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4 Low-Risk Stock Trading Tips

Without a doubt, the 2008 Wall Street crash was very hard to swallow. Many are still smarting from “the street’s” collapse, with some vowing to never again enter that particular financial market.

The problem with this, however, is the simple fact that there aren’t many other avenues for investors to travel down with their money. Sure, the conservative approach of bank accounts and bonds exists, but the interest rates for either are so low, it makes the yield hardly worth the effort. One may as well call in debt relief to gain a healthier return on their investment.

So for that reason, stocks still remain the way most investors can make money with their money. And honestly, now is not at all a bad time to either enter or return to Wall Street. The economy is stabilizing, stock prices are rising and there are services available that assist those in financial crises with efficiency and effectiveness. If that isn’t a convincing enough argument, then maybe a little peace of mind regarding low-risk stock trading tips are needed.

According to InvestorPlace.com, a would-be investor should, after locating a stock, keep in mind the following:

Know The Stock

One of the fun things about playing the stock market, aside from making money, is researching the stock that has currently peaked an investor’s interest. While this may be entertaining, it is also crucial in regard to how well the stock will perform.

Then, after knowing the stock, follow these four guidelines:

Does The Stock Trade On The Major U.S. Exchange

To be truly viable, a company should trade on either the NYSE or Nasdaq, this being the case mostly out of security concerns toward one’s investment. Both the NYSE and Nasdaq have higher standards toward companies, particularly with security of the company in mind. Conversely, this advice also rules out trading on foreign stock markets.

Volume Is Key

A good stock has a lot of buyers. Toward this point, a good rule of thumb for investors is to put their money in a company that has at least 500,000 market shares available on the public exchanges. With more investors on hand, the ups and downs of the stock are more balanced than one in which investors are either a few or bailing out completely.

Know The Worth Of The Company

A company needs value before it can be invested in. It’s as simple as that. In investment terms, this value is known as market capitalization or “market cap.” A minimum safe value of a company should be no lower than $500 million in order for an investment to have less risk. This means avoiding ventures such as startups or companies that rely on “upcoming” products. Those are extremely risky, and in more than a few cases, have not panned out as a viable entity, and because of that, a solid investment.

Buy On The Upslope, Not The Downslope

In respect to research, further delving needs to be done to understand how a company is doing financially to merit a purchase of its stock. One should carefully chart the company’s performance for the last four quarters, and be attentive to how its services are regarded by not just Wall Street, but more importantly the consumer-driven Main Street.

If the stock has steadily gone up, it’s generally safer in value than a stock that has been steadily falling.

Also, avoid so-called deals and promises of returns to fame by one or the other company who has fallen in value. Unless an epic bailout with the size of what was done for The Big Three automakers after 2008, then it’s a safe bet that investing in a devalued company will end up as a bad bet.

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Dave Landry Jr. is a personal finance manager and stock market analyst who has only recently taken an interest in blogging. He hopes you have enjoyed this article, and wishes you luck in your investing endeavors.