Buying Stocks – 5 Tips How to Buy Stocks

Do You Know How to Win Buying Stocks? You will read this article later.

Hints 1 – Avoid buying low volume stocks on a daily basis .

The average number of days should be at least 200,000 shares.

* If the volume is low, it is difficult to sell fast.
* If the price falls, you may fall into a huge loss and then you can sell.
* Your own trading can push prices up or down on very low volume stocks.
* For example, if you buy 1,000 shares, 2,000 shares a day –
* Your order may push prices higher than you might expect.
* Limit orders are only used when you trade stock. * Limit orders to tell your broker what price you will accept .

Tip 2 – If prices are falling, avoid buying more.

* Before buying stocks, they know what the price will allow them to reduce losses and go out .

The loser buys more when the price falls.

* They want to prove that they are not wrong.
* They want to reduce the average cost per share.
* But the more you buy, the greater your risk.

Market winners always try to reduce risk.

The market is always right. Combat your dangers on the market.

Tip 3 – Keep Risks Less Than Rewards .

Your risk must be less than the possible profit when you buy the stock.

* Otherwise, you risk too much of what you might get.

Your likely profit should be at least twice your risk. Three or even better.

* Example – You buy a $ 50 stock,
* If the price drops by 10%, tell your broker to sell. (50 $ – 10% = $ 45).
* Your risk is 10%.
* If the stock is likely to rise to $ 55, your likely profit is 10%.
* 10% of the risk and 10% of the profits offset each other.
* Your estimated rate of return is 0%.
* If the stock is likely to rise to $ 65, your likely profit is 30%.
* Your expected return is 20% (30% profit – 10% risk). Congratulations!

Buying stocks is a mistake when you do not know what might happen.

Estimate your risk-reward rate before you buy.

Note 4 – Attention to Market Trends .

Most people try to buy stocks or funds that look strong. You should do this, but that's not enough.

Most stocks move with the market

* Strong stocks fall in the market. Weak stocks rose in the rising market. * Emotions like the economic report to promote the market. =

The 200-day moving average is the best indicator of long-term market direction.

* It is the average closing price for today's 200 business days.
* It moves "every day" because every day has a new closing price.
* The 200-day moving average of the S & P 500 Index shows the overall market trend.
* The 200-day moving average of the NASDAQ 100 index or the Russell 2000 index shows trends in major market segments.
* The rising market is above the 200-day moving average.
* Down markets are below the 200-day moving average.

Prepare to buy or sell short based on market trends.

Tip 5 – Note the price of the total market .

Most people try to buy stocks or funds at cheap prices. They want to pay less than the stock or fund is worth it. You should do this, but that's not enough.