| 3 Questions to Ask Yourself When Buying a Stock |
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| Written by Shaun Rosenberg |
| Friday, 30 April 2010 21:46 |
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Trading the stock market is an emotional game. While you may be a logical person and think with reason in the real world all of that goes out the window when dealing with money. Just look at why casinos have made it so big, people just bet without thinking about it. To prevent you from falling into the same shoes as a gambler here are 3 questions you should ask yourself the next time you are buying a stock.
Trading the stock market is an emotional game. While you may be a logical person and think with reason in the real world all of that goes out the window when dealing with money. Just look at why casinos have made it so big, people just bet without thinking about it. To prevent you from falling into the same shoes as a gambler here are 3 questions you should ask yourself the next time you are buying a stock. 1. For What Reasons Am I Investing Into This Stock Many people buy stocks because they hear it was a "hot pick." They hear this either from the news or from a friend who may even mean well. But that does not mean it is worth investing into. Successful investors will do research on the company's fundamentals and technicals before investing into it. 2. How Will I Limit My Risk Even if you have found a stock which you believe with 100% confidence will make you money, you may be wrong. Something may change. It happens, a lot of successful traders invest into bad stocks the trick is limiting your losses. A good way to do this is to only invest a small percentage of your portfolio into any one stock. Another thing you can do is to exit if the stock goes against you. You may want to have a stop getting you out of a stock that goes against you. This way you can avoid taking any major loss. 3. When Will I Get Out? Finally it is important to have some sort of exit plan. Maybe you want to have some sort of target or maybe you simply want to ride the stock up and get out at the first sign of weakness. Whatever your plan is it is important to have it written down and to follow it. This will prevent you from making an emotional decision later on when you don't know if you should sell your position or hang onto it. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. For more stock market tips visit Shaun's site about the stock market basics Visit the Uber Article Directory to get a totally unique version of this article for reprint. |