You Shouldn't Traded Based On Hot Stock Tips For These Reasons
We are bombarded with stock tips all the time. You see financial advisors talk about stocks that are going to "make it big" and you hear tips from your friends and families on what stock is going to go up. It seems pretty exciting, like you know something that will make you rich.
But there is one problem with this. The majority of stock tips tend to fail or will even lose you money. Here are 4 reasons why you should not trade based off of stock tips.
1. Most People Don't Know What They Are Talking About
A lot of times the there are random rumors that go around which just seem to misguide the general public. Most of the time things are exaggerated and the people there just don't know what they are talking about. I have seen it before. I will hear about some stock that is making new highs and has been making their investors a killing, only to pull up their stock chart and find them GREATLY underperforming the rest of the market.
2. You Do Not Know Their Plan
You may actually come across somebody that knows what they are talking about and is actually giving you good information. But even so, they are only givng you part of the equation. You are only seeing part of the picture when all you have is a strong stock.
A successful trader will do much more then find a good quality stock. They will also figure out how to handle different situations. They will have a plan on what to do when they are wrong and they will have a plan on what to do when they are right. If all you have is the buy signal you are missing alot and will not have the same results they do.
3. There Are Pump and Dump Schemes
Pump and dump scams happen all the time in the market. And what it is a white collar crime. People who are suppose to be trusted and considered as an authority will use that power to hype up stocks and manipulate the market for their own advantage. It is best to stay away from this.
4. It May Be Illegal
If somebody comes to you with insider information you may be the new Martha Stewart. It is illegal to know insider information and act on it. Is making extra money really worth risking your freedom for?
Article Source: FxTradingStock.com
About the Author
For more information about the stock market visit Shaun's site about the Stock Market Basics
by: Shaun Rosenberg
Total views: 32
Word Count: 422
Date: Sat, 26 Jun 2010
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