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Stock Market Investing Today

grouplifeguy | Dec 16, 2009 |

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If you want to learn how to invest your own money in the stock market, the best way to do that is by actually practicing with your own money. A lot of advice about the market tells you to paper trade first. I agree with that up to a point. Once you have the mechanics down of how to place buy and sell orders, you should begin trading with real cash as soon as possible.

The reason is that stock market investing today can be an emotional roller coater. You do not experience those emotions when you are going through the motions of picking stocks with fake money. You can only feel that when the risk of losing actual money is at stake.

Once you've made the transition from paper to real money, the next step in your stock market investing game plan is to start keeping a record of every investing decision so you can learn from your mistakes. Each time you buy a stock and then later sell it, set aside time to analyze every stock selection. Ask yourself what you did right and also what you did wrong. Start keeping track of the ratios of number of winning stock picks to the number of losing stock picks. For every 10 stocks you've bought, how many were winners. Your goal should be that you picked a winning stock three or more times out of ten.

In addition, for every time that you lost money in a stock you invested in, make sure that you kept your losses on each "loser" at no more than seven to eight percent. If you can do that, pick winning stocks three out of ten and keep losses under 7-8 percent the other times, you'll be successful at investing in the stock market today.

While it might seem that picking stocks is only a skill professional traders can learn, that's not true. You've got to get that out of your head. If they were so good at what they do, then why did so many people lose money in the last bear market. And why did they lose so much. The reason is that Wall Street doesn't know anymore than you do about when to sell a stock. If they did, they would have told everybody one important piece of information -- lock in your gains. When that advice doesn't come from the people managing your money you have to ask yourself why? Why don't they tell us to lock in our gains.

The reason is simple, they aren't looking out for you. It's time you started.