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In this exclusive article Clem Chambers, Forbes columnist and author of the Amazon No.1 investing bestseller 101 Ways to Pick Stock Market Winners, discusses the five golden rules to help you start trading successfully.
After you register for free, ADVFN provides the essential tools and information to make the right investment decisions.
Incisive, honest and essential, Clem Chambers’ 101 Ways to Pick Stock Market Winners is the Amazon-bestselling investing guide.
There are many more people watching share prices than investing in stocks.
Most realise that investing is the way out of living from pay check to pay check, but do not know where to start.
Stocks and shares seem to be the reserve of the rich; a risky business where the novice loses their shirt.
But there must be away to get started without getting burned?
Here are five rules to stock market investing success to get you started.
Rule 1.
Get online and get the stock picking tools of modern investing.
ADVFN provides investors with free stock market tools that a few years ago would not even be available to the professional fund manager;
- Real time share prices.
- Fundamental information.
- Portfolio tracking.
- News.
- Opinion.
- Many more free services!
These free services let you make highly informed financial decisions on what share to buy and when to sell them.
Researching your stock market investments might seem like work. That is because stock market investing is work, as I discuss in my book 101 Ways to Pick Stock Market Winners.
Sadly investing is not a short cut to wealth, you need to treat it like any other way of making money -with focus and determination. Hopefully you will find it a lot of fun and more like a pastime than a chore.
Just as you cannot do a crossword without a pen, you shouldn’t invest without the best stock market tools which are online these days.
Happily ADVFN, one of the global stock markets leading web destinations, is free and the best place to go. So when you start the investing process get familiar with sites like ADVFN which will boost your attempt to get investing.
Rule 2.
Until you own at least 30 different shares never buy more than £1000’s worth of any share.
Risking too much on any stock investment is a recipe for disaster, even for the sophisticated stock market investor. Keeping your individual share investments small keeps your capital pot safe and lowers the stress that can make investing unpleasant. Once you have 30 stocks you can grow the scale of each investment, but until that day stay small.
Rule 3.
Build a stock portfolio of 30 shares.
Take no notice of the people that say put all your eggs in one basket. A portfolio gives you a certainty that bad luck won’t hurt you and that your choices on average will deliver the return your share picking deserves. This portfolio return over the years will outperform anything a bank will offer you on deposit and will compound.
A diversified portfolio will mean you will miss out on good luck, but investing isn’t about good luck. Bad luck and good luck cancel out over time but if you have too much of your money in too few shares then bad luck can knock you out of the game.
This is called ‘gamblers ruin’ and the way to avoid by having a portfolio.
Rule 4.
I always pick stocks using charts.
Unsurprisingly, these are novel ideas. There will always be new ways to make money using charts and over time they will stop working. This is the way it is with markets.
To be successful you need to be constantly on the lookout for new methods; old ones are always eaten away by the efficient market. To make gold you must slowly destroy your philosopher’s stone and then make another.
Rule 5.
Invest in shares for the long-term.
Buy shares you think you will hold for three or more years. Do not make your broker rich and yourself poor by trying to trade. When the world’s most successful investor, Warren Buffett, claims sloth as his most profitable investing trait you should take note. Slow and steady wins the stock market investing race. Value investing is a great skill to learn.
Put your investing money in a SIPP or ISA and let the profits roll up tax free. While interest from the bank is taxed, using these tools can protect your stock market profits and dividends from tax; one more reason to let the long-term take hold.
Just remember, by the time you can afford a Ferrari from stock investing you will be too old to want one. You think that’s bad? Perhaps you should wonder if you have any other way to get Ferrari rich at all, before you worry how long it will take.
If you can see stock market investing as a part time job from now until retirement you will do very well indeed from it; it is the short-term forex and share traders that get burnt.
Investing is how a normal person can get rich slow. It is one of the few ways available to an average fellow, but because it takes hard work, discipline and time, not many people sign up for it
If you really care about your finances and your long term prosperity it is always a good time to start investing. It is a long road, but a profitable one.
If you register with ADVFN, you will receive a free, easy to follow guide on ‘How to Invest’.
There is no need to get rich slowly. It is much better to invest in property for cash flow leveraging your money with a mortgage (making sure the market is not in a bubble), for the long term, whilst running high tech start-ups, one of them will eventually boom, and then you can invest part of your money as an angel investor…
What a load of old tosh!
1. 30 shares is too many for most people, meaning too small individual holdings with too high a proportionate cost of purchase and you might as well buy a tracker!
2. Use charts? Are you serious?
Buy Low and Sell High OR buy with a solid and safe dividend at a fair price … but do it on real value and fundamentals, not the shape of a historic chart – as the adverts say, past performance is no guarantee of future returns and so it is with shares.
3. Learn about basic measures of value, P/E, PEG, watch out for the debt and make sure the dividend is safe … do that alone and you’ll beat anyone who relies on charts over the medium and long term.
Sorry Clem but your sharepicking advice is as pants as the ADVFN web site you run!
Sorry Mr. Painter but you can lose a lot of money on dividend paying stocks, way more than you will ever make on the dividends. And you obviously know nothing about the use of charts, a six month moving average is the best but like the article says it takes hard work and discipline to make money on the market. I think 30 companies is a little muc h unless you have a lot of money.
absolute rubbish about spreading it about you will Make ziltch from this stick to one and get it for good value dont spread it about you will make nothing from this approach.
yes do not put more than£1000 in any one share that’s why the banks trade in billions oh that’s were they went wrong silly banker
to make a million invest £5 million in penny shares and sell when they reach a million never lose a bet guaranteed if you do not gamble