What Mistakes Can You Make As A Rookie Investor

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Rookie Investor Mistakes

wall-streetTechnology has certainly helped us construct the word flexibility in every day activities. Fortunately, these activities also happen to take place in the financial world and thanks to blazing fast internet, online discount brokerages are available for anyone who has a bank account.

He/she can start trading stocks almost immediately. This is how far flexibility has been assimilated in the world of finance. Get a high speed internet, a bank account, some cash and you are off to the races.

The evolution of theft has been greatly expanded in the world of technology and here, we would like to point out some flaws made by first time investors like yourself and show them how they can avoid such financial accidents.

Jumping In First

The basics of investing are quite simple in theory: buy at a low price and sell it at a higher one. In practice however, things will become far more complicated and you just might be doing the exact same opposite thing. What you need to know is that low and high always takes place in a market where everything goes through a different trend almost every single day.

At the bare minimum, a small time investor like yourself should become well versed with things such as book value, dividend yield, price – earnings ratio ( denoted as P / E ) and many more as you go along with time and sooner or later you will start to understand how they are calculated and where their major weaknesses lie.

While you are learning, you can see how your conclusions work out by using virtual money in a stock simulator. Most likely, you will find the market to be a huge constructed and confusing environment but you have to realize that as time passes you will only get wiser.

Playing With Penny Stocks

Penny stocks seem like a profitable idea now don’t they? You must have heard stories about how people wrote a book about stock market tips saying how they came in to the stock market with nothing in their hands and went back with everything they could ever have. A true rags to riches tale. With as little as $ 100, you can gain ownership to thousands of shares of a company rather than getting only 2 SHARES from a blue chip company that is issuing $ 50 a share.

Penny stocks do seem like an enticing investment now don’t they? Unfortunately, THEY ARE HIGHLY VOLATILE and if you do not know what you are getting yourself in to, then we highly recommend that you stay away from them. Penny stocks offer in position size and potential profitability has to measure against the volatility that they face. Penny stocks can shoot up and plummet down in an instant. It happens all the time.

However, getting concrete information regarding penny stocks is also problematic generally because they are traded without recorded transactions and regulation authorities’ pay little to no mind to them at all. If you are still learning about the basics of investing, then you will do well to stay away from them until and unless, you have learnt a great deal about the stock market and its functionality.

CONCLUSION:

It is not easy being a first timer in the stock exchange. However, we would like to inform you that those big, hot – shot investors were not taken out of their mother’s womb with a plethora of financial information. They learnt just like you will. They have gained and they have lost but still, they came to a successful position and so can you. Failure is all about learning and you will learn in the following years to come.

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