Trading Tip #51: It is better to average up than to average down Stocks go down for a reason. If you buy a stock and it goes down, why buy more? If you have a stock that is going up, well, wouldnât you want to own more of your winners? Trading Tip #52: Buy when the people that "know," buy Who are the people that "know"? The people who run the company of course. If the officers and/or directors of a company are making purchases of the company stock in the open market, that is a good sign. Remember, we donât mean if they are exercising options they have been granted. We mean buying stock in the open market, just like you do. Trading Tip #53: Buy...Sell Higher People are use to hearing buy low and sell high. You donât have to buy low. You just have to buy stocks that you think will be going up. Thatâs how you make money. Trading Tip #54: Watch the trend Stocks tend to move in groups. Thatâs why many stocks in the same sector like technology, health care, or banking, as examples, move in the same direction at the same time. You donât have to look for a star in a sector devoid of other bright lights. When possible, find your stars in clusters of other stars. It could make for a longer, straighter ride. Trading Tip #55: Only use margin if... you understand what it is and can afford to lose more than you invest. Margin is borrowing money to buy more securities. I have known some brokers who actually told their clients, and I quote, "The amount of money you make in the market is predicated on how many shares you own." Guess what! Itâs not! It is predicated on whether or not the stock you own goes up! If it doesnât go up it wonât matter how many shares you own. Youâll lose money. Make sure you know how much money you have at risk. Trading Tip #56: Stocks that split can offer great opportunities And even better opportunities are sometimes found with stocks that announce a dividend increase along with the split. Sometimes after a split, a stock will come down a little because of a run up in price caused by the announcement. Look for the bottom, if that happens and enjoy the ride. Trading Tip #57: Buy a Winner, Own a Winner Thatâs right. You donât have to reinvent the wheel to be an investor who makes money. By that I mean, you donât have to find an undiscovered stock to do well. Buying companies that consistently do well is a good concept. Trading Tip #58: Buy on rumor Sell on News. Many times the price of a stock will go up because there is a rumor about a company. A rumor is different than a "story." A rumor is based on fact. A story might not have any facts attached to it. Where do these rumors come from? Who knows? But who hasnât heard of the company that has a drug with a scheduled FDA hearing and the thought is, they are going to get approved? Or the buyout that is going to happen? Or the big deal that makes sense for a company? If you are buying into one of these rumors, sell when you hear the news, good or bad, most times you will be better off. By the way, if the rumor never turns into an announcement, pick your time to sell. You bought the stock for a reason. If the reason is not there...SELL. Trading Tip #59: Donât take tips from your neighbor Unless, of course, he is qualified. But most of your neighbors arenât qualified. Most likely your neighbor is just repeating something he heard from someone else. Kind of like the game whispering down the lane. We all know how that works. Yes, stories change. Do your own research, or use a professional. Trading Tip #60: Look around you before you invest A great way to invest is to look for companies you know or do business with. Is your bank a public company? Do you shop at the large homebuilding stores? What about your supermarket? Is there one that stands out? Which products do you like? Look around and you might come up with a great investing idea. Trading Tip #61: Donât take large positions in illiquid securities You donât want to buy a lot of stock in a company that doesnât trade much or one that has a very small float. When you go to sell your stock you could easily drive the price down. If you get into a stock, make sure you will be able to get out of it. Trading Tip #62: P/E/G not P/E It is not enough to look at the Price Earning Ratio of a company. You need to look at the P/E Ratio versus the past, current and estimated future growth rate. If a company has a P/E of 15 and is growing at 12% annually, all things being equal, it probably will not do as well as a company with a P/E of 20 which has a growth rate of 25%. Trading Tip #63: Diversification can save your life...your investment life that is This is the proverbial "donât put all your eggs in one basket," rule. We are not trying to gamble here; we are trying to invest. Donât put so much money in one stock that if it doesnât work out it will change your lifestyle for the worse. Trading Tip #64: Over diversification can give you a false sense of security Most people donât need to own more than 4 or 5 mutual funds to have maximum diversification. If you invest in multiple mutual funds of the same type, large cap growth for an example, you will find they will own many of the same issues. That is duplication, not diversification. Trading Tip #65: Act, and act quickly Letâs say you call your broker to buy a stock, or perhaps your broker has called you and you decide you want to enter an order. Once you have made the decision you should live by the "Nike" slogan. Make it your credo. "Just Do It." Donât inquire about other stocks or ask how the family is doing. If you make a buying or selling decision, do your business so you donât miss your price. Sometimes stock prices change quickly. Ask your other questions after you have made your trade(s). Trading Tip #66: Limit your limit orders If you are an investor, the difference of an eighth of a point shouldnât matter to you. Putting in a limit order to buy could cause you not to get an execution on a stock that you like and is moving up. If you want to invest in a company, invest in that company, donât leave it to chance. Trading Tip #67: If you are an investor, donât over trade Investors do just that, they invest. For the relatively long haul, at that. If you buy a stock for a reason and the reason does not change and there are no mitigating factors. Hold the stock. Remember, let your winners ride and sell your losers. Trading Tip #68: Consider buying when there is blood in the streets Of course we donât mean this literally. But the historical fact is that the stock market goes up, the stock market goes down and then the stock market goes back up. When the market has been slaughtered there are always opportunities. Trading Tip #69: Donât give stop orders that are too tight If a stock has a normal trading swing of 1 Â½ points in a day, donât put in an order to sell if your stock drops 1 point from where you bought it. You could get "stopped out," not because of a drop in the stock price, which was caused by something extraordinary, but because of the normal price gyrations of the stock. Trading Tip #70: Marry your wife (or husband), donât marry a stock Many people get caught up in one or two stocks or one or two industries and hold them forever, even if they are holding on for dear life. There are stocks that go down a lot and never come back. Divorce them.