Market timing – Is it a good day to buy?
Answer: Not necessarily.
The old saying that ‘timing is everything in life’, seems to be especially true for share trading. You must time your both your entry and exit points with care.
As a virgin trader the first watchword is patience, watch first before you move. Hey I know is sounds boring, where’s the thrill in that?
If you have a bottomless wallet and the patience of a nat don’t let me stop you, but for the rest of us virgin’s there are a few things to consider before we hit the buy button.
You’ve been doing your research, you have spotted a potential hot one (you hope), you have looked at some charts, 1week, 1 month, 1 year and the last 3 years you have kept abreast of the latest company news and it is all looking good. You may have even applied a couple of EMAs (exponential moving average) to the charts, if you have managed to get your had around the concept, and it is still looking good, what next?
Now as I have said before I am just a virgin trader so what do I know, but it seems to me there is still more to do if we want to protect our all so valuable capital.
What are they?
Firstly I would:
- Make a plan. Not having a plan is a complete no no. Work out an entry point and an exit point. Write it down in a notebook and be honest with the positives and negatives otherwise you are only fooling yourself and the market makers love a fool. Is it a short or long term trade? Decide before you buying when you will sell, decide on a timescale.
- What are the volumes? How much buying is going on in the stock?
- Is there much momentum in the share?
- What are the charts looking like, are they going up and in what way?
- When do the figures come out? Is there a statement out soon, and how soon?
- Have a serious look at applying an indicator or two to your charts. I like EMAs (exponential moving averages) lots of websites offer this kind of data tool free. My favourite is the FT website (Financial Times).
- What are the general markets doing?
- What’s in the news, political and business?
If after all of that, make sure the share price is rising on the day not falling. Just a small amount, not a huge jump. Finally don’t buy right at the beginning of the day, let it settle first.If there is anything else I have missed let me know.
A virgin
Posted via email from a virgin trader’s posterous
Useful list. That has saved by a lot of time.
Thanks
Max