When you set out to buy some stock you need to have a plan. There are few things that cost your average retail investor more money than entering a trade without exact criteria for getting out. If there is one thing we have learned from the first decade of the 2000′s is that you are much better off if you have an exit strategy when you enter into something. If the trade goes the way you are expecting you need to know exactly how long you want to hold onto the stock. If the trade goes south, when are you going to cut your losses? These are a couple of very basic, but extremely important ideas when it comes to stock buying.
If you are an investor you need to do the fundamental research on the company you are going to invest in before you make your purchase. Are you going to hold onto this stock until you retire, collecting dividends the whole way? Are you going to sell the stock ten years from now? What if the price of the stock doubles, is that enough profit? These are the questions you must answer if you are looking at a stock as a long term investment.
If you are trading on a shorter time horizon then you need to consider other factors as well. First check out the fee schedule for your broker. Are you paying more in commissions than you need to be? An active trader can spend thousands of dollars a year on commissions alone, so it pays to look into the cheap stock trading sites. If you can cut your commissions down from $10 a trade to $5 a trade you could save yourself over $10,000.00 a year if you regularly make 40-50 trades a week. As stock traders, there are so many things we think about on a daily basis that it is good to take a look at the basics every once in awhile.
Can anybody recommend a good software program to help sift through technical data and generate a list of appropriate stocks based on my technical criteria?
Thanks!