How To Buy Good Stocks

Learn To Buy Good Stocks

Although it may seem obvious to most stock market swing traders there are a number of simple rules that you can follow which will ensure that you have more success when buying stocks:

In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These stock indexes generally only contain major blue chip stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock.

For example the DOW 30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to easily buy and sell at the price you want without having a delay. You will also get a smaller spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered very liquid it should trade at least 500,000 shares per day, ideally even more.

It is best to avoid stocks that are bellow as this usually means the company is in trouble, although with the bear market of 2008 there have been a lot of good stocks at bargin prices between and . Avoid buying a stock below at anytime.

Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option in order to protect your stock.

Be very cautious about buying a stock just before it’s earnings release, stocks often drop significantly if you come out with a poor report. Earnings are released 4 times a year with one of them being the annual report.

If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.

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Finding out rate of stocks

You can come across stock prices of public corporations in scores of techniques. Financial websites give investors with dataon stock prices of various different corporations that can be used by stockholders. Quite a few financial internet sites nowadays give real time stock prices along with historical stock prices, and I believe Google started this trend trend and soon other financial websites followed. Online brokerage websites will provide investors with much more detailed facts about the stock prices than the free financial sites like Google or Yahoo.

If you would like to know the stock price of a firm in any financial web site, try to discover a quotes bar and enter either the symbol of the corporation or if the internet site permits the name of the firm. Most of the time as you type the corporation name; you should see the company name pop down below. If the firmappears as you are typing, just click on the corporation name and it will provide you that firm’s detailed financial knowledge. Knowing the symbol of a firm can cut time, and you can just enter it in the get quotes bar. When you are on the page of a company you will be provided with a variety of information including the stock price of the business. If prices are said to be real time, then the stock price was at that price at that specific time. Usually, most financial internet sites provide stock prices that are delayed by a minimum of 20 minutes.

You should be aware whether the stock price is a real time stock price or a time delayed stock price. While trading it is best if you know whether the stock price that’s listed is the precise stock price and if it is the price at which the stock is currently being traded or if the stock price is a pre-market hours stock price or after hours market stock price. When you trade stocks, it is best if you do it from your brokerage account and with the reports cataloguedthere rather than outdated information elsewhere. Online brokerages give the most up to date prices of stocks and also givehow several shares are being traded at a time.

Three Tips For Effective Stock Investing

Contrary to popular belief, the stock market is not a black hole. There are many investors who make significant profits investing in stocks, mutual funds, exchange traded index funds and more.

To avoid the dreaded investing black hole and conquer the stock market, remember these 3 essential tips:

1. Become Resourceful and Knowledgeable

The key to successful stock investing is to know absolutely anything and everything about the company and the factors that affect its overall performance. There are two outstanding resources to check out before investing in the stock market:

a. Newspapers: find out updated information about the country and regional economy from newspapers. These conditions greatly influence the well-being of the stock market. Besides news about the economy, news about society, weather and politics can also have an influence on stock investments.

b. Internet: online resources provide valuable information such as "How To Be The Next Warren Buffet". Search engines make it simple to find exactly what you want by simply typing a word and gathering the related information that comes up. It's important you spend some time on the company's website to learn more about them, their financial health, etc.

2. Analyze Prospects Carefully

Info gathered from the Internet can be a lot to process and is sometimes inaccurate. Every website you consider must be carefully reviewed for validity. Pay attention to the details and if you don't find reliable info to back up a particular claim, move on to another website. use bookmarks while researching. Skim through each link on the list and bookmark the useful ones for reading later. When you have 3 or 4 sites bookmarked, you are ready to star conducting detailed stock mark research.

3. Patience is Important

It's important you're patient along with having a strategy. If you do not need the profit immediately, hold on for a longer period of time. Historically, stock investments gain an average of 10 to 12 percent over a 10 year period. If you stick it out and hold onto your stocks for that long, there's a good chance you'll realize this return.

When you keep these 3 essential stock market investing tips in mind, your research will make you a more effective stock market investor.

Getting to the Truths of Stock Trading

Stock Trading Truths

There are a lot of misconceptions surrounding the field of stock trading that trigger new trader’s fears and keep others from trying the profession at all. As a successful trader for over 15 years, I prefer to take a more positive approach and deal with the prevailing truths that exist in the field of stock trading.  Here are just a few.

1.Stock trading success will come when you keep your trades low risk on a consistent basis over time. Yes, this approach will cause you to miss out on one or two bonanza jackpot trades that the media portrays to be every day opportunities.  However, you will find that, over time, searching for those dream come true trades more often than not results in a fantastic loss that ends up deteriorating the portfolio you worked so hard to accumulate.Better to stay lower risk with steady profits over time if you are looking to make stock trading more than a hobby.

2.You don’t have to spend the whole day trading to thrive at stock trading.It does not have to be a nine to five job.Now, don’t misunderstand.I’m not implying that stock trading is another make money while you sleep angle.You must put in the time and the commitment to master the processes needed to be successful. But, by using GAP trading capably, I trade for two to four hours per day, plus one more hour of prep time.And, I earn a great living.  With the right system, you can too.

3.Building on the knowledge and the experiences of other profitable traders can greatly accelerate your learning cycle.Don’t start from the drawing board because it will cost you a lot of money and ten or more years to make all the mistakes others have already made.It is just resourceful business sense to build on the knowledge of others.Didn’t your parents tell you “don’t reinvent the wheel”, but don’t we just turn around and do just that?Read books and articles by successful traders, take courses or seminars, find counselors or coaches to guide your progress.

Stock trading is often portrayed as mysterious and hard for “regular guys” to understand.  Take it from a “regular guy”, that perception is not right.  With the right systems in place and a working knowledge of the basic truths of stock trading, anyone can be successful.

To read about other lessons I learned in my fifteen years as a day trader and coach, as well as tips and techniques for becoming successful at stock trading, read my free report “From Video Junkie to Day Trader,” and learn more about how you could be trading stocks profitably in as little as two weeks.

What To Do If A Trade Goes Against You

Trade Goes Against You

Expecting a miracle? It probably will not happen. This article is written to deal with trying to trade out of a losing position, NOT to ignore stop losses. Ignoring stops is the surest way in the world to take all the money in your account and just flush it down the toilet. I am serious. While that might help you in the short run eventually there is a 100% chance you will have a massive loss, like 50% or more on your money lost that is invested in the trade if you don’t use a stop. In addition, you will accumulate a portfolio of losing positions and have no more money to trade with. Every huge loss starts with the trader refusing to take a small loss – often times as a result of taking a loss or a stopout and then watching the stock turn in their favor. So the thinking is “They are not gonna get me this time”.  This is how traders learn to trade with bad habits.

The first thing to realize, there are 4 reasons losses that can happen when you are in a day trading or swing trading.

1. Timing is off on the entry
2. The direction you think the stock will move is just wrong
3. News items come out and move stock or index against you
4. Your price target to exit is too far away

We will address these one by one.

1. Timing is off on the entry

If your entry timing is off, this usualy means the price will move a bit in your favor, then against you within the first 5 to 10 minutes. The amount the price moves against you will be way more than any profit so far, but it does not go to the stop area either. This can be identified by the price hesitating and moving up and down, just below your price for long or just above for short. It should not make a beeline against you and it should not go right near your stop in the first few minutes.

The easiest way to deal with this happening is to assume that your timing is going to be off. Enter long or short only one half to two-thirds the actual size you want in a position where you think the timing is right. To make sure this never happens, do not use market orders. Place a limit slightly below the current market quote, most of the time you will have no trouble getting filled. Obviously you need to be aware of the trade type – if it’s a breakout and you don’t think you will get filled if you don’t use market, then for sure just go in. Most trades will not just run immediate, including breakouts. Once you receive a fill back, make sure you place an initial stop loss for that position. Wait a few minutes and see what the stock price does. If it runs in your favor immediately, well then your timing was perfect – trade what you have OR look for the remainder on a small dip.

Most of the time the best deal is to stick with day trading what you have. If the stock moves against you more than for you in the first 5 minutes, but is not a beeline against you (meaning it looks like the trade will stop out etc), then put in an order to add at the low of this 5 minutes (for long) or the high (for shorts). If you are an aggressive trader, you can put in some additional orders and press bets above the high for longs or below the low for shorts. If you are not able to get filled on your better price add shares, the press bets additional shares will usually work out because this means there is not much selling. If the price moves so that you can add at a better price, then make sure you cancel the press bets add shares. If you get filled on your additional shares, you can move your stop down slightly but increase to include all shares OR just place a separate stop on teh add. If you get the press bets add, move your initial stop up to just below that low of the 5 minutes, and make sure you increase the shares.

2. You are dead wrong on the direction

This often happens to even the most seasoned traders. You try a breakout that fails, you try to catch a turn at the bottom of a downtrend, you think a stock will follow another stock with bad news down … the common element is you are dead wrong. Usually these types of trades will be self evident from the get go – meaning within a few minutes its already far further against you than it ever went for you AND it does not oscillate. By this I mean the upside is severely limited (for longs) or downside limited (for shorts). This means it can move easily one direction, but really, really struggles in the direction you bet.

Usually if you see this happening, the only chance you have is to try to double down near your stop. You are looking to risk another 15c to 20c on double size, betting it will turn in your favor before you stop out. If you want to attempt this, care must be taken to use discipline. Do not try to force making money on the trade. The thinking is to try to minimize the loss by catching a turn near the stop area, with minimal risk on the add. If you can cut the loss in half or even get to even, get out. Move on to the next trade.

If you doubled down and actually caught the turn, you would want to move the stop up on all to just below the turn. When the price moves halfway back from your secondary add position to the price of your first entry, sell the additional shares so you are left with only your original position. On the additional shares you want to keep you stop to just below that entry. The theory is the side that was pushing the price so far against you finally got washed out, so give the rest a shot. Because you made a bunch back with the added shares, if you get stopped you will lose less than if you did not do that. It is your call to decide if that is the best thing or to just exit all of the position with a minor loss and move on.

3. News events happen in real time and can cause the stock or index to move against you sharply

This is arguably a tough situation. Not only do you have to be able to read and analyze the news very quickly, you must decide what impact it will have on the stock price. The call is would this type of news cause the stock price to go far enough to hit the stop level? If the answer is probably yes, exiting at market before the stop will save you money. If you think there is a chance the news would not stop you out, the plan is to exit the position on a counter move the other way. Most of the time there is no good way to add shares to trade out of a news play where you get caught. Occasionally the market will react in way A, but a few minutes later they realize they are wrong (or someone made a bad assessment, and the market is changing its mind) and react in way B. If you can uncover and notice that this will probably happen, the add point is the high of the bar where the news came out. Most of the time that will run any stops and trap traders playing the news as a quick trade, forcing them out.

4. Your price target to exit is too far away

This is common to. You have to kind of guess based on how the stock has been trading, localized volatility, and support resistance points where a price move might go to. It is very common to think it can move to A, but it struggles to get to even half of A. Usually these types if you don’t monitor them real close will turn into losing trades. The main reason is a scale up seller (for long bets) or scale down buyer (for short bets) is betting the other direction and absorbing a lot of the volume.

Most chart setups will attract trader attention and the more obvious a trade looks but does not work or really struggles, the bigger th indication is to get out immediately. Some of these can result in a huge move the other way because they trap lots of short term money in the stock trying to trade whatever setup happened. There is no real method to add to work your way out of it, you really just need to pay attention. If the stock appear
s weak (meaning it should be going up but its not) and you think you should exit – usually this is the right thing to do. Your instincts are telling you something important – for the trade setup, the stock is not trading like it. Getting out is the best solution because you are looking to avoid your stop getting hit and saving a bigger loss. Also realize if you exit early, and then see it was a mistake, you can always get back in with a click of the button.

Do not expect to make money on every trade, its simply not possible – you have to pick your battles. If you sense something is off or wrong and you are at a loss, take the loss and move on. Sticking around and trying to always make money will actually result in bigger losses eventually. You can think of the God rule (just a catchphrase) – When a trade goes wrong, (God) gives you one chance to get out – it’s up to you to realize the chance and take it.