Making money in the stock market is the most popular dream many individuals strive to succumb, unfortunately not everyone can achieve a stock market investors dream to making money in the stock market. You remember those big internet stocks back in the late 90’s when they all went public and started to boom, like Microsoft, when the secretary and many of the janitors became millionaires overnight. People see this extraordinary stuff happen and they want to get in! It isn’t that simple to just get into the stock market, kind-of dumbfounded.  You really need to learn how to trade in the stock market by googling stock trading tips or stock tips. Reading as many books and even going to seminars will help but mainly reading as many books as possible you will soon learn how to trade in the stock market to being financially independent.

I’m going to start off by recommending the books you will most likely want to read to become a stock market genius. I average 35% Annual, good hedge fund managers and high paid brokers only average 12% which is considered to be really good. I could get a job on wall street getting paid $500,000 a year with the returns I get.

You need to read all the books Think and grow rich by Napoleon Hill , Rich Dad Poor Dads Cashflow Quadrant. Peter Lynch – “Beating The Streets”, Peter Lynch “One Up on Wall Street”, Napoleon Hill’s “Keys To Success”,

A few things you will want to learn are the basics of the acronyms.

Important Acronyms Page .

P/E – Price to Earnings ratio. A valuation ratio of a company’s current share price compared to its per-share earnings.

P/E Price earnings ratio is a deciding tool to measure if a stock is undervalued.

• Perfect time to buy a stock is just starting to break out of the price base. “Pivot” or “Buy Point”. Avoid buying 5% or 10% above the exact buy point.

EPS – Earnings Per Share. The portion of a company’s profit allocated to each outstanding share of common stock Earnings per share serves as an indicator of a company’s profitability. Look for companies with a 30-50% EPS.

EBIT – Earnings Before Interest And Taxes – An indicator of a company’s profitability, calculated as revenue minus expenses, excluding tax and interest.

NVI – Negative Volume Index. An index that focuses on days where the volume has significantly decreased from the previous day’s trading.

NI – Net Income

IPO – Initial Public Offering. An IPO is a company that is brand new on the market and decides to go public to raise more capital to use for expanding the company. Shares are sold to the public market to investors willing to invest in the company.

P/S – Price To Sales . A ratio for valuing a stock relative to its own past performance, other companies or the market itself. Price to sales is calculated by dividing a stock’s current price by its revenue per share for the trailing 12 months : PSR = Share Price / Revenue Per Share

ROE – Return On Equity – At least 17%/year normal stock market cycle: bull markets 2-4 years followed by a bear market, then a bull market.

ROA – Return On Assets

ROI – Return On Investments

RSI – Relative Strength Index

There is so much more to learn to make money in the stock market. These are the very few of all the acronyms, however I don’t have all day to write the thousands of acronyms there are in the stock market. The stock acronyms above are chosen because they’re the most popular used acronyms to learn and the most important to measure one of your investments.

Low corporate Debt-to-Equity ratio is usually better.

RS Rating – Relative Price Strength rating – Buy if 80 or higher. Utilize institutional sponsorship, always make it a priority to use this important tool as you purchase stock.

When To Buy

Buy stocks with a 5-8% climb in the current quarter. Put a small investment into the stock first and then decide whether or not you will average up or sell the stock cause it was a bad stock pick.

Average up – You will make money in the stock market if you average up. Typically you will average up to a stocks 4% price climb, this is positive signs of a bullish trend and usually the company is showing signs of growth if you’ve done you fundamentals.

Time your buys by using charts at the correct “pivot point” or “buy point” off of a sound chart bases. Your stock will seldom ever drop 8% from the correct buy point. If you can do this you will make a lot of money in the stock market.

Exit Point

Every good stock investor has a exit point. You will want to sell a stock if it has decreased in value 8%. If your disciplined enough to get rid of a stock when it drops this far you will minimize loses on your portfolio and most likely have a money making portfolio.  Even the best investors lose in the stock market but it all matters how much you lose and in this case 8% lose isn’t even a small dent in the portfolio when we have other good stock picks making us money.

Understanding The Basic Fundamentals

Diligence is key to learning and putting these stock tips to use, implemented right you can make a lot of cash in stocks. Pay attention to the Federal Reserve announcements. Subscribe to their website federalreserve.com .  You can use this to get an idea of how the economy is doing .You will want to look at employment rates, interest rate increases and drastic changes in events. This can give you a good barometer to abide by. 

Company should always have good cash flow, balance and income sheets. The company should also mention about research and development plans in the annual report. Debt is bad but is always misunderstood by amateur investors and this false illusion could have them miss out on the big stock spike. If the company is using the debt to give the company employees bonuses than we surely know that this is bad debt.  Good debt is debt used to increase the asset productivity of the company ex – marketing or product development. A company can never grow without hot products or services.

Understanding how to read annual reports gets confusing.  You should bookmark the sec.gov website. This will give you key information on our stocks and the market before the news broadcasts it. The government can impact the stock market greatly. A lot of companies rely on the government’s approval such as healthcare and pharmaceutical companies. An approved drug can make a poor man into a millionaire over night.

Interest rates provide the best confirmation of basic economic conditions and changes in the discount rate and fed funds rate are by far the most reliable. Big hikes in the discount rate generally indicate the beginning of a bear market. Bear markets usually but not always end when the rate was lowered.

Changes in T-Bill rates and erratic, tricky fed funds rate sometimes help predict impending discount rate changes. Economic data such as unemployment figures, inflation data, gross domestic product (GDP) and many others.

Avoid lack of education, bad analyst information  and not doing your technical and fundamental analysis. By learning some stock tips in this article you will be able to gain knowledge and trade to make money on the stock market.

 So you want to make money in the stock market?

Following my advice and reading the books I’ve mentioned are going to help you our a lot. Get the best stock tips and sign up for my newsletter as well.