Hot Stock Picks

A majority of new traders in the stock market only look for hot stocks to buy. They think that if a lot of investors are putting money in a certain stock,

NY, MD (prHWY.com) February 10, 2012 - A majority of new traders in the stock market only look for hot stocks to buy. They think that if a lot of investors are putting money in a certain stock, there must be something really good going on with the issuing company, so there is a big possibility of making huge profits. Hot Stocks - Penny Stock Picks However, stock market trading is not that simple. Finding in-demand stocks is not the be-all and end-all of stock investing. To make sure that your career as a stock investor is on the right track, you should avoid the biggest mistakes that can be committed by greenhorn stock traders. Read on.

First off, do not follow the band wagon blindly. Even if people in the media tell you what hot stocks to buy, you should not immediately follow their lead or suggestion. You need to remember that you are not the only one reading the business newspaper or watching the stock investing show. This means that a lot of people will be heading to the trading floor, buying the recommended stocks. Although people from the news agency and financial television programs know what they are talking about, you will have a lot of competition in other traders and if you do not know the perfect timing of buying and selling stocks, your risk of losing money will be higher. By the way, this also applies to hot tips provided by your friends. You will never know where your friends got their tip. So, if the tip is not reliable and you lose money, your relationship with your friends could be affected. It would be better if you pick stocks based on the information that you gathered from your own technical analysis or from a unbiased stock picking service.

Another important mistake to avoid is concentrating all your efforts in one trade. Even if the stocks are at the top of the list of hot stocks to buy issued by experts, it is still advisable to diversify your portfolio so your exposure to risks will be minimal. In fact, it would be ideal not to risk more than 10% of your account in one trade.

A lot of investors who follow tips on hot stocks to buy from other people usually end up holding on to their investments even if big losses are already apparent. If you see your stocks slide, consider offloading them at a certain level. Do not wait for your losing stocks to pick up because it may never happen.

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