There are also other reasons for putting out free stock picks. In many cases, the actual companies themselves are paying various people or services to tell the world about their business. It's common to have a small, publicly traded penny stock pay a lot of money to get the right kind of exposure to help lift their share price. The aim is to issue more stock at a higher price and raise money more easily.
Finally, keep in mind that if trading on margin—which means you're borrowing your investment funds from a brokerage firm (and bear in mind that margin requirements for day trading are high)—you're far more vulnerable to sharp price movements. Margin helps to amplify the trading results not just of profits, but of losses as well if a trade goes against you. Therefore, using stop losses is crucial when day trading on margin.
If investing in single stocks may be too risky for you, consider investing in good growth stock mutual funds. Mutual funds are a simple, even boring, investment plan, yet they work well for most people. Of course, all investing requires a degree of risk; there really is no sure thing. But mutual funds are a great balance of reasonable risk and excellent returns. They have built-in diversification that will keep you from putting all your eggs in one basket.
Buy “the basket”: Can’t decide which of the companies in a particular industry will be the long-term winner? Buy ’em all! Buying a basket of stocks takes the pressure off picking “the one.” Having a stake in all the players that pass muster in your analysis means you won’t miss out if one takes off, and you can use gains from that winner to offset any losses. This strategy will also help you identify which company is “the one” so you can double down on your position if desired.

Why I’m buying: Spell out what you find attractive about the company and the opportunity you see for the future. What are your expectations? What metrics matter most and what milestones will you use to judge the company’s progress? Catalog the potential pitfalls and mark which ones would be game-changers and which would be signs of a temporary setback.

×