Exploit Opportunities and Control Losses | Jan 9th 2007
Jan. 9 2007
To better exploit opportunities and control losses, investors in the stock market should adopt an action plan to optimize success. Here is advice for both seasoned and novice investors from GorillaTrades.com, one of the largest subscriber-based financial stock-picking services in the world, with subscribers in 55 countries.
— Be patient when entering new trades. Remember that stocks don’t rise forever, so your patience as an investor will often be rewarded with favorable prices.
— Consider entering new investments after what Gorilla Trades terms a “confirmation day,” a time that marks a combination of significant volume and price action. This will drastically reduce your trade risk.
— Spread out your portfolio’s capital. Diversification may help you avoid large capital losses.
— Consider dollar cost averaging “UP.” This involves purchasing shares of a security at successively higher prices, greatly reducing the risk incurred by investing a large amount in a single investment at the wrong time.
— Pay only the price that coincides with your exit strategy; consider bidding for stocks.
— Immediately assign an exit strategy to each trade you make. Keep in mind that the right entry point will afford you ample time to exit a profitable trade.
— Diversify your portfolio by making new buying decisions based on a risk rating system you devise (or are provided) that takes into account: a stock’s market capitalization; shares outstanding; volatility; current tradable float, and the possible risk versus the possible return. Rating potential new stocks from 1-5 (with 5 being the highest risk; 1 the lowest) and comparing them with other stocks you own will help you make decisions that reduce your portfolio’s overall volatility.
— Trade or invest within your personal risk parameters. Each investor has different goals, objectives, and risk tolerance. Knowing your tolerance for risk will guide you to the best decisions.
— Always consider the current market environment. A majority of all stocks (3 out of every 4) will follow the market’s overall trend.
— Use a sound, analytical stock-picking system that offers a smorgasbord of fresh stock trading and investing ideas for consideration daily. Avoid penny stocks and the websites that tout them.