Hi Dogfeet nice idea i like the ideas but i will argue with u on number 3 and add 1 more to it that is crucial i think. 3: Put all your eggs in one basket - and keep track of that basket. 8: Always have an exit plan. im arguing with u on number 3 for a reason which is that how smart any of us can be we are bound to make a mistake in our life. so remember don't put all of ur eggs in one basket but put a significant amount would be more appropriate because lets say if u have 10,000$ in ur portfolio and u invest in a company for some XYZ reason didn't perform according to market or the management made a drunk decision. the stocks fell if u have all ur eggs in the same basket u will crack them all and u will not be able to sell them. but on the other hand if that happens but u have not touched ur initial investment and the stock dips u can get out of with a loss (which usually hurts) but better loose few percent than loose everthing. u still have enough available capital to invest in another stock to make a some descent money. also never be sad that u made a loss learn from it why it happened what was the flaw in ur analysis.... for my case i always keep around 25 to 30% as available funds. the number 8 which is the exit is crucial because in case the stock dips for some reason u don't loose all ur money but just a limited amout u have accepted to loose. for that check the volatility of the stock so that u set ur stop loss accordingly usually mine is around 8%. i hope these will help chahine
Thank you for all the comments! What is a "Stop Loss", how does this work and how do I "install" this? Thanks. :D
Stop-loss order------- is where you instruct your broker to sell if a stocks price falls BELOW a stipulated level. Market order------simply buy or sell orders that are to be executed immediately. Limit orders--------1) limit buy order, you instruct your broker to BUY the stock if and when the share price falls BELOW a certain level. 2) limit sell order, instruct your broker to sell as soon as the price goes ABOVE a specified limit. stop buy order-------instruct your broker to buy when the price rises to a certain limit ( used to limit potential losses from a short postion )
Thanks for the information.
Good answer MCShinko! Very thorough.
agree happyharry the answer is very good and so precise that im sure i would have not been able to do any better chahinemm
Couldn't have said it better myself! Thanks for that most excellent information!