How to get going in the Stock Market

We all know that the way to make money is to buy low and sell high. In this article I will show you a method of trading that will not allow you to miss out on any opportunity to make a profit.

Markets are driven by two emotions. Fear and greed. When the stock market is going up people start hearing about all the money that everyone else is making. They want to be in on the easy money so they buy shares causing the prices to go higher. This is greed. Soon enough the shares are over valued and people are making unwise decisions in buying as the market reaches the top. When the market is going up people believe that it will keep going up forever.

On the other side when the market is going down fear takes over. People start to see their hard earn cash disappear. So they sell, causing the prices to drop even further. Then the penguin syndrome takes over. As people see others selling they start selling as well causing the prices to drop even lower. Soon the shares are at a bargain and under valued. When the market is going down people cannot see the bottom because they are afraid to look down.

People are creatures of habit. And people are followers. That’s why you only see a small percentage of people that are truly wealthy. To become wealthy you have to do what everyone else is not doing or is afraid of doing. You have to buy when everyone else is panicking and selling and you have to sell when everyone is excited and buying.

Now here is where you are going to have to follow me a little. Pay close attention. Re-read if you have too. The company you are investing in isn’t as important as you think. Sure you want to pick one that’s not going to go bankrupt but a majority of the companies that you invest in you will be selling shortly. You just want the money. So pick five companies that have good PE ratios (anything under 20 is good). The price doesn’t tell you how expensive or cheap a stock is, the PE ratio tells you that. Make sure you have just as much money sitting on the sideline in cash as you have invested in the stock, your going to need it. Say you buy 100 shares in Apple at $90 a share. If the stock goes down to $87 buy another 100 shares. If the market isn’t doing to well and people are selling the price will drop some more. So you buy another 100 shares at $84. Eventually the market will pick up because that’s what it does, it moves up and down. The day the market stops moving we will have far worse problems than making money, the world probably just ended. So when the market goes back up and Apple moves to $87 again you sell the 100 shares that you bought at $84, taking $300 for yourself. Notice you do not sell unless its for a profit. If it goes back down, you buy some more. If it goes back to $90 you sell what you bought at $87. Get it?

You do this for as many companies as you like. Just don’t panic and don’t break down. If the market seems like its never going back up again just relax and buy some more cheap stock. And don’t get greedy when your stock is going up. Don’t think your stock will continue to go up forever. Sell it if you can make a profit. Don’t think of the market going down as a bad thing, think of it as an opportunity to make money. And that’s why you buy and sell the same stock on many different levels. This way you don’t miss an opportunity to make some cash. Don’t just buy and hold, that will get you average results. Do what others aren’t doing and you will be where others are not.