The Fundamental Stock Trading Pick Question
By Ultimate Trading
Your Should Have A Real Reason For Buying A Stock Trading Pick
No matter what your reason is for choosing a stock trading pick; a
trend, technical analysis of charts, or company fundamentals, there
are some fundamental trading questions you must answer before making
a trade. Answering these questions should be an integral part of
your decision making process, and should occur on every trade you
ever make. The question that I am going to discuss in this article
is almost self-explanatory. As a trader, you have to ask yourself,
is there a compelling reason to believe this
trading pick will work?
Before buying any stock trading pick, you must be able to articulate
a solid reason why you believe the stocks value will rise in the
immediate future. If you're shorting, you must have a good reason to
believe its value will drop. Some traders get into positions for
reasons that have no logical basis. Ive actually heard people say
they bought stocks because they "wanted to see what the stock
trading pick would do," they "like" the company, they think the
stock trading pick is "due for a breakout," or they think that it
would be "a fun stock to own."
"Wanting to see what a stock trading pick will do," sounds a lot
like gambling. Throw some money at it and see if you win or lose.
There is no place in trading for a gambling mentality. As for
"liking" a company, that's a bit naive. The company doesn't like
you, and its management and board of directors don't like you. They
have no idea that you even exist. Emotions should never be the basis
for making a trade. It makes no sense to "like" a company. Companies
exist to make money for their shareholders; your goal is to identify
trades that you can make money from.
Finally, some traders will buy a beaten-down stock trading pick that
they think is "due for a breakout." There is no rule that says that
a company, which has performed poorly in the past, will rebound.
Companies go out of business every day nothing says a company has
to return to profitability or its stock trading pick price has to
rise. You should keep this fact in mind.
If you always use sound reasoning to pick stocks and have a good
reason for each trade, you will greatly increase your profits. And
there are other benefits as well. For instance, you'll be much less
inclined to purchase a stock trading pick impulsively or to get into
a play on the basis of a "hot tip." You should never make a trade
unless you absolutely believe it will be a winner.
Some trades may seem stronger than others, so put more money into
the strong ones and less into the weaker ones, but never go into a
trade not knowing whether it will work. Why would you make a trade
that you think wont work? You wont always be right, but at least
youll be following convictions that are based on logic and reason,
and will be able to analyze your trades if they go against you. This
will allow you hone your technique and your understanding of the
market, to make every trade better.
And, because some trades won't work out, always set stops on all
trades. This will keep you from losing significant sums on the
trades that go against you. You should always employ sound money
management principles when trading. But, before you set your stops
and take your position, know that you have a sound reason for
trading pick will work.
About To Learn Secrets Most Traders Will Never Know About Profitable System Trading..."
Inside you’ll learn...
to design a winning system from scratch and exactly what
to do to supercharge your current stock trading system!
one ingredient you literally "Drop" into your
stock trading system that can triple your profit!
to use “secret” money management techniques
to minimize your risk.
tools the professionals use and how you can get huge discounts
(charting software, data, etc).
you'll also get a FREE copy of David Jenyns’ complete
Ultimate Trading Systems Course…
Just enter your name & email - then click the “Click
Here For Free Instant Download!” button. (All information
kept 100% confidential). The download details will be
emailed to you immediately.
take your privacy very seriously. My
personal privacy guarantee to you. I respect your privacy
and will never share your email address with anyone. You can
easily unsubscribe at any time. View our Privacy
Policy - David Jenyns Founder of www.ultimate-trading-systems.com