If you cut your losses at 8%, it will always allow you to survive to invest another day. I have seen people go bankrupt or ruin their health because they’d fall in love with a stock, could not face up to and admit mistakes, and couldn’t make the hard sell decisions. Vacillating when it comes time to sell is how you will sooner or later experience big losses. And big losses will cause you to lose your confidence, which you absolutely cannot let happen if you expect to continue investing.

If you are worried, the old adage, “sell down to the sleeping point,” is the best way to relieve some pressure. You don’t have to sell it all, just sell something so you can sleep at night.

If you cut all your losses at 7% or 8% below your purchase price, and then sell just a few of your stock when you’re up 25% to 30%, you can be right once and wrong twice and still not get into trouble.

Your best-performing stocks should be held longer for a larger possible profit. Always sell your worst-performing stock first, not your best performing stock.

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The last step is creating cash flow statement so that you can see how your money moves and how much comes in and how much goes out and where it goes.

Plus the amount of your total income (Listing your Income), Total Expense (Your outgo) into the table show below to see your cash flow. Do you have positive cash flow - more coming in than going out - so that you can start investing in stock or are expense overpowering your income? Doing a cash flow statement isn’t just about finding money in your financial situation to fund your stock program. First and foremost, it’s about your financial well-being. Are you managing your finances well or not?

Looking at Your CashFlow

Personal debt in expenses far exceeded whatever income they generated. That announcement is another reminder to watch your cash flow; keep your income growing and your expense and debt as low as possible.

Analyzing your Cash Flow

Use your cash flow statement to identify sources of funds for you investment program. The more you can increase your income and the more you can decrease your outgo, the better. Scrutinize your data. Where can you improve the result? Here are some question to ask yourself:

How can you increase your income? Do you have hobbies, interests, or skills that can generate extra cash for you?

Can you get more paid overtime at work? How about a promotion or a job change?

Where cna you cut expense?

Have you categorized your expense as either “necessary ” or “nonessential”?

Can you lower your debt payments by refinancing or consolidating loans and credit card balances?

Have you shopped around for lower insurance or telephone rates?

Have you analyzed your tax withholdings in your paycheck to make sure that you are not overpaying your taxes

Finding investment money in tax savings

According to the Tax Foundation, the average U.S. citizen pays more in taxes that in food, clothing and shelter combined. Sit down with your tax advisor and try to find ways to reduce your taxes. A home-base business for example is a great way to gain new income and increase your tax deductions, resulting in a lower tax burden. Your tax advisor can make recommendations that work for you.

One tax strategy to consider is doing your stock investing in a tax-sheltered account such as a traditional Individual Retirement Account (IRA) or a Roth Individual Retirement Account. Again check with your tax advisor for deductions and strategies available to you. For more on the tax implications of stockinvesting keep reading our article at http://www.stockpreacher.com

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What is the Stock Market?

The stock market, known as (equity market), is a private or public market for the trading of company stock and derivatives of company stock at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.

Today the world stock market is estimated at about $51 trillion or more. The world derivatives market has been estimated at about $480 trillion face or nominal value, 12 times the size of the entire world economy. It must be noted though that the value of the derivatives market, because it is stated in terms of notional values, and cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are entities a corporation or mutual organization specialized in the business of bringing buyers and sellers of stocks and securities together. The stock market in the United States includes the trading of all securities listed on the NYSE, the NASDAQ, the Amex, as well as on the many regional exchanges, e.g. OTCBB and Pink Sheets. European examples of stock exchanges include the London Stock Exchange, the Deutsche Borse and the Paris Bourse, now part of Euronext.

In other words, stock is a share in the ownership of a company. Stock represents a claim on the company’s assets and earnings. Holding a company’s stock means that you are one of the many owners (shareholders) of a company, and, as such, you have a claim (albeit usually very small) to very thing the company owns.

A stock is represented by a stock certificate. This is a fancy piece of paper that is proof of your ownership.Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, one vote per share to elect the board of directors at annual meetings is the extent to which you have a say in the company. The management of the company is supposed to increase the value of the firm for shareholders. If this doesn’t happen, the shareholders can vote to have the management removed–well, this is the theory anyway. In reality, Individual investors like you and I don’t own enough shares to have a material influence on the company. It’s really the big boys like large institutional investors and billionaire entrepreneurs who make the decisions.

The importance of being a shareholder is that you are entitled to a portion of the company’s profits and have a claim on assets.
Profits are sometimes paid out in the form of dividends.In case of liquidation, you’ll receive what’s left after all the creditors have been paid. This last point is worth repeating: the importance of stock ownership is your claim on assets and earnings.

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