Almost everyone knows someone that has done really well in the stock market, as well as many others that have lost substantial sums of money. The key is to identify wise investments that meet your risk tolerance and capacity. You can improve your chances in the market by following some of the advice given in this article. Good luck and here’s to your future.

Be sure to diversify your investments across a few different areas. Like the old adage says, do not put your eggs into one basket. Don’t put all of your investments in one share, in case it doesn’t succeed.

To be successful in stock market investing, it is essential to read widely. Practice reading annual reports and understand how basic accounting methods are used to display company information. Look up unfamiliar terms in a good online glossary. Empowering yourself with investment information can go a long way in increasing your success.

A general tip that all beginners should use is to avoid buying stocks that cost less than $15 per share. When starting out, you generally don’t want to invest in companies that aren’t leading their field and those companies that are, are most definitely going to cost much more than $15 a share.

Do not set price targets for your stocks. Instead, you should set a stop-loss limit. It is always wise to plan for the worst, while hoping for the best. Because of this, whenever you purchase a new stock, set a stop-loss value at about 15 percent below your purchase price. This is the point at which you should cut your losses and sell your stock, before it becomes completely worthless.

Protect your money. Protect the profit that you have made through investments via a stop-loss order. This is placed with your broker telling him/her to sell when the stock goes below a certain price. People who are new to trading should set their stop-loss order for ten percent below the price they paid, as this prevents last minute ’emotional’ decision making.

When investing in the stock market, be sure to investigate both the short and long-term performance of a company. Some companies do well for only a few quarters, but over the long term, they are very unstable. Before you invest in any company know their overall performance for the past five years at least.

Learn the jargon associated with investments and the market. Before you start investing, spend some time immersed in web sites, books, magazines or newspapers that cover the stock market. Knowledge of key terms is essential to understanding chatter, news and rumors about the market that can prove useful to your investment strategy.

Always stay on top of financial news and trends. Not only is this helpful for any stocks you may be invested in already, but this is also helpful for you to choose which stocks to invest in the future. The Wall Street Journal and New York Stock Exchange websites are two great online tools.

Don’t be upset if you lose some money when you start investing. Stock market novices often feel a sense of disappointment when they have a setback. The knowledge and experience that are developed over time can be a goal to keep you from becoming overly discouraged.

Be sensitive to the paradox of stock market history. History clearly demonstrates that those who buy good stocks and hold them, do better than those who trade frequently. However, individual stock histories are not absolutely sure to follow in the future, and while the market averages 10% annual returns, it does not do 10% every year.

Before purchasing stock, you must have clear investment goals. You need to decide whether you are hoping to earn income with a lower risk, or if you just want to build your portfolio. You’ll be more successful if you can figure out your goals and some strategies to go along with them.

Finding and attending a local seminar on stock market investing might be a good idea if you are starting your investment career with minimal stock market knowledge. These are usually available for a small price and are taught by stock market professionals who can assist you in making the most out of your investment.

You can sometimes save money on commissions by purchasing stocks and mutual funds directly from the company. Not all companies allow this, but if they do, it saves you from paying brokerage commissions. The downside is that you cannot specify a purchase price and date, and when the time comes to sell, you do not have control over the date and price of the stock sale.

As stated in the above article, lots of people have been very successful at investing in the stock market, but lots of people have lost a great deal, too. Extreme successes or failures in investing like this happen frequently. While luck does play a role, you increase your chances by making smart decisions. Use the tips in this article to help you to make investments that will pay off.