Stock market investors must develop an action plan to
maximize investment opportunities while minimized losses,
advises GorillaTrades.com.
A well-devised plan should follow a few basic guidelines,
according to GorillaTrades.com:
Be patient when entering new trades as some stocks
will show returns over time
Reduce trade risk after a “confirmation day” or
time that marks a combination of significant volume
and price action
Spread out the portfolio's capital
to avoid large capital losses
Consider dollar cost
averaging “up”,
which involves purchasing shares of a security at successively
higher prices, thus reducing the risk incurred by investing
a large amount in a single investment
Pay only the
price that coincides with your exit strategy; consider
bidding for stocks.
Immediately assign an exit strategy
to each trade you make.
Diversify your portfolio by
making new buying decisions based on a risk rating
system that takes into account: a stock's market capitalization,
shares outstanding, volatility, current tradable float,
and the possible risk versus the possible return. Rate
potential new stocks from 1 to 5, with 5 being the
highest risk.
Trade or invest within your personal
risk parameters. Each investor has different goals,
objectives, and risk tolerance.
Always consider the
current market environment. A majority of all stocks
(3 out of every 4) will follow the market's overall
trend.
Use a sound, analytical stock-picking system
that offers a smorgasbord of fresh stock trading and
investing ideas for consideration daily. Avoid penny
stocks.
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