On a constant basis, we are constantly bombarded by “stock
trading tips”, in emails, by regular mail, and in
many other forms of print. We’ve all seen those nice
glossy newsletters in our mailbox proclaiming the next hot
stock that is “Going to Quadruple Your Money in Only
Six Weeks”, and other similar ridiculous claims.
Most of these stock trading tips are worthless and will
only end up causing you to lose money or break even at best.
But, how do you determine if these stock market trading
tips that are being freely given have any real value or
Luckily, there are a few basic guidelines you can follow
that will help you to determine if these tips are going
to have a likely chance of improving the value of your stock
trading portfolio. Follow these few simple guidelines listed
here and you’ll be able to eliminate most, if not
all of the “stock trading tips” you receive.
Guidelines to Determine Whether Stock Trading Tips
Have Real Value
1) Who is paying to have these tips delivered? A lot of
what you receive are simply paid advertisements. Look closely
at the bottom of the last page. By law, if a company has
been paid to promote a stock, they must state this fact.
And usually it is in small print at the bottom or end of
the document. If it says they were paid to promote the endorsed
company, you can usually bet that you will NOT “get
paid” by investing in it.
2) Check the recent volume of the underlying stock tip.
If there was significantly higher recent volume surges before
the stock tip was sent out, you can usually rest assured
that someone (the people providing the stock tip) have already
purchased this stock and hope to make a profit when those
that receive their “tips” purchase this same
stock from them at an elevated price due to the frenzied
buying of their duped targets (you).
3) Search for recent information and news on the recommended
tip. If you can’t find out anything about the “great”
company they are recommending, then you should strongly
consider staying far away from it.
4) Do the providers of these stock trading tips make statements
like “largest off-shore oil find ever” or “so
profitable they don’t know what to do with all the
extra cash”? If so, you should be able to research
these stocks and find at least something that backs up these
outlandish claims. If not, well, then once again it is probable
that you are being misled.
So next time you receive yet another hot stock tip, simply
follow the above guidelines to help determine the validity
of the investment. You will find that a large proportion
of all the free stock tips you receive will meet one of
the guidelines above.
Remember, these stock market tips are being given to you
for “free”, and more than likely you’re
getting what you paid for.
Frank Soler is a successful trader and Registered Investment
Advisor. His company, SolerInvestments.com, provides real-time
Futures, and Stock Picks, and a free
online trading education center.
Copyright @ 2007 Soler Investments. All
Rights Reserved. Reprint of this article is allowed as long
as due credit is given to the author and links are left