Helpful Hints For Beginners

A Basic Trading Plan in a Nutshell.

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.

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?