Make Sure You're Covered: Five Investment Tips for the Small Time Trader

When putting money in the markets, most small time investors fear that they will have a difficult time in beating the big boys. In many cases, this is true. However, when following these five tips, one can navigate the markets and beat the competition.

Arbitration

Often, a company will provide false information to shareholders and potential investors. When this happens, an investor will lose money if they follow the bad advice. Now, some people opt to file a lawsuit when facing this problem. However, it is difficult for a small time investor to beat a mighty corporation. To recover funds, one must engage in securities arbitration. With this step, a shareholder can recover losses by having an impartial person hear their case. This is the perfect option for a shareholder who wants to avoid a lengthy court battle.

Solid broker

All too often, an investor will go with the cheapest brokerage house. While it will save a trader a few bucks, it will cost them a lot of money in the long run. Instead, a trader should use a solid broker offering fast executions. Remember, when making a trade, one should think about more than saving a few dollars on commissions.

Hedge

Often a trader will carry a large position in a stock they like. However, the market is difficult to predict, and an investor should buy options to hedge his or her bets. With a put or call option, one can protect their investment without spending a lot of money. Remember, Wall Street is unpredictable, and an options purchase can protect a buyer.

Study

Now, many traders will turn on the television or go on the Internet for advice. This is a waste of time as a serious trader should learn how to read the markets. When understanding equities, one can make successful trades with impressive accuracy. Remember, people on television make money for their analysis; if they were that good they would make money trading stocks and not talking all day on TV.

Acceptance

When in on a losing trade, one should know how to cut their losses. Sadly, many amateurs will hold on to their losing trade for weeks, or months, and watch their portfolio decline. Instead, a buyer should never fear walking away from a trade. While a small loss hurts, it is better to move on to the next investment.

With these five tips, a trader should not fear the markets. Remember, a small time investor can do well when he or she takes time to study the markets and trends

Author Bio

Dixie is a full-time mother and part-time freelance writer and blogger. She has written for many niches, including home, family, finance, and health. She lives in Arizona with her three girls and husband.

Dixie is also interested in writing for business law, and received help on fact checking from Silver Law, who specializes in securities arbitration.