One thing that most new investors usually have plenty of is excitement. When you're new to the world of stock market trading, it seems like there are endless opportunities for making your hard earned money work even harder to become lasting wealth. It's true that the basic principles governing the stock market haven't really changed in over two hundred years, and are fairly simply to comprehend, even if you're not a financial expert or mathematics whiz. The hard part for most new investors isn't finding their motivation; it's not letting it get the best of them when they run across so-called hot stock picks.

It's true that many people have a skewed perception of how things work in the stock market. They've watched television programs that show dramatizations of the chaos on the trading floor, and luck first time traders making a miracle decision to buy or sell a stock that turns them into a millionaire overnight. The truth is that real wealth is rarely ever made this quickly on the stock market. However, choosing the wrong hot stock picks can definitely cause you to lose your money overnight.

If you're thinking that it's going to be impossible to know which hot stock picks you should pay attention to, and which once you should avoid, it's important to realize that there are many evaluation tools available to help you decide whether a stock really has potential to grow like you want it to in the future. One of the most important tools that investors use is called technical analysis, and ongoing system of stock market tracking and price point monitoring that helps investors make educated predictions about what a stock is likely to do in the future, based on how it has performed in the past.

The great thing about technical analysis is that you can use it as a method for checking popular recommendations for hot stock picks against the reality of how they are likely to perform. All you have to do is take a look at the last month, three months or a year of a stock's performance, and you'll immediately start to notice trends and patterns that can be interpreted for their future impact. It's true that there are some bubble stocks and high risk penny stocks that can make you a lot of money in a short period of time, but more often than not, these securities fail to meet expectations over the long run.