Thinking About Investing In the Stock Market?
I've been trading stocks for many years now and for the couple of years, I've been trying to help others learn more about the stock market so they too can help secure their financial future.
Buying and selling stocks is not so difficult to do, it just takes time and patience.
Here are some pointers to help those of you out there with your portfolio.
You can't just go out and start buying shares of a company without some understanding of how the company is doing.
Just because you like a particular product doesn't mean you should run out and build a position in the company.
You need to research the company to see how profitable they're being at the moment.
Read their balance sheets, quarterly reports as well as their financial statements.
These three reports will help give you an idea of the direction of the company.
If the company has been doing the right thing, then you just might want to buy some shares.
When you start buying shares, you can't just buy all of the shares at once.
I typically buy shares incrementally.
I decide how much I'm willing to invest into the company (no more than 20% of my portfolio) before I buy.
I'll start with buying half of my expected total position.
If the stock falls in value (8%-10%), I will purchase the remaining shares at the lower price to help reduce my cost basis (price per share).
Even after you've built a position doesn't mean that you should hold onto the shares without keep up to date with the activities of the company.
The company may be doing well when you bought into it, but that could change over a short period of time.
You need to continue doing your due diligence on each company you invest in.
My rule is at least one hour per week for each company I'm invested in.
Never involve your emotions when trading shares.
Dealing with Wall Street has nothing to do with emotions.
I understand when an investor is up 20%-30% on a particular trade, it hard not to be excited, but that's not what I'm talking about.
What I'm referring to is when people see a company not doing the right thing and the share price is dropping, don't sit there and say that you're down 20%, but you can make it back.
Instead, sell your position in the company and take the 10%-15% loss.
By doing so, you will be able to have capitol for future trades.
Using your emotions when trading stocks, will cost you more than you're willing to lose.
Buying and selling stocks is not so difficult to do, it just takes time and patience.
Here are some pointers to help those of you out there with your portfolio.
You can't just go out and start buying shares of a company without some understanding of how the company is doing.
Just because you like a particular product doesn't mean you should run out and build a position in the company.
You need to research the company to see how profitable they're being at the moment.
Read their balance sheets, quarterly reports as well as their financial statements.
These three reports will help give you an idea of the direction of the company.
If the company has been doing the right thing, then you just might want to buy some shares.
When you start buying shares, you can't just buy all of the shares at once.
I typically buy shares incrementally.
I decide how much I'm willing to invest into the company (no more than 20% of my portfolio) before I buy.
I'll start with buying half of my expected total position.
If the stock falls in value (8%-10%), I will purchase the remaining shares at the lower price to help reduce my cost basis (price per share).
Even after you've built a position doesn't mean that you should hold onto the shares without keep up to date with the activities of the company.
The company may be doing well when you bought into it, but that could change over a short period of time.
You need to continue doing your due diligence on each company you invest in.
My rule is at least one hour per week for each company I'm invested in.
Never involve your emotions when trading shares.
Dealing with Wall Street has nothing to do with emotions.
I understand when an investor is up 20%-30% on a particular trade, it hard not to be excited, but that's not what I'm talking about.
What I'm referring to is when people see a company not doing the right thing and the share price is dropping, don't sit there and say that you're down 20%, but you can make it back.
Instead, sell your position in the company and take the 10%-15% loss.
By doing so, you will be able to have capitol for future trades.
Using your emotions when trading stocks, will cost you more than you're willing to lose.
Source...