Important points to consider if you are going to sign up to a stock market newsletter, advisory service or training course: Value for money. Whilst everyone deserves to be paid for quality services, if a product or service sounds too expensive, then it is. If you spend too much on trading advice, education or training you will erode your trading capital – i.e. your trading account. If a company uses a hard sell approach, you may want to question their validity as well. A quality trading newsletter or trading education service will only need to use word of mouth to get you on board. If their clients are happy they will tell their friends. There is a difference between trading and gambling. Which one are you being taught? Trading comes down to a few very simple rules – you make money when the market is going up, you lose money when it is going down.
If you are buying stock as the stock price is falling, hoping that it will turn around and make you money, you are gambling, not trading.
If a stock price is trending up, chances are it will keep going up, and you will make money. Always have a trailing stop in place, so that if the price ceases going up, turns around and heads back down, you will be stopped out.
If an advisor is suggesting you buy as a stock is falling, the only person who is making money is the broker.
Does your stock market advisory or education service hold an ASIC licence?
In Australia anyone offering financial advice must be licenced by ASIC. To gain an Australian Financial Services Licence (AFSL) a company or person must be able to prove that they have the necessary industry experience and education to offer financial advice. Very few trading educators hold an ASIC Licence in their own name or own company name. Most trading educators rent their licence from another entity. To check if your educator is properly licenced, ask them to provide you with their ASFL number and the name of the licence holder. Or you can check the ASIC website to see if they are registered http://www.asic.gov.au/fs
Ask to see their trading results
Your trading educator should be able to provide copies of their trading account statements or results. Make sure you specify the time period you would like to see covered. A lot of people make money trading over a short period or snapshot in time, however you are looking for long term results. Ask to see all their trading statements, not just the good ones. Better still, go with a company who ensure that they take the same trades they are recommending that you take.
Search the internet for reviews about the company you are thinking of subscribing to or joining. The internet is a great place to find comments and reviews about stock market training companies and educators.
ASIC have a website called MoneySmart – this is where you can search for companies that people have complained about or who ASIC have taken action against.
The Chartist ticks all the boxes.