Stock Investing Recommendations

By: Nandha

Everyone trading in stocks wants to make money. But earning money from the stock market is not that easy. Here are some things for effective stock investing.Always have an investment plan. This includes at what price you need to buy a stock, what will be your stop loss level, what is the initial target price, what is your second target price. Having investment plan is a must for any serious trader, however sticking with it is even more essential.Never alter your investment objective. Many people are so hesitant to cut loss, thus holding on to a stock and wishing the stock to come back up in the future. Well, that day could be years from now or never come at all. For these people, long term investment is their short term investment which has gone bad. Keep to the rules. Stocks for long term holding are different in nature from those for short term trading.Do not fully invest. This is the distinction between professional investors and individual traders. Individual investors tend to fully invest to increase their return. But many successful fund managers invest only up to 90% of their total capital. This will give some room to purchase stocks at a bargain when the market dips into a correction.Invest only in stocks you understand. There are many stocks to pick out there, why bother to invest in any stock whose business is too complicated to understand? Keep to the ones you are familiar with, or the ones whose products you use, thus giving you comfort and peace of mind.Research your options. At times you get an email offering investment recommendations or get an investment tip from the media or your broker, or even hear a gossip from someone. When you can always use it, be sure to do your own research. Don't buy any stock or any other investment without analyzing it yourself.Never average down, do average up. Many people like to buy more stocks to reduce down their entry price. Be watchful as this might not be just a short term reversal. Rather, do average up if the stock continues showing strong momentum. This will let you commit your capital at few stages and allow you to minimize your risk.Always diversify. Regardless of how confident you are on one stock, always allocate your capital no more than 5% into one single stock. Therefore, if it turns bad, your overall portfolio will not suffer.Make a record of your entries. Be diligent and try to take note of your entries and the reasons behind it. That way you can review and learn your mistakes and successes.

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