As an active trader and author, I am often asked for stock tips.  What am I buying?  What industries am I interested in? Am I long or short in the market?  But are these really the right questions?  I think not.  I think the best questions are:

• Is now the right time for me to be invested in stocks?
• What stocks are the best ones to buy according to my goals?
• How to I limit the risk of my trades?

To answer these questions I have compiled my Top 10 Stock Tips

Top 10 Stock Tips

Stock Tip 1. Do not fall for “Pump and Dump Schemes”

A “Pump and Dump Scheme” refers to the fact there are companies out there that collect email addresses by offering “FREE” Stock Market Newsletters, usually in the Penny Stocks and Micro Cap area.  This company then gets paid by struggling companies to promote their stock to the email list.  When the email recipients begin to buy the stock and the stock starts to rise, the company promoting the stock then sell into that strength and make money from the poor people that followed their advice.  You can never win with these schemes, do not fall for it.  Make your own decisions.

Further information : Pump and Dump Schemes

Stock Tip 2. Understand economics & business cycles

The stock market does not move randomly.  There are reasons why the market moves up and down in the medium and long term.

1. The health of the economy and the business climate influence the actions of governments and reserve banks
2. Governments and reserve banks dictate the Monetary & Fiscal policies – Interest Rates / Cost of Money / Debt and Budget Management
3. Monetary and Fiscal policy affects the business climate and the business cycle
4. The business climate and Cycles affect the direction of the stock market.

It is an interlinked cycle.  The key decision makers in the cycle are the governments and reserve banks.  You need to be able to interpret what impact their actions will have on the stock market.

Stock Tip 3. Understand how to read company fundamentals

Can you decide what a healthy company balance sheet looks like?  DO you know what fundamental factors to look for to find a fast growth company of the future?  Can you interpret a Stock Price? What does EPS and Accelerating EPS mean?  Fundamental analysis is the bread and butter of the Stock Market Analyst on Wall St.  But is it not rocket science.  You can do it to.

Stock Tip 4. Understand how to use charts and indicators

Stock charts are used by the Technical Analyst, to assess the supply and demand situation and optimize timing.  The Liberated Stock Trader FREE Training Course has a detailed guide to popular indicators and chart types.  For a list of the different types of charts for example, see Stock Charts.

Stock Tip 5. Understand how to scan for stocks

Who needs stock tips from a newsletter, friend or company insider? Not you or I.  What we need to be able to do is scan for winning stocks.  How?  By using stock screening.  Using the skills you have learned in company fundamentals and technical analysis you can easily screen for stocks that meet your criteria.  There are a number of articles in the Liberated Stock Trader FREE Course, to help you achieve this very goal.  Never ask for stock tips again you will not need them.  When you learn stock screening people will be asking you for stock tips.

Stock Tip 6. Understand how many stocks you wish to buy

Portfolio management is often overlooked.  It can often contribute significantly to you making a profit on a trade.  Do you know how many stocks you should be buying with your allocated investment pot.  This article will give you a good insight.  How many stocks should I own?

Stock Tip 7.  Understand cash allocation and risk reward

Cash allocation and assessing risk reward are very important.  To be able to assess the reward from a given trade, you can use fundamental or technical analysis, or both.  From this information you can set price targets.  To understand the risk you need to set downside price targets.  Then you can measure the risk versus the reward.  This is really the difference between continual profit and miserable losses.  A whole chapter of the Liberated Stock Trader PRO Training is dedicated to this topic.  Want a sneak preview of this section, see this article Cash Allocation

Stock Tip 8. Create your trading strategy

Creating a trading strategy is a combination of all the above.  But it needs structure, discipline, refinement and patience.  To create a trading strategy you need to know what kind of trader / investor you are, what are your goals and how to achieve them.  This is all explained in 7th Grade of the Free Trading Academy

Stock Tip 9. Create your trading system

Creating a trading system means to put your strategy into a regimented, repeatable, semi automated system.  This can help remove the emotion from trading, but it is also easier said than done.  Read the 10 Steps to create a great stock market trading system.

Stock Tip 10. Use stop losses

This is a really simple yet extremely important stock tip.  Stop losses allow you to automate the selling of a stock you have bought at a given price.  They allow you to limit your risk (according to your risk reward ratio) and give you piece of mind.  But where should you set your stop loss?  This is the important question.  This question is completely covered in the Liberated Stock Trader PRO Training course is a section I call the Escalator Method.

All the Stock Tips You Will Ever Need!

So there you have it, all the stock tips you will ever need.  Well not quite.  Did you expect me to tell you what stocks are hot, what stocks you should buy now.  No, that is not the goal of the Liberated Stock Trader.  The goal is that you find your very own hot stocks and take control of your own future.

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