I have been investing and sometimes even trading for some years, I cannot call my self successful, but I have learned some things and I have issue to even remember those lessons, so I though I write them down.
if you want to buy stocks, any stock, consider always these things. It’s going to keep you out of many losses and out of common pitfalls.
Print it out and consider these steps every time before you buy any financial instrument.
1. Is this a game / play, Are you after a quick buck?( I recommend not to do it)
2. Is this a good company? (don’t buy bad companies), who uses the products, would you buy their product, do you see people around you using their products? is future trend or technological progress good for this company or bad?
3. What do you know about this company?
4. what is the dividend yield? (could you keep the stock for ever just for the dividend).
5. Are you at the top of your game? stress situation? have you followed the market recently? How mentally fit are you ? How much do you know about stocks?
6. is the market and/or the stock in a Uptrend or downtrend? what is the direction of the long time trend and is this trade against it or with the trend. (avoid against the trend trades).
7. What stop loss level would you use? When do you cut your losses?
8. When do you sell it? what is the target? or do you keep it for ever for the dividend?
9. Is this day a good day to buy it? are we up or down for the week, is this week a down or up week. Are we at the top of the channel or at the bottom(every stock has a channel where it travels). Buy at the bottom half of the channel, it’s easier to set stop loss, and set the stop loss below the channel. if you set it in the channel, you are going to be shaken out.
10. Is this money free for this use? can it stay in the stock for a long time? How big position is it safe to take compared to the total account size, so even if this company would fail, you would still live with it.
That’s the most important part.
Follow up instructions:
When you are in the trade remember to follow it, set the stop loss straight after you have bought the stock. Don’t change the stop loss. Don’t even raise it too fast.
Log in to google alerts and Make a alert for this stock, so you get mail every day or every week what’s going on with the company.
if the company has any hint or rumor about financial mess or counting practice errors, sell it immediately.
Account handling quide:
1. Don’t ever use too much of position to one company, it could fail.
2. Use stop loss when ever feasible, it’s mentally easier.
3. Save more money to the account always. What ever happens, just add money every month. And try not to loose more then you can save, if you loose, wait that the saving repairs the hole. Don’t accelerate trading after losses, stop the trading to cope.
I can modify this if I remember something else.