THE ADVIZER     Learn to Trade and Invest Like a Pro   |  Online Stock Trading   |   Work From Home

Stocks can be devastating to the new investor if they start out as an uneducated day trader, in two ways - mentally and financially. The most common mistake made by new traders is they think they can get an online trading account and start randomly picking individual stocks to trade and make money. We suggest a system where you trade Exchange Traded Funds (ETF) by sector or index trackers.

A couple reasons why the individual investor has difficulty picking winning stocks.

First reason - The Pros that do this for a living can barely beat the common index yearly gains and most have at least a four year degree in Finance.

Second reason - The Pros may spend 8 to 10 hours a day several days a week doing financial research on a single company and actually go visit the company and still have results discussed in reason number one. The chance you can pull up a few reports on the internet and do well day trading individual stocks is really reaching. Some people will get lucky in the beginning and this can be worse than someone losing on their first few trades. Reason being that they get a false sense of security and think this isn't so tough after all, I think I will stay at home and do this for a living. Before you know it they have lost all their money and their Job.

The correct way we have found is to start small and invest in an Index or ETF, what these are is a group of stocks usually grouped by sector. This way if one company goes under you have not lost everything because only a small amount of your money is actually in one stock. If you wanted to invest in the companies that make up the DOW(Dow Jones Industrials Avg) you could buy the Diamonds Trust Fund (ticker DIA), it tracks the Dow one to one. For the S&P 500 there is a Index Fund Spider (ticker SPY), for the Nasdaq there is a fund Power Shares QQQ (ticker QQQQ).

If you would like to take on more risk which leads to greater reward there are Ultra Funds which move at double the percentage of the Index, for example take the Dow, there is a tracking fund called Ultra Dow (ticker DDM) which will move twice the daily percentage. The downside is when the Dow drops by 5% your Ultra Fund will drop by 10%. Visit our ultra fund description page for more information on ultra funds.

If you have thought about getting into shorting stocks there are funds that perform the same function but you can actually buy and sell like a regular stock. ProShares has several of these short ETFs by sector. We advise against shorting but if you must, this may be safer than shorting an individual stock.

Remember you can't make your first million before you make your first dollar, so start out small. If you would like to learn more about ETF trading and investing visit the Free Individual ETF Investor Training Course


Free Individual ETF Investor Training
Learn about 3X Tracking ETFs

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