Forex

Beginners make the common
mistake of trying to follow too many markets at once. Some look
for software to scan thousands of stocks and quickly bog down.
Serious beginners should pick no more than two or three dozen stocks
and track them day in and day out. You need to get to know them,
develop a feel for how they move. Do you know when your companies
release their earnings? Do you know their highest and lowest
prices for the past year? The more you know about a stock, the more
confidence you have and the fewer surprises can jump out at you.
Many professionals focus on just a few stocks, or even on a single one.
Which stocks should you track? Begin by choosing two or three currently
hot industries. Technology, Internet, telecommunications, and
biotechnology industries are in the forefront of the market at the time
of this writing, but the list is likely to change. It always does. Pick half
a dozen leading stocks in each of those industries and follow them
daily. That’s where you’ll find the highest volumes, the steadiest trends,
the crispest reversals. Several months later, after you get to know your
stocks and make some money, you may be ready to add another
industry group and pick its top six stocks. Remember, the depth of
your research is much more important than its breadth. You can make
more money from a handful of familiar stocks.
The choice is easier for futures traders—there are only about three
dozen futures, in six or seven groups. Beginners should stay away from
the most volatile markets. Take grains, for instance. You should analyze
corn, wheat, and soybeans, but trade only corn because it tends to be
the slowest and quietest of the group. Learn to ride a bicycle with training
wheels before starting to race. When it comes to tropicals, analyze
all, but trade only sugar—a big, liquid, and reasonably volatile market,
leaving aside coffee and cocoa, which can move as fast as the S&P.
Needless to say, a beginner has no business with stock index futures,
whose nickname on the floor is “rockets.” You may graduate to them in
a couple of years, but at this stage, if you have an opinion on the stock
market, trade SPDRs or QQQs, exchange-traded market indexes.