The Learning Curve of Investing
How much can you learn simply by studying? You can read books, study information on web sites, attend seminars, and spend months in paper trading. Yet when that is all done, you still do not really understand investing and trading until you put money into a position and find out what happens.
Key PointNo matter how much you study and analyze, you cannot understand the market until you have money at risk.
- Don't pay for information when exaggerated promises are part of the deal. No seminar is going to provide you with stock market secrets or shortcuts, and no program is going to help you to know at the push of a button which stocks to buy or avoid.
- Make up your own mind and lead; don't follow. Those who follow tend to enter and exit positions after the big move has taken place.
- Consider and use all valid kinds of information. Fundamental investors can gain insight from candlestick charts and moving averages, and devoted chartists can learn a lot from the latest earnings report or quarterly dividend announcement. Remember, all sources of information about companies and stock prices are part of the same overall market body of knowledge.
- Listen and learn. You can gain more knowledge about markets from other investors and traders than you can from financial reporters on television or radio programs. Get facts from other individual investors, investment clubs, articles, and books, and don't rely on 30-second sound bites.