Teach me to trade in the global village
We have now instant access to information- we find, within minutes, what happens to the other end of the world. How is that affects trading and stock market? Trading has changed a lot in the last few decades. More and more peoples, small investors, decide to put their money on the stock market, but they are the same investors that will react to any rumor from this global village in a very emotional way.
These days, stock market is in the news all the time. You hear how it reaches a new high or a new low, what some politician said and how that influenced the market.
Beginners in trade and stock market investing usually buy when the prices are up- and this has a lot to do with the media and all the information we receive daily. After you hear, week after week, that investing in stock market is great and you can make a lot of money, you decide to start trading. But, of course, you buy the stocks at the exact same moment when every experienced trader think that prices can’t go any higher and it’s time to sell. So, you end up buying really expensive stocks and you will probably sell them at the lowest possible price, because you panic and you don’t want to wait anymore. And there is also the reverse psychology that wannabe traders apply sometimes: I’m buying those stocks, they are vey low, every one says it can only go up from now on. Well, in fact, sometimes, stocks continue to go down for a long period of time. It’s not a deal to buy stocks only because they are cheap.
This kind of emotional trading is caused, primarily, by the fact we are bombarded with information every day and we just don’t have the time to discern the reality among the rumors. Don’t guide your investments on what someone declared on the TV last night or on what’s written in the newspapers.
When you are not sure how to trade, find a good broker- he will guide you through every investment decision you need to make and he will advise you what steps you should follow in order to have a good portfolio. If you are just starting to trade, don’t put all your money in that activity. Give yourself some time to get to use with that activity and build your portfolio over a longer period of time. A valuable portfolio must be varied: it’s not a good idea to concentrate on a certain industry or just a few companies, even if you hear all day long how great they are and how investors will make money with that stocks.
The best solution is to let the professionals, like your broker, to teach you how to trade. Also, you need to get to the point where you are capable to make your own decision without being influenced by all the rumors from the global village.