A Basic Share Trading Plan in a Nutshell For The Beginner.
For those who are interested here is my “trading plan”. Here it is in a nutshell:-
1. Do your homework/research.
2. Know the amount you are investing in the stock. No more than 10% of your portfolio’s value.
3. Work out your profit margin. So you know how much you are going to make plus know your exit price. (The price you are selling at.)
4. Put your stop loss on so you will not lose more than 10% ($2,000 = $200 this includes brokerage).
5. Don’t get greedy, panic or fearful. (You can’t afford these emotions in trading.)
6.Have an up to date list of around 15 to 20 future prospects ready at all times.(If in doubt leave it out) and keep them up to date.
Christopher Strudwick is a keen amateur share trader on the Australian Stock Market Visit his weblog for more free articles and useful information at http://www.asxnewbie.com
7. Dont become impatient; don’t go chasing share prices/ stocks. And make sure you are using “real time data” 20 minutes delayed price is for the birds.
Finding the Right Stocks Using Basic Criteria.
1. What is the outlook for pricing of the company’s products?
2. Can the company sell more? What is the outlook for unit sales?
3. Can the company increase profits on existing sales?
4. Can the company control expenses?
5. If it does raise sales, how much will fall to the bottom line?
6. Can the company be as profitable as it used to be, or at
least as profitable as its competitors?
7. Does the company have one-time expenses that will have to be paid in the future?
8. Does the company have unprofitable operations it can shed?
9. Is the company comfortable with analysts’ earnings estimates?
10. How much can the company grow over the next five years?
11. What will the company do with any excess cash generated?
12. What does the company expect its competitors to do?
13. How does the company compare financially with other
Companies also in the same business?
14. What would the company be worth if it were sold?
15. Does the company plan to buy back stock?
16. What are the insiders doing?
The Reasons Why to Keep A Profitable Stock once you have one.
1. Definitely in an upwards trend at the moment.
2. Excellent turnover and good volatility.
3. More buyers than sellers in the market depth.
4. More shares wanted than what is currently available.
5. Is the stock is definitely in the headlines at the moment.
6. Nicely priced low enough for a good profit to be made. (Mercenary Reasons)
In other words the reasons why you bought the stock in the first place haven’t really changed.
A good tip for you here.
If you keep an eye open, you can sometimes snap up some good bargains particularly at quarterly reporting time. Even “blue chips” get slammed if their reports aren’t up to the investor’s unrealistic expectations of what their performance should have been.
One thing is for sure you can never really understand the reasons why some investors sell and some buy.
Hopefully YOU know why YOU bought and sold that stock? And it was because of the “Right” educated reasons.
Finally if in doubt get out. It works for me.