Tips Stock Market

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Tips Stock Market Checklist

  1. Go With Where the Elephants Go. The multi-billion dollar funds move stocks and cause them to double or triple. What do these groups need to have a trade/investment qualify to be a stock market pick? They look for Earnings Surprises - Analysts Raising Estimates - Accelerating Earnings Growth-Price-to-cash-flow ratio under 35. Price-to-earnings-growth ratio below one signal undervalued stocks and those with PEGs above 2 are overvalued. Big funds only buy a stock with return on equity above 15%.
  2. Trailing Stop - The Golden Lifesaver. A Trailing Stop is a Stop-Loss Order at a percentage or dollar amount below the market price for a long position. The trailing stop price is adjusted upward as the price increases.
  3. Don't Diversify. All you do is offset your winners with losers.
  4. Know When To Fold Em Kenny Rodgers. Sell if your stock is down more than 7%. Sell if there is a lawsuit, management disputes or high level employees quitting. Sell if earnings slow down, if the stock is not going up but the rest of the market, if the stock has gone too fast.
  5. Don't Ever "Chase a Stock". You miss your buy point so you keep trying to get your order filled as the price increases.
  6. Never "Average Down". If a stock if $50 and drops to $45 DON'T buy more shares. Average Up!
  7. Buy high, Sell higher. JDSU - $232 to $1250 in 5 months.
  8. Scared Money Never Wins-EMOTIONLESS TRADERS make millions. If you are trading your rent money - kiss it goodbye.
  9. Don't Over Trade
  10. Get Rich Quick = Get Poor Quick. Get Rich Quick is a gambler mentality. Trading is like becoming a doctor. One must study, learn, practice and refine their skills and disciple.
  11. The Trend is Your Friend- 80% of stocks move in the same direction of the general market.
  12. Preservation of Capital. "How much can I loose on this trade?" is what the pros ask themselves before they enter every single trade. Preservation of capital is the single most important aspect.
  13. Don't Always Be In The Market.
  14. Risk to Reward Ratios. Don't ever place a trade without at least a reward/risk ratio of at least 2 to 1.
  15. Plan Your Trade & Trade Your Plan. Every successful trader has created a trading plan and sticks to it. By combining patience, discipline and a well researched and devised trading plan it becomes mechanical and we wait for the right market conditions to present themselves.
  16. Piggyback the Smart Money. Buy stocks that have 40% or more institutional ownership.
  17. Ignore Gurus. Follow the rules and you will have the edge. Don't follow the rules and be eaten alive by the pros who live by these rules.

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