Most investors are very eager to invest and buy a stock but why? Is it because the company is the best in its field, the price it is 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 research needed 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" - New Trader
"I bought it because some XYZ long term factor that will fundamentally change.....this penny stock", only to sell it after the first sign of profits such as a uptick of 5cents in the stock. Just random
If you were to ask a real trader what his game plan is? It would be something to the extend 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 days lows at $73.99, risking $1 to make $5 per 100 shares"
It is pretty obvious who is more prepared for the upside and where to take profits but more importantly the downside when things go wrong. The top hedge funds in the world have an average success rating of around 40%ish, for the Professional Trader, licensed with their Series 56 (we have) and 1,000+ trades under there belt (we have) most tend to trade in the 25-35% range.
Our members as they continue to complete each lesson, learn more as we break down a professional game plan piece by piece so they can understand why each is so important. Such as the topic of risk reward that is discussed when we get to lesson 5 "Penthouse or Poor House."
In the mean time do some homework for your own benefit on your top 5 favorite companies. You can email us the information and we will help you (firstname.lastname@example.org) if you are too lazy to do this, well than.... you shouldn't be trading.
Go to http://finance.yahoo.com/ and tell me the following below of your top 5 favorite companies.
- price there trading at
- 52 Week range
- Market Cap
- P/E (price to earning)
- EPS (earning per share)
- Dividend Yield in $+% term
Pull up there 1 year chart on yahoo finance, and tell me in order of which are you the most to least Bullish on!
Bonus 2: if you can include why you are the most bullish on your top pick compared to your other picks!