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You Shouldn’t Traded Based On Hot Stock Tips For These Reasons

By Shaun Rosenberg

We hear hot stock tips all the time. You turn on the news they are interviewing Financial advisors, you listen to your friends they are telling you which stocks are definitely going to go up. It all seems very exciting at the time.

But there is one problem with this. The majority of stock tips tend to fail or will even lose you money. Here are 4 reasons why you should not trade based off of stock tips.

1. Most People Don’t Know What They Are Talking About

I’ve heard a ton of people give off a ton of tips and a lot of them are just misguided rumors and misinformation. I’ve heard hype about some amazing company that is changing the world and has been making new highs and has just been a gravy train for all of their investors. Yet when I pull up the stock chart I see it underperforming the market or even going down. Sometimes I wonder where these rumors start in the first place.

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.

Successful traders know that the buy signal is only part of the equation. It is also very important to know when to get out of a position, both when you are right and when you are wrong. In fact the majority of trading isn’t finding stocks that are likely to go up, but knowing what to do once you are in the position. Just knowing the buy signal is like just knowing that sales people make a lot of money, anybody can get in, but only experienced people will have the results.

3. 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?

For more information about the stock market visit Shaun’s site about the Stock Market Basics

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Article Citation
MLA Style Citation:
Rosenberg, Shaun "You Shouldn’t Traded Based On Hot Stock Tips For These Reasons." You Shouldn’t Traded Based On Hot Stock Tips For These Reasons. 26 Jun. 2010. 5 Aug 2014 <>.

APA Style Citation:
Rosenberg, S (2010, June 26). You Shouldn’t Traded Based On Hot Stock Tips For These Reasons. Retrieved August 5, 2014, from

Chicago Style Citation:
Rosenberg, Shaun "You Shouldn’t Traded Based On Hot Stock Tips For These Reasons"

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