dividends. Usually, the best choices for this strategy are bank stocks because they are proven to last through recession. The other strategy is called buy and sell. It is as it sounds, buy a stock when it's under priced then sell it when it goes north. Most investors do buy and sell due to high return on investment or ROI, but the risk is greater. To counter this, an arbitrary floor must be set.

An arbitrary floor is a limit if how far a stock falls that you are willing to keep it, usually this is at 6% to 8% lower of the price you got it. When the price of stock hits the arbitrary floor, you sell. Always remember that it is best to know when to cut your losses. That's the purpose of the arbitrary floor you would set upon your stocks, so you won't ride the stock to its grave.

The stock market is a tough place, but when you take the proper steps and precautions, take calculated risks instead of going in with guns blazing, you can end up as a stock market success.
About the Author
Justin DeMerchant is the founder of abletrend, stock trading for dummies , and financial information where information on stocks and investing can be found.
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