Select Your Investments. DEVELOP YOUR FINANCIAL PLAN

After you formulate your objectives, asset allocation plan, and investment strategy, it is time to select your investments. Your decision as to which stocks to buy is guided by your investment strategy. Investors following a passive investment strategy choose diversified investments in each investment asset class. A diversified stock portfolio includes stocks from different sectors of the economy (technology, energy, health care, consumer, industrial, financial, auto, basic materials, manufacturing, and utilities) whose returns are not directly related.

An investor following an active strategy uses fundamental and technical analysis to assemble stocks to buy that are undervalued and then sells them when they become overvalued and replaces them with new undervalued stocks.

Irrespective of whether you are an active or passive investor, you need to even out the risk of loss by having a diversified portfolio. In other words, you should not have all your eggs in one basket.

Lack of Trading Plan
Planning plays a key role in the success or failure of any endeavor

Using too much Leverage
Determining the proper capital requirements for trading is a difficult task

Failure to control Risk
Refusing to employ effective risk control measures can ensure your long-term failure

Lack of Discipline
A lack of discipline can destroy even the most talented and best prepared trader

Useful Advices to Beginning Trader
You can control your success or failure

All about Stocks
Encyclopedia about Stocks. That you should know about Stocks before starting

Forex Glossary
All terms about Forex market