Best Stock Trading Firms

If you can not follow a rule, do not begin speculating or investing, as you are sure to lose. Learn to adhere strictly to a rule or do not follow it at all.

The following rules should be carefully studied and applied in your trading:

Capital Required

You would not try to run an automobile and start out to travel several hundred miles unless you knew how much gasoline it required to run a given number of miles. Yet, you go into speculation without knowing one of the most important things, the amount of capital required to succeed and make speculation a business. Do not try to get rich in a few months or a year. A man certainly should be satisfied if he can acquire a competent fortune over a period of ten to twenty years. Often we have one year when a man with nerve and knowledge and a small amount of capital can make a fortune. I have been able to pile up enormous profits in a short time by pyramiding, but this can not be done continuously and I do not claim to be able to do it.

What I am trying to teach you is a safe, sure way, which will yield more profits than any other business on earth if you will only be conservative and not make speculation a wild gamble. A man may go into business and lose all of his money and then years pass before he has another opportunity to make a large amount of money in that or any other business. Yet, in the speculative markets opportunities return every year, provided a man has studied enough to see them when they appear. The chances for gain are so unusual and so many great opportunities do come in Wall Street that the average man gets greedy, gambles and does not wait between times for the real opportunity.

Limit Your Risk

A strong will power is just as essential as plenty of capital. If you have not the firmness, will power, and determination to protect every trade with a stop loss order, do not start stock trading, for you will fail. I have often heard traders say “If I place a stop loss order at a certain point the market is sure to catch it.” Yet they realize afterward that the stop loss order being caught was the best thing that could happen to them.

There is nothing better than getting out quickly when you are wrong. The man who refuses to get out when he is wrong usually stays until his money is gone and the margin clerk sells him out. A lot of people do not know how to place a stop loss order on a trade when they make it. A stop loss order is an order given to the broker that becomes a market order when the stock reaches the price at which it is placed.

About the Author
Anthony Green is an expert author on stock market related topics. His articles about online stock trading, stock market trading and stock recommendations have been published on numerous web sites, forums, blogs and e-zines all over the Internet. For more information visit at http://www.5minutetrader.com.

Is it easy or difficult to make money in the stock market?

I recently decided to try the stock market. I invested money in various different companies. Companies as safe as GE and Wal-Mart to as risky as General Motors. No matter the diversification of the portfolio, I still lost money, not much though, say about $400.00 thus far. It was a good month for most people, so why not me? I did basic research and to the best of my ability. Is it easy to make money in the stock market? So far it has been rather difficult for me. What are your opinions and experiences? Thanks in advance to all whom answer. Serious answers only please.

P.S. I currently use e-trade as my brokerage firm, if that makes any difference at all. Maybe there is another company that will work better for me than etrade? Thanks again!

The absolute biggest misconception that everyday people have is that buying “good” companies like Walmart is safe. Walmart being a good company does NOT mean that its stock is a good investment – in other words, it’s not just what you’re buying, it’s how much you’re paying for it. In fact, you can really say that it’s entirely how much you’re paying for it, since buying really terrible companies is perfectly fine if you’re getting a bargain price for it (not just “cheap”, but so cheap that even its cheapness isn’t justified by its level of terrible-ness). Sorry about the second-grade colloquialism.

What you need to be able to do to make stock-picking worth your while is to be able to identify companies that are worth more than what the market is pricing it at. This is incredibly difficult and is why fund managers get paid insane amounts of money to do an okay job and those who do it very well get paid despicable amounts.

Honestly, what I would do is figure out how much of your money you’re willing to put in the market, and just dump it in something like the Vanguard S&P500 index fund, and maybe a few others (international index fund, etc.). I specifically mention Vanguard due to the level of fees. S&P500 index funds are ALL the same. Unless it’s some shady company. If you ever come across an idea you really like or have a truly compelling reason to put your money in a company, you can always reallocate a little bit over. The answer it’s what people like to hear but it’s probably the only honest one for somebody who isn’t trying to spend their life researching companies.

A word on technical analysis – NO. It’s just not very smart – stocks are traded based on fundamental value (all those up and down days you see are getting driven by news and events affecting the company, not because some random indicator lit up). Quantitative methods do work, just not the stuff you find on the internet (run of the mill candlesticks, oscillators, moving averages, what have you). I’m talking the heavy duty stuff that requires knowledge of math and the ability to identify market inefficiencies and the abililty to run large amounts of money very quickly with [*this is key*] very low trading costs – the type of thing you don’t want to try in your personal account, especially not what the kind of percentages you’re probably paying in fees.