What To Buy?

Now that you have some money burning a hole in your pocket and the stock market is going up you have decided to buy some stock or maybe a mutual fund, but you have the momentous decisions to what to buy.

At this point you have three decisions to make besides which equity to buy:

1. How much to buy.
2. When to buy.
3. When to sell.

Which of these is the most important decision? Let me tell you this as a professional trader. What to buy and when to buy are the two least important of these decisions. Maybe only 10%. I know that comes as a shock to you because everyone is trying to find that one perfect stock that will make him a millionaire almost immediately. It's not going to happen.

Trading is an occupation. Just like the business or profession you are in now it takes time to learn. There are certain basic rules that apply to every occupation. Most brokers and financial planners don't know them, but as a former floor trader I had to learn them or I could not have survived.

What to buy is the least important because there are always several good buying opportunities every day. When to buy is not anywhere as important and when to sell. Every professional trader I know will first determine the risk, his potential loss, before buying. At the same time he makes his buy he puts in a sell order called a stop-loss order to automatically exit the position should it go against him. He is not thinking about how much he will make on a trade. He is thinking about protecting his capital should he be wrong. Professional traders are right less than 50% of the time, but they never take big losses.

The loser's philosophy is always thinking about how much he will make and he refuses to face up to the very possible fact that he could lose money, a lot of money if he does not have a loss limit of some kind on his position. The loser is willing to be wiped out rather than admit he is wrong. Brokers tell you you have not lost money until you sell. Believe that and I will sell you my flying pig.

The other very important concern for your investments is how much of this stock should I buy. A good rule of thumb is between 10% and not more than 20% of your portfolio. Most mutual fund managers limit a risk position to about 5%, but they have other considerations. Never put all your money in one trade because it looks so good. That is super dumb.

Before you decide what to buy be sure you have in mind the amount you are willing to risk and the size of the position you wish to take (number of shares or dollars). When you have learned this you will be a successful stock market investor.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

1-888-345-7870; al@mutualfundstrategy.com

---

Investment Lawyers and Trash Stocks

The trash business in its efforts to cook their books... Read More

How to Make Big Money Safely in Stock Market

(1) Stock Market is Tough Place to Make Any Money... Read More

The Stock Market - Part 1: Believe It Or Not, Its Always Been Your Best Friend And Always Will Be

Regardless of the fact that the world's stock markets have... Read More

Investment Discipline

One of the great "secrets" of successful people is discipline... Read More

Starbucks Stock is Up

Starbucks earnings are up again and so is their stock... Read More

The Exclusive Club of Large Caps

Picture one of those clubs where only the real heavyweights... Read More

Stock Market Investing: Knowing When (and when not) to Sell

One of the greatest challenges of investing in stocks is... Read More

Using Sector Funds to Construct Diversified Mutual Fund Portfolios

'Sector funds are too risky.' 'I doubled my money with... Read More

Look Out The Window

Quick, look out the window. It's raining. No, the sun's... Read More

Play another Day

Money management starts with protecting your capital, realizing profits and... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

Lies, Damn Lies and Mutual Fund Returns

How many times has this happened to you? You're at... Read More

Race Horses and Mutual Funds

For years investors have been taught to look into the... Read More

Investing in Dividend Paying Stocks

I was recently interviewed for a press release through a... Read More

Bollinger Bands Strategies

The Bollinger Band theory is designed to depict the volatility... Read More

Stock Trading Success

The ABC's of Stock Trading SuccessStock trading success...why is it... Read More

Intervention

Intervention. Now don't let that big word scare you. The... Read More

Is the Stock Market for You?

Many people would like to diversify their portfolios to expand... Read More

True Investment Road Maps

If you don't know where you are going any road... Read More

The Next Bull Market

We are already in it, but you can't see it.... Read More

Pathways

During our travel down life's path we come to many... Read More

Stealth Bull

If you have been watching the stock market at all... Read More

Oil Stocks CHK WLL - What Is Their Worth?

(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More

What is Involved in Peak Performance Trading?

There is so much involved in developing peak performance, that... Read More

No Load Mutual Funds: Investment Hype vs. Investment Help

With the internet such a huge part of our daily... Read More

Tips to Finding Other People?s Simple Trading Plans

Did you know you can make money (and a lot... Read More

Nest Eggs and Omelets

Do you have a nest egg? You know, a place... Read More

Is Active Trading The Answer?

One of the main reasons many of us get into... Read More

Market Success

Who are the successful investors?There are those who follow the... Read More

Forces that Move Stock Prices

Among the largest forces that affect stock prices are inflation,... Read More

Index Fund Trading Using Technical Analysis and Swing Trading Strategies

Index Fund Trading can be one of the most profitable...or... Read More

Evaluation I

An insane person cannot evaluate an insane evaluation system.As you... Read More

Low Tide

When you stand on the ocean shore and watch the... Read More