Six Key Investing Rules Every Smart Stock Investor and Trader Knows

by Andrew McGuinness     Jul 16, 2019

If you're looking to get into stock investments or trading, you're probably wondering where the heck you're supposed to begin. With a seemingly endless number of options to invest in ranging from well-established blue chips to new and promising penny stocks, you're right to feel a little bit overwhelmed if it's your first time navigating the stock market. However, with a little help from the pros, you'll be on your way to effectively buying and trading; here are six simple stock cycle rules that you can use to invest like a pro.

Do your homework. The best and biggest stock trades begin with insider information on a new product from an established company or a smaller company that is set to make promising goals in the near future. Before you even think about putting any money down, do a little digging and contact company representatives to see what they have lined up and how they're planning to spend the next six months to a year. You may also seek to speak with a sponsor, or someone who has insider information from a particular company, who is able to recognize trading opportunities early in the cycle. Get all the information that you can, then invest your money in a company that you believe has the most viable mission or product they're looking to introduce.

Play the waiting game. Like a fine wine, truly smart investments take time to mature. It may be days, weeks, or even months before the company in which you've invested your money and bought stocks introduces the product or service that will interest larger buyers and raise its price. Don't panic is your stock isn't catapulting through the roof a few weeks after you've purchased; smart investors know that the hype and buzz of a new invention takes time, so hang onto those stocks.

Check for online presence. In today's fast-paced world, chances are good that if there's something worth investing in on the market, the first ones to know about it will be sharing their information on the internet. To check up on the health of your investment, monitor your stocks' presence on internet chat rooms, trading forums, and blogs. If there's barely anyone talking about it, you are ether in the early stages of the stock cycle or you've picked a dud. If there seems to be hype building, you know you're on the edge of an excellent investment.

Watch the rise thanks to Wall Street. Smart investors know that once the executives on Wall Street catch wind of a hot stock, the lifespan of the investment has nearly run its course. When Wall Street brokers begin to hawk a stock, you can watch the prices of your investment rise, but don't sell just yet- most of the public has not heard about it yet, so you still stand to gain more by being patient.

Monitor mainstream media. To know when the right time to sell is, you should be monitoring mainstream media, which is generally the last source to know about a big breakthrough or investment potential. Unlike niche blogs and internet chat rooms, mainstream media (like television shows, newspapers, and other commonly consumed publications) is public common knowledge- the least savvy investors will put their money in during this step. Carefully monitor common mainstream media sources, and begin getting ready to sell when demand is at its highest.

Know when to exit. When your stock is flying high, it can be tempting to hang onto it and see how far it will climb. However, smart investors know that a stock is most valuable when the demand is peaking with the public. Sell your investments when the value is high- and get ready to move onto the next best thing!

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