Wednesday, 4 January 2017
Making Decisions In The Beginning : Continuation on How Investment Works.
Let us return to driving as a reference. When you first start driving, you will not enter the high way and take the car at speeds of sixty and seventy miles per hour. Instead, you will stay in residential areas or at least on the access road, where there is less pressure to maintain such a high speed.
In the stock market, you will also want to stay away from any expensive stocks or extremely volatile investments until you have become extremely comfortable with the process of trading. There are small investment opportunities referred to as “penny stocks”, which will help you try out your sea legs and get a feel for how the stock market works prior to investing large sums of money and risking a big financial loss.
These particular stocks cost literally pennies or small dollar amounts and typically only fluctuate fractions of a cent on any given day, making them extremely safe for those just starting out. Once you get the hang of it and can better judge the market trends, you can comfortably move on to more complicated and adventurous areas of the market.
It is like removing the training wheels from your bicycle or entering the freeway the first time at an hour of the day when there is no traffic to contend with. Be aware that, just like you may fall off your bike once or twice and end up with some scrapes and bruises, you may lose money in an investment here and there.
This is very typical, and investing in the stock market is a lot like gambling.
In poker, you cannot expect to win every hand, and the same is true in the world of investments. Learning to watch the market trends, though, is similar to watching other cars as you join traffic and determining the correct speed and proximity to other cars for optimal safety. Such diligent study can help you improve your statistics drastically in a short time.
To be continuing...........