Investment Checklist

This article tells you about Investment Checklist. A checklist allows the investor to focus on investment strategies, as it helps in justifying the decision and evaluation process for each share in the portfolio. The investment checklist also comes handy in making the best purchases and trades.

Investment Checklist

Since every situation is unique; it is up to the investor to make all the right decisions which are right for the very situation. According to experts, the investor must watch the scholastic lead band. When the band crosses 20 bands, it’s the best time to buy and when it is below 80 bands, that’s the perfect time to sell.

It is also important to hold financial data referring to different time periods, to view the stocks performance in a wider perspective. If the charts depict downward changes in the trade then one should not hold them for long to avoid losing money.

As an investor, it is important to understand the trends, especially during the periods of consolidation. Trends are identified by higher highs and lows for a rising trend and lower highs and lows in a sliding trend.

The trading action of the previous day must be studied in comparison with the present day’s happenings. By subtracting the high from the low of the day, the stocks with the range of $1 or more can be identified. As those with larger ranges provide form more possibilities for earnings for the investors.

Another important investment decision pertains to the percentage allocation of assets between the fixed income and the equity investments. The equity part in the portfolio must provide for funds especially big company stock funds and small-cap stocks. The investors’ target plan must identify the value of stocks and the growth expected of them.

A portfolio with 60 percent in equities is riskier than a 50-50 portfolio, as it involves too much risk. Especially after a year like 2008 when the equities touched the sky’s and then went straight to the bottom. Rebalancing of investments would help the investors by taking off some of the last year’s profits and spreading them around. In other words it is called buying low and selling high, which is made automatic with rebalancing.

It is important for the beginner investor to have many shares in the low bracket because initially there is risk of losing money in the beginning which can be turned around with experience.

For the investment portfolio to pay off in good and bad times it must be properly diversified. After 2008 many investors find it feasible to invest heavily in large-cap growth stocks. However, it is also important to give weightage to value, small-cap and international stocks.

There are certain stocks which have significant gaps (the difference between the amount a stock closed on one day and the amount it opened at the next day) at the open. Such stocks provide good opportunities for trading in terms of volume and price.

Though losses form part of stock market trading however, it is also important to identify the exit point as well as the stop loss value when trading stocks.

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