Trading Recommendations: Should You Pay for Stock Market and Option Trade Picking Services? (2024)

“Real-time buy and sell alerts, only $49 a month.” “Our team of experts use the latest technology to pick stocks for you.” “Our service gives you the hottest stocks ready for a breakout rally.” “Our artificial intelligence screener yields 30%, 60% and 90% returns in just days. Just take a look at our list of recent winners!” You’ve most likely come across these trading recommendations for a fee, but are they worth it?

Paid Services That Offer Trade Recommendations

Stock market and option trade picking services are found all over the Internet. Some make lots of tempting claims. Some of these websites are run by amateurs and some by “gurus” who have been professional traders or former floor traders.

In our opinion, the ones that claim you don’t need to have any knowledge and “only spend 10 minutes a day to enter our trades,” are dangerous, because you are blindly putting your money at risk without knowing how to do any investigative work into the picks yourself. Knowledge is power.

Results may vary, with some yielding stock picks that are no better than throwing darts at the financial page in a newspaper.

Share Trading Recommendations With Subscription Fees

All of them want the same thing…your money for a subscription to their service. Those who are new to the world of trading can be tempted to jump on these services.

Here’s a word of encouragement; you can do it yourself! There is enough information, up-to-the-second data and “tools for trading” on the Internet that you don’t need “gurus.” Today, everything needed to pick stocks is available to everyone, and most of it is free.

Education Beats Paid Info From Recommended Traders

However, you do need to become educated and to get some first-hand experience in trading the market. This will require time and much study. The number of books on the market and Internet courses and YouTube tutorials are abundant, with many being low-cost or free.

Checkout our book: Trading Vertical Option Spreads on Robinhood: Effectively Trade Option Spreads for Low-Risk, Consistent Profits

Once you have “head knowledge” from diligent study, it’s time to get first-hand experience. It is often recommended to begin by “paper trading,” that is, simulating your trades by writing down all of the facts and figures of trades you propose to make.

Learning will come as you follow each trade and see what the outcome would have been. It is vital that you take detailed notes on why you picked each stock or option, so you can see what you did right or wrong.

Trading Shares Tips

It makes sense not to risk money while learning, but eventually you need to make trades using cash, because when you have “skin in the game,” you will tend to do a more thorough investigation into your picks.

Be prepared to have losing trades, especially in the early days of trading. We consider this money to be the cost of getting an education, just as you would have to pay tuition for any college course.

Trade small, of course, because “preservation of capital” is paramount. You can’t play at the casino if you’ve run out of chips! Limit the amount of cash you allocate to each trade. Begin stock trading with stocks whose prices are low, perhaps in the $20 range, not the $3,000 Amazon range.

Let’s take a look at all that finance.yahoo.com has to offer for free as an example. This site provides an overall summary, performance outlook for the short, mid and long terms, a variety of charts, monthly, quarterly and annual statistics, historical data, financials and analysis. If you scroll down, you’ll also find a bar graph with recommended trends. You can see stocks strong buy recommendation, as well as those that are a hold, underperform or sell.

Check out our article: Moving Average Charts: Simple But Powerful Tools for Traders

Options Trading Recommendations: Those interested in trading options will find hundreds of hours of excellent free tutorials from experts at TastyTrade.com.

Come Up With Your Own Trading Recommendations

Stock screeners allow you to enter specific criteria about a stock, such as stocks under $20. Scans from stock screeners, however, may produce a lot of results that match your search criteria. You may feel like a kid in a candy store, but you can’t eat all of the candy. Trading shares tips: You will have to drill down further to pick one or two stocks that you believe have the best chance of success.

Sometimes, further investigation into the stocks you are considering reveals that now is not the time to enter a trade. Perhaps the hardest thing for a trader to do is NOT to trade. There are times when you should sit on the sidelines and not enter a trade. The market, or the individual stock, may not be moving in your favor at the moment.

Everyone today has incredible access to stock market data that was never available to the public before. It will take lots of study and trading to become proficient, and learning never stops. But, you can do it on your own.

In Conclusion: Use Caution When it Comes to Paid Trade Recommendations

Should you decide to try one of the services that give stock or options trading recommendations, you will have a better chance of success if you have knowledge and experience so that you can evaluate each recommendation yourself, and not blindly jump into every recommendation.