A good broker can be a great asset, but bad brokers want to churn your account (recommend you buy and sell repeatedly to make money on commissions) or unload stock the broker’s employer currently owns but feels will go down on the unsuspecting but trusting client- unfortunately that’s YOU.

Essential Principles of Investing:

If you tried to take someone’s money out of their wallet you can be sure they would fight hard to keep it. The market is no different.

Principle #1. Hope is not a strategy

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If you lose 50% on a trade you have to make 100% on the next trade just to break even.

If you caught an employee stealing everyday -would you fire them or hope they stop? There is no difference between that employee and a stock that keeps stealing your hard earned money as it goes down.

Principle # 2. The Market is Never Wrong – YOU ARE!!!

P. H. D.’s verses Grandma: patterns repeat over and over because human psychology
never changes. The most difficult part of trading is accepting you’re wrong and
taking a small loss before it becomes a huge loss. That’s why a grandmother,
who has more mastery over her emotions will make a fortune, while a rocket
scientist who has an ego problem and can’t accept their fallibility will go broke.

Principle # 3. A stock is only worth what people are willing to pay.

A great company is not always a great stock. E-toys (online toy company) was valued at over a billion dollars. The price just kept going up. Soon the company, the stock and the billion dollars was gone.

Principle # 4. The trend is your friend

Stocks tend to continue to move in a certain direction; up, down or sideways until
they run into an obstacle or are effected by news. A stock gradually increasing in
value will usually continue to increase and vice versa.

Principle # 5. Importance of Volume

Volume is a vital piece of information. If a stock is trading higher on high
volume, it is likely to continue. However, if the stock’s price is increasing
on low volume, then less people believe the stock is worth that higher price.

Principle # 6. The whole world is competing for the same dollar.