After we discussed the first three tips to invest in the stock market, we will continue discussing the remaining three here. These tips will help you decide on the different situations within the stock market to reach your financial goals.
4. Average Up, not Average Down
Many investors like to average down, by putting more cash on a falling stock. For instance, once the shares fall 25%, 50%, or 75% from the original purchase, they buy more stocks.
Consequently, they make the average price per shares go lower. That is problematic, since the investment may fall for a reason. Worse, investors create more downside to go.
Moreover, those investors put more (possibly) their small portfolio on the line in shares that trend lower.
You have to average up, instead. The right investors witness the shares start climbing after they make a purchase. The trend of this company to go higher will sustain if the underlying company continues to do well.
Putting more of your money into winning stocks will pay you well.
5. Try Paper Trade
Many people want to try penny stocks, as we have discussed that this stock can go dramatically high. But they usually do not know where to start. With their lack of knowledge of buying and selling, plus the bad name penny stocks, they are cautious with the high risk.
For those problems, we have paper trading. It helps you to keep track of the stocks you want to buy. But, you do that with imaginary money.
It does not require money and risk. Yet, paper trade will improve your knowledge of market and skill on stock trading.
6. Don’t Trust Free
Always remember, free stock picks, specifically in penny stocks are always dangerous. The hidden motivation of those promotors and your greed is the perfect combination to guide you in buying worthless companies.
7. Don’t Just Buy What People are Buying
This mob-mentality buying shows that the investment is overvalued. It happens in all investment, whether it is penny stocks, bitcoin-related investment or Dutch Tulip Bulbs, you will not get a fair price.
