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Comparing the cash flow statements of companies is going to help you narrow your list down even further. So you’ve found a few sectors that are really going to benefit from these broad themes, that’s step one. Then you find the companies within those sectors that are able to generate cash for investors at a faster pace and that are using cash responsibly.

Define and write down the conditions under which you'll enter a position. "Buy during uptrend" isn't specific enough. Something like this is much more specific and also testable: "Buy when price breaks above the upper trendline of a triangle pattern, where the triangle was preceded by an uptrend (at least one higher swing high and higher swing low before the triangle formed) on the two-minute chart in the first two hours of the trading day."
The content on MoneyCrashers.com is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor. References to products, offers, and rates from third party sites often change. While we do our best to keep these updated, numbers stated on this site may differ from actual numbers. We may have financial relationships with some of the companies mentioned on this website. Among other things, we may receive free products, services, and/or monetary compensation in exchange for featured placement of sponsored products or services. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors.
Successful traders have to move fast, but they don't have to think fast. Why? Because they've developed a trading strategy in advance, along with the discipline to stick to that strategy. It is important to follow your formula closely rather than try to chase profits. Don't let your emotions get the best of you and abandon your strategy. There's a mantra among day traders: "Plan your trade and trade your plan."
A (Excellent) - The stock has an excellent track record for maximizing performance while minimizing risk, thus delivering the best possible combination of total return on investment and reduced volatility. It has made the most of the recent economic environment to maximize risk-adjusted returns compared to other stocks. While past performance is just an indication -- not a guarantee -- we believe this fund is among the most likely to deliver superior performance relative to risk in the future as well.
Blue-chip stocks are popular because they typically have a decades-long track record for earning. "Blue chips" derived their name from Poker, where the most valuable playing chip color is blue. Shareholders like them because they tend to grow dividend rates faster than the rate of inflation meaning the owner increases income without having to buy another share. Blue-chip stocks are not flashy, but they have solid balance sheets and steady returns.

A stop-loss order is designed to limit losses on a position in a security. For long positions, a stop loss can be placed below a recent low, or for short positions, above a recent high. It can also be based on volatility. For example, if a stock price is moving about $0.05 a minute, then you may place a stop loss $0.15 away from your entry to give the price some space to fluctuate before it moves in your anticipated direction.


There are many fees an investor will incur when investing in mutual funds. One of the most important fees to consider is the management expense ratio (MER), which is charged by the management team each year, based on the number of assets in the fund. The MER ranges from 0.05% to 0.7% annually and varies depending on the type of fund. But the higher the MER, the more it impacts the fund's overall returns.
6. Find a good investment service to subscribe to. Many of the suggestions above can now be covered by joining just one stock market service. These services now aim to pick stocks, offer trading and portfolio management software and educational services too. If things go well, then by investing in the stock market picks, the service can be paid for with profits.
A stock split is when a company increases its total shares and is frequently done on a 2-for-1 ratio. So, if you own 100 shares of a stock priced at $80 per share and worth $8,000, after the split you'll have 200 shares priced at $40 each, and still worth $8,000. Stock splits occur when prices are rising in a way perceived to deter smaller investors. They can keep the trading volume up by making it easier for a larger buying pool to trade. If you invest in a stock, expect to experience a stock split at some point.
When thinking about a stock exchange it is worth remembering that it is a capital market. The primary purpose of a capital market is to enable businesses to raise money to provide working capital to fund expansion and growth. In exchange for this money, the companies issue equity in the form of stock, creating stockholders. Each stockholder ownes a piece of the active business relative to the amount of money they invested.

When investing in the stock market, you have to think long term and avoid the temptation to check your portfolio several times per day. All this will do is waste your time, stress you out, and increase the odds that you will make a big mistake and sell at the wrong time. Plan to set up automatic contributions to your investment so you can buy more investments no matter where you are.

Assess how much capital you're willing to risk on each trade. Many successful day traders risk less than 1% to 2% of their account per trade. If you have a $40,000 trading account and are willing to risk 0.5% of your capital on each trade, your maximum loss per trade is $200 (0.005 x $40,000). Set aside a surplus amount of funds you can trade with and you're prepared to lose. Remember, it may or may not happen.

Dividend growth -- This is the most optional characteristic on the list, as there are some great beginner-friendly stocks that don't pay dividends. Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) is a great example. However, if a stock does pay a dividend, an established track record of dividend growth is an excellent characteristic for long-term-focused beginning investors to look for.


E (Very Weak) - The stock has significantly underperformed most other funds given the level of risk in its underlying investments, resulting in a very weak risk-adjusted performance. Thus, its investment strategy and/or management has done just the opposite of what was needed to maximize returns in the recent economic environment. While the risk-adjusted performance of any stock is subject to change, we believe this fund has proven to be a very bad investment in the recent past.


Once you have a specific set of entry rules, scan through more charts to see if those conditions are generated each day (assuming you want to day trade every day) and more often than not produce a price move in the anticipated direction. If so, you have a potential entry point for a strategy. You'll then need to assess how to exit, or sell, those trades.
Over the long run, value stocks outperform growth, so look for stocks trading at relatively cheap valuations based on price-to-earnings ratio (P/E), price-to-sales ratio (P/S), and price-to-free-cash-flow ratio (P/FCF). It is vital not to chase opportunities, but rather wait for them because patience always pays. Solid fundamentals and a large moat (barrier to entry) are also vital for long-term sustained success. Also, use technical analysis and charting to better help pinpoint both the entry and exit points for the stock under consideration—both for a target profit area and a stop loss.
By understanding your risk tolerance, you can avoid those investments which are likely to make you anxious. Generally speaking, you should never own an asset which keeps you from sleeping in the night. Anxiety stimulates fear which triggers emotional responses (rather than logical responses) to the stressor. During periods of financial uncertainty, the investor who can retain a cool head and follows an analytical decision process invariably comes out ahead.
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