Investing in the stock market is one of the most profitable and risky type of investment. Currently, in most cases, investment allocation is the result of cash flow to assets, where the current return and risk satisfied certain expectations of investors. There are some differences between the parties to the stock market as investors and traders. Nevertheless, classical investor and trader, both aimed at obtaining money. History shows various cases where the investor started with a small amount of money and eventually became a very rich, or vice versa, when millionaire lost all investments in the stock market and have become poor. What is the most important quality that separates winners from losers in stock investments? The answer is simple - an investment in knowledge, whether that is based on wisdom, collected or other investors gained through their own mistakes. Anyway, the following basic principles could be useful to remember:

1. Never invest all their money in the stock market, especially if you are new. General recommended that the portion of the money invested in shares ranging from 25% to 50% of your total budget.

2. Never invest all the money in one stock - always diversify among several stocks in different sectors.


3. Always carefully follow the general market conditions, especially if a market is about to begin. Be prepared for sale in most households in advance.

4. Never rush to investment decision. Closely watching the quarterly financial reports, news, trends and macroeconomics, before taking any decision.

5. Do not let your emotions prevail over rational disciplined approach.

6. To improve the return / risk ratio, to use reliable software tools that embody the wisdom of investors focused.

7. All stocks volatile, without exception. There will always be a certain probability that something suddenly goes wrong with any stock. Even the best stocks may decline.

U.S. recent studies show that the average investor has about $ 250000 investment assets, and more than half of investors using the brokerage councils. Investing is popular for both sexes almost equally. Over the past decade, the expectations of most investors has fallen from about 30% to about 10% of the annual return on investment. Most investors prefer long-term investment with less than five transactions a year. Not everyone is able to succeed in investing. Most investment losses occur because of lack of knowledge, over-confident, impatient, greed, fear, and the various misunderstandings. An experienced investor knows that there is a direct correlation time spent on upgrading and investment return on investment.

Self-education can help improve the investment skills. Typically, after reading dozens of books about investing, investors have come to the conclusion of the importance of fundamental analysis and interpretation of technical analysis indicators. In addition, investors should read the quarterly financial reports, watch market conditions, to try to predict macroeconomic trends, etc. How long will all this take? Fortunately, there is optimized approach, which allows effectively invest the time to give maximum impact. As an example, in order to achieve the driving experience, it is enough to read one book, get driving training and regular practice. Something similar could be with investing skills, moreover, that some books will be required. The following books can be useful to improve the investment competence:

* Greatest Lessons Stock traders of all time, John Boik (good introduction to investing)

* Stock Investing for Dummies by Paul Mladjenovic (very useful and important to read the book)

The following books William J. O'Neil:

* How to make money in shares

* 24 Key lessons for investment success

* A successful investor

These books easy and enjoyable to read. Some experts view may be controversial. For example, some authors propose to use this method as "an average downwards." This is the way to reduce the cost of purchases. "Averaging down means to buy more shares to a question at prices lower than in the past consistently purchase, as price declines. However, other authors argue that this method is bad. They offer to sell any shares if the market price falls below about 8% - 10% of the purchase price. The problem of this contradiction is that, on average, down works well in the event that the decline in prices is a temporary correction, but no sign of declining business and long-term declining demand for stocks. How to distinguish them from disturbing signals correction? The answer - accurately estimate the real value of the company and its stock, as well as understand the current market conditions and know macroeconomic trends.

Nevertheless, all books about investing are useful to some extent. The next important step is training. This can be done without money, in a simulation mode. Then it would be natural to use real money to draw lessons more effectively. Regular exercise is important. Nevertheless, it is difficult to acquire good skills investment quickly. One reason is that the market is not always the same. It may be bull or bear market with various corrected. Some market cycles can be very long. Thus, for example, have a real market happens rarely, about once every 12-14 years. Despite this, it would be helpful to have experience in the market, at least once.

The first step in investment analysis must be fundamental analysis. Fundamental analysis allows to predict long-term stock performance. This depends on many factors: the profitability of the company and its growth, liquidity of assets, market value of shares on earnings, book value, and sales, etc. Stock price also depends on the news, views of various analysts and ratings. Such factors may be many, and it is clear that each case has an impact on stock performance. For example, statistical studies of hundreds of companies for a period of several years, shows that greater number of parameters related to bad company and its shares, more risky investments in it. In general, any company and its shares may be regarded as the best model system and a system of quality is a combination of all influential factors with different weights.

Using technical analysis to further fundamental analysis could increase the chances of successful investing. One of the best software tools to perform technical analysis MetaStock www.metastock.com. However, since there are hundreds of technical indicators with varying interpretations of each of them is not just to complete a full technical analysis. Some investors use only a few indicators that are good from their point of view. In general, each indicator has its own ability to predict stock price. Ideally, it would be nice to computer software to determine the ability of current indicators in forecasting stock prices and make each of the indicators of the weight. Then logically, to maximize the accuracy of forecasting it would be nice to combine all the signals from all indicators. In addition to fundamental and technical analysis, should take into account that the price of a stock goes up and down depending on many factors, including general market conditions and sectors. This means that there should not be the optimum time to buy shares (as well as for sale). Thus, the timing analysis is also important.