The most critical thing is a dilemma when to initiate a trade.
When to enter is perhaps as important as to when to exit.
But to exit, one has to enter.
So the decision of entering becomes a very important one.
Set Targets: Not only Price but time targets For initiating a trade, it is very important, to have set targets in mind.
Targets not only for price but targets in terms of time value.
It is important to ascertain what are the expectations from a trade and how much do you hope to make.
This is important not to curtail your earnings but to have realistic expectations.
Don't marry a stock Now if you have decided that you have a time frame in mind lets say a year.
Then the first thing that needs to be done is to get the fundamentals check done.
There are various parameters that need to be checked.
I have mentioned a few in the next post.
It is important not to be stuck on a particular stock, it is far more important to get the right stock.
So the way to evaluate a decision to enter should be first find the right company and then enter, rather than finding a company first and then searching whether the company is right or not.
In short it does not pay to be stuck on a particular company.
One is there in the stock markets to make money and the only decision to choose a company should be to make good returns.
Technicals are as important Now once you are convinced about the fundamentals of the company, that would include among other things, the earnings, the profit record, the profitability, the growth perspective, the reserves, the industry scenario, quality of management etc amongst others then comes the analysis of the technicals.
Technical parameters are equally important as fundamental parameters to enter into a trade.
Although one might argue that technical parameters are more importnat if one is making a short term trade.
But i feel that they also play an important role when one is initiating longer trades.
It doesn't hurt if you get the stock 5% cheaper does it!