Why Buy a Stock?
Most investors are very eager to invest and buy a stock. But why? Is the company the best in it’s field? The price it’s trading at is a real bargain? Or is it the fact that you hate to see your account sitting in cash? Most new traders tend to avoid doing the homework and necessary research to properly manage their risk and this is why so many traders fail.
When you ask a new trader his "Game Plan" it is usually something to the effect of
" Sell it higher"
"I bought it because some XYZ long term factor that will fundamentally change.....this stock," only to sell it after the first sign of profits. Random efforts yield random results.
If you were to ask a real trader what his game plan is, it would be something to the extent of:
"I'm buying EA through $75 based off a daily Bull Flag Pattern that has been forming for the past month, my target is $80+ in the stock and my stop will be at the prior day’s lows at $73.99, risking $1 to make $5 per 100 shares"
Trade liquid stocks, avoid chaotic stocks
It’s obvious who is more prepared for the upside and where to take profits and more importantly the downside if/when things go wrong. The top hedge funds in the world have an average success rate of around 40%. For the Professional Trader licensed with their Series 56, most tend to trade in the 30-35% range. This is why we focus on the downside because we are aware that percentage wise, we are wrong more often than we are right.
Do you have balls?
We would like for you to post in the Group Chat the information below on your top 5 favorite companies.
- The daily chart of the stock
Pro Tip use www.tradingview.com for your charting.