10 Stock Buying Strategies
Buy Low – Sell High
The rule is not buy at the bottom and sell at the top, attempting to do so can be devastating. It’s best to buy close to the bottom, or you start chasing the stock back up. Likewise, it’s best to sell close to the top, otherwise you start chasing the stock back down.
Understand the Difference Between Investing and Trading
Some stocks are great investment and provide consistent returns over long periods of time via dividend payments. Other stocks are volatile and are risky to hold for the long term. Learning which stocks are good for which purpose is key to success in the stock market.
Pay Reasonable Prices for Stocks
Another way to put it is, never over pay for stocks. By checking the PEG, or Price-Earnings to Growth ratio and buying stocks when the PEG is as close to 1.0 as possible without being under will help you pay the right price.
Never Take a Big Loss
Sometimes it’s inevitable that you take a loss, just do everything you can to make sure that loss isn’t going to wipe you out.
Keep Your Emotions in Check
When you do take a loss don’t let your emotions get away from you. It’s easy to wipe out other potential gains by letting a loss mess with your emotions.
Understand the Importance of Dividends
Dividends provide passive income from companies that are well established, and the tax on dividends is only 15%.
Understand Exactly What You are Buying
This should be obvious but never buys stocks that you don’t understand. Before you buy any stock you need to gather as much information as you can so you have no surprises once you own the stock.
Stocks move, but they don’t always move as fast as investors would like. Take the time to let a stock hit the right price before you buy or sell and you can maximize your returns.
Stop-limit orders will issue a buy/sell order to be executed once a limit has been reached (or better) after a stop has already been reached.
Circumstances Change, the Savvy Investor Changes with Them