$2,000 can turn into almost $100,000 after 40 years (at 10% return a year).
Investing in stocks can help you pay for your biggest goals.
Financial Goals for 2019
That 10% average incrgease may not sound like much, but given time, this interest compounds to produce incredible returns.
Imagine someone told you that you could turn $2,000 into $100,000 with no work whatsoever? It sounds too good to be true, but it’s completely possible if you understand compound interest.
The key element to remember here is time. The longer you have your money invested, the more powerful compounding becomes. That means the younger you get started, and the more patient you are, the greater returns you will reap in the future.
However, you don’t need $2,000 to get started. You can start small and keep adding to your investment over time. You’ll be amazed how quickly your investment can grow. In fact, if you added $100 a month to that initial $2,000 investment, after 40 years you’d have close to $1 million.
You’ll have both winners and losers, but if you learn how to identify good companies, you’ll have some stocks that multiply 10 times (or more) in value over the years.
The biggest advantage you can give yourself is to start early and let that compounding work its magic.
Invested money can grow much faster than cash in a savings account.
Ever wanted to own part of a great business? That’s exactly what happens when you purchase stock. You’re buying a part of that company. As a part owner, you’re entitled to a share of the profits and assets of that business.
You Profit from Owning Stock in One of Two Ways
The company can decide to return money to their shareholders via dividends. This is cash that is paid to you on a regular basis for being a shareholder.
The business grows and the price per share increases. Once you decide to sell your shares, you pocket the returns.
How to Make Money with Your Stocks?
While money kept in a savings account gets eaten away by inflation, invested money is working for you 24/7. Unlike a bank account, your original outlay can multiply many times over if you invest in the right companies.
On average, the stock market has returned around 10% annually since 1974 (without factoring in inflation). That easily beats the 0.5% you’ll get by keeping your money in a savings account.
As we enter the month of December 2018, there have been slight changes in my stock market trading venture. Compared from my last month's top 10 best stocks to buy, I have decided to sell my stocks on CSCO and will be investing on AMZN.
Stocks to Buy in December 2018
I have been following this video from YouTube about the best stock market to invest in 2018 and it has given quite positive results in my stock trading venture.
Best Stocks for Beginners in 2018
From the video, MSFT is one of the best stock to invest in 2018. Here are my top 10 best stocks to invest this December 2018.
Strong Buy
Before deciding on investing in the stock market, you may want to read more about the introduction to market analysis to help you understand on market fluctuation and how it can quickly change in stock trading.
The best stocks to invest are from those companies that you fully understand and how the business operations works in the market. You need to know the cash flow of the company and how it makes money in order to predict the trends of their stocks.
This helps you keep up with your investment and make good decisions in buying and selling of your stocks hold.
Best Stocks for Beginners in 2018
Companies With a Strong Balance Sheet
A strong balance sheet is a sure way of verifying the stability of a company. Make a research study of the company's history, their long-term and short-term investments and the status of both their short-term and long-term debts. If you buy stocks in a company that has a lot of debt, they might end up going bankrupt which will be a loss on your side.
Companies in Different Sectors
Invest in companies in different sectors to spread out your risk factor. The probability of losing out on all your investments is very slim if you diversify. This is because different companies encounter different financial problems and growth rates.
Stocks to Buy in November 2018
Here are some of the top 10 stocks that we picked that are much more likely a good choice to invest in November 2018.
Best Stocks to Buy
Best Stocks to Sell
Buy Low and Sell High
Best approach is to buy stocks when prices are low. Make sure to update yourself with the stocks value in the market. When the stocks value goes up, it is best to sell them. Most people often do the opposite and buy when the prices are rising, as they are expecting it will still go up. They end up selling it in a low price as the stock values are significantly dropping. This results is an evident loss of money.
Understand Dow's Theories Used in Technical Analysis
Market fluctuations are a reflection of all known information. This means that the price of a security and its trade performance can be seen in the information available about it. Price listings are viewed as a fair value. Major news about a company often leads to a sudden change in how its stock trades.
Price movements can be charted and predicted. Although prices tend to move randomly, there are times when they move in a noticeable trend. Identifying the trend makes it possible to make money from it. According to the period the market is analyzed, short and long term trends become easy to identify.
History often repeats itself. Traders react the same way to current conditions the same way they do to past ones. This predictable behavior in people allows technical analysts to profit each time similar conditions occur.
Read Charts
How to Use Charts the Right Way!
Chart reading can allow you to spot price trends. By studying charts and graphs, you can identify the general direction the prices are headed while overlooking individual fluctuations. Different kinds of trends include up trends, down trends, horizontal trends, trend lines and major trends. Major trends are those that last more than an year.
There are four kinds of charts used by technical analysts. Line charts are used to plot closing stock prices over a few years. Candlestick and bar charts are used to show high and low prices for a particular trading period and any gaps experienced between trading periods. Point and figure charts show significant price movements experienced over a long time.
A cup-shaped pattern indicates an upward trend that will continue after a short pause in the downward direction. Saucer bottom or rounding bottom pattern signifies long-term bottoming after a downtrend which then moves to an upswing. Double top or double bottom patterns show two failed attempts at exceeding a high or low price followed by a trend reversal. Other patterns observed include wedges, flags, pennants, and triangles.
Support and Resistance
Support is the lowest price a security drops to before more buyers drive the price up while resistance is the highest price attained by a security before the owner sells their share causing the price to fall again. These levels fluctuate from time to time. Technical analysts tend to keep away from securities nearing a support level due to the volatility of the price.
It's possible for stock prices to fall below support levels or rise above resistance levels. In such cases, the support level becomes a resistance lever for a new low-level support and vice versa. Such reversals are usually common in the short term.
The Volume of Trade
The amount of buying and selling going on indicates the validity of a trend. An increase in trading volume rises while the price is rising indicates a valid trend. If the trading volume increases slightly or falls while the price goes up, the trend might reverse itself soon.
Use Moving Averages
A moving average is defined as a series of calculated averages calculated over equal periods of time. It's used to filter out minor price fluctuations. They make it easier to see overall trends since they remove unrepresentative highs and lows.
The simple moving average (SMA) is calculated by adding all closing prices during a particular time period and dividing it by the number of prices included.
The linear weighted average takes each price in the chart and multiplies it by its position before adding all the prices and dividing them by the number of prices.
Exponential moving average (EMA) is similar to the linear moving average. The only difference is that it weighs the most recent prices to compute the average. This makes it more responsive to the most recent information.
Indicators and Oscillators
Indicators are calculations that usually support trend information drawn from price movements. Some indicators have a particular value range and are called oscillators.
We have leading and lagging indicators. Leading indicators predict price movements and are used in horizontal trends to show uptrends or downtrends. Lagging indicators are used to confirm price movement.
The average directional index (ADX) and the Aroon indicator are included in trend indicators. ADX uses negative and positive directional indicators to find out the strength of an uptrend or downtrend on a scale 0 - 100 with values less than 20 showing a weak trend and those above 40 showing a strong one. The Aroon indicator determines the nature and strength of a trend and the onset of a new one.
Moving average convergence-divergence (MACD) indicator is the best-known volume indicator. It shows the difference between two moving averages, a long-term and a short-term plotted against a center line representing the where the two averages are equal.
On-balance (OBV) indicator is another volume indicator that shows the total trading volume within a given period. If the value is a positive number, the price is up but if its negative, the price is down.
It's not a good practice to use indicators and oscillators alone to help you decide on whether to buy or sell. The best thing is to use them together with other methods such as chart patterns and price movements.
Fastest Way to Become Stock Market Trader Expert
Quick Results
Market analysis using technical analysis focuses on short periods of time usually a few minutes to one month. This makes it suitable to people seeking to make money by repeatedly buying and selling securities rather than investing them for a long period of time. You might want to read some tips on "How to be Successful in Day Trading".
Day trading occurs when you buy and sell a security within one day. While it occurs in all marketplaces, it’s often seen in the Forex and stock markets. While day traders are often well-funded and highly-educated, it doesn’t mean that a regular person like yourself can’t get into and be successful. The important thing is to understand the terms and lay out strategies to ensure your success.
If you want to get involved in the day trading market, try to consider these 15 tips below to help you become successful:
You might want to watch this video first.
Keep a Journal of Trading Rules
Before you even get involved in the market, it’s imperative to develop a list of rules to abide by.
The biggest obstacle newbies face is the lack of discipline. After all, they’re excited about the prospect of making money. However, the rules will keep the emotions in check and fortify your resolve of sticking to them.
Be Mindful Of Your Emotions and Ego
It’s okay to leave a position when the fundamentals are clearly showing you’ve made a mistake in getting involved in it. It’s not uncommon to make mistakes, even by experienced traders.
The best thing you can do is think practically. It’s not uncommon for traders to throw caution to the wind when dealing with a losing streak. However, this often leads them to lose even more money. If they’re experiencing a good streak, they may take even bigger risks that are not supported by any statistics.
Avoid emotions and ego and stick to discipline and rational thinking if you’re going to be successful. You won’t be making impulsive decisions, and you’ll stick to the trading strategies and rules that ensure you can be successful.
Add A Stop Loss
When it comes to profiting and losing, you have to consider how much loss you’d be okay with losing before you leave the market. Once you decide this amount, keep with it. This keeps you from getting too greedy when the market spikes and mitigates the losses that can happen when the market suddenly downturns.
If you’re already trading in the market and have attained your targets, create new stop loss and profit levels.
Have A Maximum Daily Loss Set
This will be the amount of money you can financially and mentally withstand losing in a trading day. This is the time you need to exit the position and stop trading the rest of the day. Don’t go back into it, even if the urge is there to make up for the loss.
Day traders look at their performance by the amount of money they have and how well they abided by the trading strategies. If you stick with your strategies, you can recognize where the problems are. If you don’t, you won’t know where adjustments need to be made.
Have A Risk Reward Ratio
Novice traders should look for minute losses and big gains. A 3:1 risk reward is ideal for novices. What does a 3:1 ratio mean? It means for every three losses you have; you’ll have one good win. The more experience you get in the market, the higher your ratios can become.
Have A Simple Strategy
The easier your strategy is, the more successful you can be with trading. You’ll know when to get into the market and when to get out of it.
You Don’t Have To Trade Every Day
Many people are under the assumption that to be successful they need to trade every day. The only time you need to trade is when opportunities arise that meet your goals. If something doesn’t feel right, don’t trade. Listen to your gut and keep to the trading plan.
Spread The Risk
There’s an old saying, “don’t put all your eggs in one basket.” When it comes to trading, you don’t want to put a lot of capital into one stock. Set the trading amount to no more than 10 percent of your budget. The amount you invest depends on how much money you have and your personal preferences.
Make sure to invest only what you can comfortably lose. How the risk is spread needs to be determined by three things:
How much risk you want
Your short-term goals
Your long-term goals
Find A Niche and Stick To It
You can day trade in stock, options, futures and forex, but it’s better to learn a niche and stick by it. It doesn’t matter how good the other options are; until you’ve mastered it, you shouldn’t try the others.
Liquidity and Volatility
The two qualities you want in stock is volatility and liquidity. Stock liquidity lets you buy or sell stock at a decent price; volatility gauges the price variance for the day. When a stock is considered volatile, it could be a trader’s dreams come true or their worst nightmare.
Don’t Purchase More of a Losing Stock
When you buy more of a losing stock, you may only set yourself up for failure. You may think it will reverse its losing streak and earn you cash, but what if it doesn’t? There are many stocks on a bull run. Trade in those unless you have real experience in the stock market.
Avoid Putting Focus On A P&L Account
Your attention should be on your trading plan and chart. You will incur some losses, but sticking with the strategy means better wins that eliminate the losses. If you notice the account is suffering multiple losses, you may start making decisions on emotions – not common sense.
Don’t Act Impulsively
If you’re going to be a successful trader, you need to be disciplined. If you stay in one position too long or get out too early, you may feel aggravated with the results you’re getting. Learn what to avoid in stocks trading.
Conduct A Daily Review
There are four key questions to ask yourself after the day trading has ended:
Did you abide by the rules?
Were there any weaknesses?
Will you improve those weaknesses?
Was the trading strategy you came up with working?
Practice Various Situations
Practice makes perfect. To become a smart trader, you need to practice. Write down mistakes made and what went well. You’ll only make money if you repeat what has worked and avoided what didn’t. What do you need to do with your trades? Stick to the rules you’ve laid out such as pricing actions and when to enter and get out of a trade.
Before you know it, this will come naturally, and you can implement the strategies you’ve created in real-life.
Watch this video below as how day trading actually works!
Final Thoughts:
Your success at day trading boils down to one key thing - determination.
You must be determined enough to come up with a great investment strategy plan and maintain a level head throughout the process.
Don’t allow emotions to make your decisions. Instead, focus on the rules you have set for yourself and follow these tips to be successful in stock trading efforts.
You can buy stocks on the market stocks exchange by using either of these methods: market order or limit order. The market order means that you are buying the current on-going rate of the stock while the limit order allows you to set parameters on selling or buying the stocks from the lowest price point or the highest price point that you are willing to stake in the online stocks market.
What is Stock Market
Limit orders can give you the ability of flexibility and help you protect from fluctuations that you can possibly incur in the market transactions. With a limit order, you can get extra profits from buying or selling at 5%-1% of under or over the current price respectively.
Invest in Individual Stocks
Individual stocks always generate higher returns than funds but are more volatile. Also, there are things to consider before investing in the stock market trading to be successful. The best individual stocks to invest are those from big companies. These are companies which are financially stable, still growing strong and will still be thriving in many years.
Focus on Your Gains
Focus on how your stocks are doing. Don't compare them with those of your friends, colleagues or people you see on television. This will always daunt you and misleads you towards success. Don't compare your progress to others since you have different perspective and goals in your business. Instead, focus on your own profits and come up with strategies to increase them in the long-run.
Long-Term Planning
All companies, both big and small, experience spikes in the price of their stocks and this is just normal. This may cause them to lose 10% or even 40% market cap mainly due to negative sentiments. However, if you choose a great company, the earnings eventually catch up to the share price making the stock price go up.
How to Buy Stocks
As a beginner, you should learn the basics of stock market trading and how to buy the stocks to start with. Learn the ins and outs of the company whose stocks you have choosen to invest. In time, you can add another stock from another company. Gradually increase your stocks depending on how comfortable you are on buying them.
Guide on How to Buy Stocks Online
Split Your Investments
Once you have choosen a good stock, split the amount of money you want to invest in it by three. Don't invest all your money at once. Purchase shares in interludes of 30 days. This will protect you from the large price drops which significantly hurt the share price.
Take the Profits
Take the profits you earn from your stock market investment. At any point, you'll have to sell the stock and take the profit you've earned. Companies don't stay profitable forever. Even large companies reach a point of decline. When a time like this comes, sell your stock and move on. There will always be emerging companies with a more promising future.
How to Start Investing
Update Your Portfolio
Make changes to your portfolio once in a while. Ideally, you should redistribute your stock holdings every 6, 12 or 18 months if one of the stocks gets to a value of more than 33% of your total value. To redistribute, you'll need to sell the stocks that have significantly gone up and use the money obtained to buy shares of stocks that are lagging behind.
Enroll in DRIPs
Dividend reinvestment programs (DRIPs) allow the automatic purchase of additional stocks using dividend issued by a company. The dividends from the new stock shares gradually increase and add to your margin levels. Most financial institutions offer to enroll your stocks into a DRIP for free.
It is very important to understand definitions of metrics like the earnings per share (EPS), the P/E ratio, compound annual growth rate (CAGR) and return on equity (ROE).
You should know how each of these are calculated and comfortably compare the metrics of different companies to make better stock market investments.
Order Types
Investors use different order types which you should familiarize yourself with. Some of them include limit orders, market orders, stop market orders, trailing stop loss orders and stop limit orders.
Different Order Types of Stock Market Trading
Stock Selection and Timing
Making profits in the stock market heavily relies on choosing the right stock and when you invest in it. Ensure you understand how technical and fundamental analysis are performed, their differences and which one will work best in a stock market strategy.
Types of Investment Accounts
The most common investment accounts are cash accounts. However, we also have margin accounts which are required for certain trade types. Learn what margins are, how they're calculated and the difference between margin requirements.
