No matter what your reason is for picking a stock; a trend, technical analysis of charts, or company fundamentals, there are some fundamental online stock trading questions you must answer before making a trade.
Answering these questions should be an integral part of your decision making process, and should occur on every trade you ever make. The question that I am going to discuss in this article is almost self-explanatory. As a trader, you have to ask yourself, is there a compelling reason to believe this trade will work?
Before buying any stock, you must be able to articulate a solid reason why you believe the stock`s value will rise in the immediate future. If you`re shorting, you must have a good reason to believe its value will drop. Some traders get into positions for reasons that have no logical basis. I`ve actually heard people say they bought stocks because they `wanted to see what the stock would do,` they `like` the company, they think the stock is `due for a breakout,` or they think that it would be `a fun stock to own.`
`Wanting to see what a stock will do,` sounds a lot like gambling. Throw some money at it and see if you win or lose. There is no place in online stock trading for a gambling mentality. As for `liking` a company, that`s a bit naive. The company doesn`t like you, and its management and board of directors don`t like you. They have no idea that you even exist. Emotions should never be the basis for making a trade. It makes no sense to `like` a company. Companies exist to make money for their shareholders; your goal is to identify trades that you can make money from.
Finally, some traders buy beaten-down stocks that they think are `due for a breakout.` There is no rule that says that a company which has performed poorly in the past will rebound. Companies go out of business every day – nothing says a company has to return to profitability or its stock price has to rise. You should keep this fact in mind.
If you always use sound reasoning to pick stocks and have a good reason for each trade, you will greatly increase your profits. And there are other benefits as well. For instance, you`ll be much less inclined to purchase a stock impulsively or to get into a play on the basis of a `hot tip.` You should never make a trade unless you absolutely believe it will be a winner.
Some trades may seem stronger than others, so put more money into the strong ones and less into the weaker ones, but never go into a trade not knowing whether it will work. Why would you make a trade that you think won`t work? You won`t always be right, but at least you`ll be following convictions that are based on logic and reason, and will be able to analyze your trades if they go against you. This will allow you hone your technique and your understanding of the market, to make every trade better.
And, because some trades won`t work out, always set stops on all trades. This will keep you from losing significant sums on the trades that go against you. You should always employ sound money management principles when online stock trading. But, before you set your stops and take your position, know that you have a sound reason for thinking each trade will work.
5 Steps To Opening An Offshore Bank Account
If you`re investing for the first time in an offshore account, it can be confusing. You must choose a reputable bank and handle the ins and outs of offshore accounting procedures. There are no first time investing procedures to follow. However, the following five simple steps will give you the information you need.
3 Major Reasons To Bank Offshore
One of the biggest decisions you may ever make is selecting a bank, so knowing all the facts is very important. Many people are choosing to open offshore accounts. Why does offshore banking seem to be so great? The 3Ps, or privacy, protection and profit are the three major reasons to consider investing offshore. We will look at them in this article.
15 Things You Should Know About Offshore Fund Managers
Do you know the person managing your money? If you don`t, you need to; knowing who is managing your fund is as important as knowing where your money is. It`s absolutely essential, and you should not hesitate to ask as many questions as you wish so that you`re sure you`re comfortable with where your money is being invested.
