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Strategies & Market Trends : You buy a stock. It goes down, now what?
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To: Bald Eagle who wrote ()7/19/1998 7:13:00 PM
From: P.T.Burnem  Read Replies (1) of 112
 
Step 1. Before buying a stock, decide on the max loss you are
willing to take on the trade.

Step 2. Decide on how much you are willing to pay for the stock.

Step 3. Determine the nearest support level and a stop-loss price.

Step 4. Calculate the number of shares to buy:

Shares = Max. Loss / (Purchase Price - Stop-Loss Price)

If you must buy a round lot (i.e. to use a limit order), round the number of shares down, not up.

Step 5. Place a buy order

Step 6. As soon as your order gets filled, place a stop-loss order.

Step 7. Relax. It's time to consider your sell strategy.

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