Investing in stocks is proving out to be one of the most profitable options for people. However it is necessary to invest prudently in stocks as you can lose your full investment in case you are inexperienced or not careful.
The first thing you need to do is to understand the stock market and to understand the stock market you need to know what stocks are. A stock of a company normally means a share of ownership that you can hold in a company. Companies raise capital from the public in the form of shares to invest in their business and make it grow.
In order to follow stocks you should start with reading stock articles and magazines. Also take help from a broker who deals in stocks everyday. Sit with him and observe what he is doing on his computer terminal. You should note down all questions that you are going to ask him later.
How To Follow Stocks: The Golden Rule Of Investing
Always remember the golden rule of buying at low process and selling at high pries. You will not become an expert in following stocks in one day. It takes quite a bit of persistence on your part to understand the working of the stock market and what particular trends each stock is following.
While following stocks you always have to remember that the market is always right. Hence you should act according to the flow of the market. You should be able to stay right with the market for as long as possible. You will lose more money if you stay wrong with the stock market.
Next on the list would be to aggregate the list of those stocks that are doing well over a period of time, say during the last one month. You can sort these stocks in descending order according to the prices and the margins by which they have gone up. You should then start following only these selective stocks and start investing in them.
Stick With A Long Term Strategy
Also remember that the market trend is your best friend on which you can rely on when you are following stocks. The important point here is to stay with the trend and stick to it as far as possible in order to earn profits in the long run.
Remember that people can make money by following stocks in the long run and sticking to them and their trading plan as a whole. Most of the people who rely on short term gains from stocks end up making losses in the end, with one statistic citing a 95% failure rate for short-term traders.
Do not take the help of software vendors, financial analysts and trading authors for following stocks unless they are reputed and have loads of experience behind them in the stock market. The internet today is the best source for researching as well as following stocks.
All you need to successfully follow stocks is a computer and an internet connection. You can log on to stock sites like Yahoo Finance and follow your stocks regularly with the help of charts which will provide you details of the opening and closing price of stocks along with the trend that the stock has followed since the last week, month, quarter and year.