One of the most common mistakes for beginning investors to make is that they get really excited about the opportunity for making money in the stock market long before they learn about all the ways that they could potentially lose money in the market. Before they know it, they've put all their money on one so-called "hot stock" hoping that it will make them a millionaire overnight, and instead the stock starts to plummet, and they have to sell all their holdings just to break even or maybe even for a loss. If you're going to be a successful, smart investor, you have to learn how to go about trading stock picks.

Even those that have been trading stock picks for weeks or months might not actually be aware of what they're doing, or how they could apply simply strategies to give themselves a better chance of success. Professional investors use this term to refer to a situation in which an investor uses a proven form of analysis to come to the conclusion that a particular stock should be added to his or her portfolio, because it has demonstrated the strong potential to grow in value in the future.

Many new investors find trading stock picks confusing and frustrating in the beginning of their careers, because although you might sink hours of research and investigation into a certain company, there's just no way to know for certain whether a stock is going to rise or fall in price the very next day. If this is how you feel, it's important to point out that there are methods for elevating your knowledge, and making more educated guesses about the direction a stock will head, and learning how to act upon it. Many investors incorporate technical analysis into their market evaluation strategies for just this purpose.

Technical analysis is a method for trading stock picks that relies solely on the practice of tracking the price movements of a certain stock on a chronological graph, and then evaluating those charts for trends and patterns that will emerge in the price points over time. By using the assumptions that trends will continue unless interrupted, and history is inclined to repeat itself, analysts use this method to make educated predictions about whether the price of a stock is going to rise or fall. Although this is a very popular method for picking stocks that are likely to grow, it isn't fail proof, and shouldn't be your only strategy.