Candlestick Trading Blog

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Investing Advice – Tip #1
Diversify Immediately
Even if you are only investing $500, it is important to not put all of your money into one stock. The importance of portfolio diversification cannot be stressed enough. Three stocks at least (or one mutual fund) should suffice in your first purchase. If you are going the high-risk, small-cap route with one of your investments, be sure that the rest of your investment (at least 50%) is invested in one to two larger, more reputable companies that are in different sectors than your small-cap find.  This bit of investing advice should aid in a favorable return on investment.

Investing Advice – Tip #2:
Investor Discipline
One important investing strategy is knowing when to sell. Anybody can buy stock. Trailing stops take the guessing out of investing and guarantee that both your profits and your principal are always protected.

Investing Advice – Tip #3:
Invest in Money Market Accounts
When putting your money into a savings account, investment basics tell you that money market accounts generally pay more than regular savings accounts, but the interest rates can fluctuate a little more. Institutions offering money market accounts, for your money management, usually have minimum amounts that can be deposited and also have a minimum dollar amount required to open an account.

Investing Advice – Tip #4:
Re-evaluate Current Trading Strategies
Becoming complacent about your investment philosophy is foolish. Continually evaluate and test additional trading options. What works in one market environment may fall flat in another.

Investing Advice – Tip #5:
How much do I Invest?
When starting investing it is important to determine what level of investment you should commit to. Be realistic and don’t invest too much. With your money in investment accounts you cannot liquidate without adverse tax consequences. Good investing advice will also tell you not to invest too little either or you may not achieve your investment goals. It is common for financial planners to suggest holding anywhere from three to six months of salary in a savings account before putting any money into investments.  The investment risk you choose is determined by your comfort level.

Investing Advice –Tip #6:
Retirement Investing
If your job offers a 401K or other retirement savings plans, be sure to take advantage. Employers will match your contributions up to a certain percentage and you can quickly build up a significant amount in savings. Contributions are usually taken out of your check before taxes and are figured on a percentage basis. Remember also that your contributions increase as your pay increases.

Investing Advice – Tip #7:
Invest without Emotion
Don’t let ego or fear get in the way of investing wisely.  It is important to keep the company’s financial health, investment fundamentals, earnings growth, and cash flow constantly in check. Be sure to continuously evaluate the company you chose to invest in to ensure it is still a strong investment. Do this even as its share price fluctuates, which it inevitably will.

Investing Advice – Tip #8:
Stocks are Unpredictable
Another way to buy stock is through investing in low cost mutual funds.  You can participate in several stocks within a fund in exchange for a small fee, while also reducing your risk. Investment options, such as this, are great for those that are risk adverse in nature

Investing Advice – Tip #9:
Limit Your Losses
Most experienced investors utilize stop loss strategies specifically where they sell a stock if it drops more than a specified amount. This ensures that no single investment will drastically weaken your strong portfolio.

Investing Advice – Tip #10:
Invest in Yourself
Sooner or later, one way or the other, you will pay for an investment education. Whether your education is from a carefully chosen instruction course, or poorly chosen investment strategies, is entirely up to you. Be sure you do significant research if you are interested in getting into playing the stock market game.

Investing Advice – Tip #11:
Know “What” you are buying and “Why”
If you are buying distressed stock in a company that has a threat of going bankrupt, be sure you understand that you may lose all of your money. If you are buying stocks in a company because you think it is undervalued, be sure to understand why you think the company will not go bankrupt. It is also important to evaluate that stock over a period of time equal to about three years to see if you still think it is undervalued.

Investing Advice – Tip #12:
Develop a Stock Trading System
This goes hand-in-hand with the next one. A stock trading system is a method of charting and analyzing stock movements in order to determine when to buy and sell. The best trading system available is Japanese Candlesticks and the Candlestick Forum is the best place to learn it.