Stock Tips: Some Basic Things To Know

Today, I wanted to give you some stock tips that might help you become a better investor. In my last article, I talked about picking an investing strategy and sticking to it. This is by far one of the best stock market tips I can give you. It’s easy to get caught up in the newest investing sensations. I remember being really attracted to options and currency trading sounds pretty cool. While if I worked at it, I might become an expert trading them, there is a lot more risk associated with those investing strategies.

This leads me to my third rule of investing. Keep it simple. As we move along here, I’ll do my best to break everything down, but simplicity is key. Buying stocks long meaning buying them for later sale is the safest, albeit riskiest thing we can invest in. Remember, invest only in things you know and understand because you can and will lose money.

Some of these tips are not really “mine”. I’ve actually borrowed some of them from William O’Neil. But some of them are mine.

Tip #1 –

Don’t buy any stock based on a recommendation from any spam email or fax you receive. These are basically scams.

Tip #2 –

Don’t buy on tips from your friend, neighbor or coworker. Do your own homework. While you can find stocks that way, put them through the same scrutiny you put the other ones through.

Tip #3 –

Don’t buy penny stocks. This is another investing area where if you don’t know what you are doing, you’ll lose. Stocks are cheap for a reason – that’s what they are worth. I’ve noticed that services that promote these stocks are now giving away their picks as free stock tips. Don’t fall for them.

Tip #4 –

Don’t subscribe to the gurus investment newsletters.

Tip #5 –

Only buy stocks that are priced above $15 dollars per share. These stocks are the ones the big money are buying. They aren’t buying the low priced crap. You need the power of the big money behind any stock you purchase because that’s what drives up the price.

Tip #6 –

Don’t get your free trading tips from the big media players in cable or print like MSNBC or Forbes. Buy the time the general public knows about the next best investment, it’s already occurred and the big money needs buyers. This is their advertising. Steer clear.

Tip # 7 –

Break down your investing strategy into a step by step process. Leave nothing to chance. Write down your actions and streamline them.

So those are some of my free stock market tips. I hope they help. I’m sure that I will come up with more later but those are some of the better ones I can think of at the moment.

Stock Tips on How To Screen The IBD 200 Futher

As I mentioned in my last article, here are some additional tips to reduce the number of stocks to look at each day.

Price percentage increase – What you are looking for are stocks increasing in price. I only am screening for stocks that go up at least 2% daily.

Volume percentage increase – Not only are you looking for stocks that go up in price but also at the same time on heavier volume. I am looking for over 100% over the prior day.

Trading volume – Pradeep suggests going for stocks that trade at least 100,000 shares daily. William O’Neil suggests 300,000.

Composite rating – Investor’s Business Daily assigns a rating to every stock based on certain characteristics. We’ll be using over 96.

EPS Rating – Is the earnings per share rating. I’ll be using 80.

RS Rating – Is the relative strength rating. I’ll be using 80.

SMR Rating – Another rating. I’ll be using A or B ratings.

Accumulation/Distribution Rating – This is how much buying pressure a stock is under. I’ll be using A or B.

Industry Group Relative Strength Rating – I’ll be using A or B again.

Those are some additional tips I’d recommend to reduce the number of stocks you have to follow. Check out my next article in this series called Buying Shares From Scratch.