9. Keep a trade journal – Keeping a record of previous trades is an invaluable tip. Software now enables you to quickly and easily store all your trade history, from entry and exit to price and volume. You can use the information to identify problems and amend your strategy, enabling you to make intelligent decisions in future. You never meet a trader who regrets keeping a trading journal.
This is an excellent learning experience and one that is vital to the long-term profitability of anyone in the stock market. To get the real experience, purchase some graph paper and chart the stock price movements each day by hand. Learn to compare this with the overall movements of the equity market or index and a whole new world of investment and money will begin to open up to you!
The least demanding way to invest in the stock market is to invest through a fund. There are two types of funds. First is the actively managed mutual funds which have higher fees—92% of these funds fail to beat the underlying index over any three-year period. The second type is the index tracking fund, which typically has lower costs and is more effective in matching the growth of the stock market. This means they are growing in popularity because of the higher return on investment you receive. You should also use the most tax efficient way to invest: using your Investment Retirement Account (IRA) first. It’s best to invest in a low-cost, index-tracking fund through your tax-free IRA.
And you can find such stocks in lists like the IBD 50, Sector Leaders, IBD Big Cap 20 and IPO Leaders. For example, fast-growing semiconductor designer and artificial intelligence (AI) stock Nvidia was featured on the IBD 50 before it surged 750%. And Apple has been featured on various IBD lists as it has made big moves in recent years. While, of course, not every stock featured on an IBD list will make the type of moves that Nvidia and Apple have made, it does show why it pays to regularly update your list of stocks to watch using these S&P 500-beating screens.
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.