You Shouldn't Traded Based On Hot Stock Tips For These Reasons
We are bombarded with stock tips all the time. You see financial advisors talk about stocks that are going to "make it big" and you hear tips from your friends and families on what stock is going to go up. It seems pretty exciting, like you know something that will make you rich.
However there is one big problem with this. The majority of stock tips are not actually worth investing into, or at least not the ticket to financial freedom. Here are 4 reasons to forget about trading hot stock tips.
1. Most People Don't Know What They Are Talking About
Sometimes rumors start and are exaggerated to the point where there really isn't much truth in them anymore. A lot of people will just be regurgitating the misguided information that they got. I have seen it before. Some company is changing the world and has been making their investors a killing in the past few months. But when I actually look at the stock of the company it hasn't been doing to hot compared to the rest of the market.
2. You Don't Know their Strategy
If you see a financial advisor that actually knows what they are talking about talk about a stock that they like they might actually be giving you good information. But all that can give you is what stock they are getting into.
A successful trader will do much more then find a good quality stock. They will also figure out how to handle different situations. They will have a plan on what to do when they are wrong and they will have a plan on what to do when they are right. If all you have is the buy signal you are missing alot and will not have the same results they do.
3. There Are Pump and Dump Schemes
You'd be surprised at some of the widely accepted financial "gurus" who take part in pump and dump schemes. These are schemes to falsely hype up a company to get more buyers and manipulate the price of the stock for their own advantage. Stay away from this.
4.It May Be Illegal
If you know some insider information that will affect the price of a company and you act upon it then you have committed a crime. Do you really want to sacrifice your freedom for a quick profit?
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