I’m always seeking out other people’s opinions when I’m trying to learn something. 1mil asks Yahoo! Answers users: What’s a good way to start investing?
Best Answer: By dreduce52
… The reason you are uncertain is because you have not developed a Trading Plan, or tested your theories. The worry and stress that rolls our stomachs and gives us chicken s**ts problems is that we’ve not defined risk, and the uncertainty multiplies. This contrary feeling is in conflict with Rule #1 of “preservation of capital.”
Neither have you probably defined your time horizon. It cannot be both short-term and long-term, and the only reason it could switch is when it keeps going for you, and not against you, like right now with the Dow making new all time highs daily.
Take a look at charting and Technical Analysis for following trends in the markets. Why would you own a stock that is in an obvious decline, or a mutual fund that underperforms the index it follows?
Realize right away there are two sides to the market, not just the upside. Not only can you short the weak ones while you go long the stronger ones, what goes up, eventually comes down at least part way. This is not a business of prediction, but rather knowing what to do if certain price points are reached, say at Support or Resistance levels, or Fibonacci retracement levels, or if a breakout to new highs or lows occurs.
Learn how to analyze risk, and make this your primary approach. We are not in the business of analyzing an unfounded theory of compounding profits and erroneously analyzing how much money you can make. For example, most traders don’t make any money at all; more than 80% blow out.
Learn about money management techniques, and maybe you’ll stick around awhile.
They say “Buy and Hold” for the long term is better, but that depends on when you get in, and what your definition of “long term” is. The phrase “Buy low and sell high” infers that you buy after a decline; but how much of a decline? If you had bought after a 1000 pt decline in the Dow in 2000, you would still be waiting to get back to even, six years later in most stocks.
Beginner’s Books on Investing:
Which Is Better, Buy-and-Hold or Market Timing?
Do You Have What It Takes to Be a Market Timer
The Beginner’s Bible in Technical Analysis is:
Edwards & McGee - Tech. Anal. Of Stock Trends
Droke, Clif -Technical Analysis Simplified
Kahn, Michael N. - Tech. Anal. Plain & Simple
Kamich, Bruce M. - How Technical Analysis Works
Lefevre, Edwin - Reminiscences of a Stock Operator
Lofton, Todd - Getting Started in Futures
Lowenstein, Roger - Buffet (Warren)-The Making of a Capitalist
O’Neil, William - J.How to Make Money in Stocks
Oz, Tony - How to Make Money From Wall Street
Develop a plan, then test your plan on a simulator and when you start making “virtual” money, then you can risk your own.
(See any books here you’ve read yet — I think I picked him because he was using big words lol.)
But I liked this guys no brainer, no bs approach..
