One of the first things you need to know regarding
investing online is, that no matter how far things
have come for the individual investor you are still
at a disadvantage trading in the markets.
Beyond the extensive knowledge and skill
level you will need to aquire to trade profitably,
you will be trading against professionals.
The major brokerage houses, sector analyst,
money managers, floor specialist's, and the
institutions move the market, and let's not forget
those computerized trading programs.
Sure any major news event can move markets around
the world, but how this news gets interpreted and
which stocks it affects is clearly given from the
above group.
Whether it's a rise in interest rates or a individual
company or sector news, the above provide direction.
The institutions, brokerage houses, professional
traders have access to news and information far
further in advance then the individual investor
could ever hope to get. They have sophisticated
technical trading programs, dedicated technical
analysts, analysts that specialize in each market
sector, and lot's and lot's of cash to make major
moves in any stock. Their deep pockets can ride out
the up and downs of fast moving volatile markets far
longer than any small individual investor could last
particularly if that investor is trading on margin.
So what to do?
Do your own research, learn a combined skill level of
both fundamental and technical analysis. Learn proper
order entry and exit strategies. Develope discipline
and trading strategies that are easy to control and
work for you. While your goal is to make money you'll
need to learn how not to lose money, through
money management and effective use of defensive stop
orders.
As your skill level rises call and put options can also
serve as a hedge against risk. (but only for the skilled).
Something else to consider "Don't put all your eggs
in one basket" start off small.
Until your confidence and skill level improve.
Lastly keep your emotions in check, try not to overeact
to both good and bad news.
Treat trading as running your own business.
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