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Stock Investing Basics

The two largest enemies of the stock investor are greed and fear. Fear can paralyze the investor from taking chances. They over-analyze, get neurotic and never take a chance on buying a stock. If you do your research and the stock looks favorable, do not let fear creep in and stop you from taking action.

On the opposite end of spectrum is greed. The investor might try to squeeze out a little more profit and put themselves at risk.

It's always important to set your exit points before you invest. This should not be done as dollar amounts. Always operate off percentages. With my day-trading I set my percentage at 2-3%. When my investment hits 3% above my purchase price I sell. If I lose money I hold on, but also set an acceptable loss percentage of 2-3% … You should factor losses into your over-stock stock investing plan. They're a part of doing business. You will lose and you will win.

If you see your stock dip a percentage point, do not panic, let fear creep in and sell. Give it some time. It could be a temporary blip on the radar and go up 5% the next day.

If you see your profits soar to 10-20% you're getting greedy. You should have sold a long time ago. In fact, I would be weary of any profit percentage over 7%.

Do not trade off emotion. Always use your head and keep your decision making process clinical. Do your planning beforehand and stick to it. Set your exit points wherever you're on the profit or loss side. Avoid fear and greed. All good investors are educated and sober with their stock investments.

Source by Sarah Celeste