What do I mean by the title of this post? If you are scanning the internet looking for investing advice and information (and apparently you are because you are here), perhaps the best piece of advice I can give you regarding investing in the stock market is to TEST any strategy, philosophy or straight out advice you may receive before actually investing your hard earned money in the stock market.
This is generally known as PAPER TRADING. As the name implies it is the act of making stock trades on "paper" without putting up any hard earned capital. With this method of trading you can try out any strategy you like, see how you would have done financially, had you actually made the trade.
The biggest problem with this type of trading is the fudge factor where you kind of skew your "buy" and "sells" in an effort to make your results appear better. To avoid this you have to be regimented in your paper trading, making your buy and sell decisions and then implementing them immediately, not waiting until the next day, for example, to see if the market would have treated your trade more favorably.
Done properly paper trading can be a great tool in determining if a certain trading style fits your needs. It also gives you the ability to modify a trading technique in order to see if you can improve your returns.
Paper trading is what I did for a few years in an effort to better tweak my trading strategy which can be found at www.low-risk-high-yield-investing.com
When paper trading another piece of advice is to paper trade in all market conditions to see how you would have fared. I have said this before, in a bull market, everyone is a stock picking genius (remember the 1990's?) and of course in a bear market, I do not care how great a trading philosophy you may have, you are going to lose money, unless of course part of your strategy is shorting the market.
Some on-line brokerage accounts give you the ability to paper trade in a bogus sub account that you can set up within your account.
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