I don’t normally trade stocks under $10 (I have and I’ve made money). The lure of catching that next great stock that rockets from single to double (or even triple!!) digits can be so alluring. So, I finally broke down and subscribed to Investor’s Business Daily’s “Top-Rated Stocks Under $10”. I’m hoping this service will help me pick good under $10 stocks. My opinion of stock suggesting services is simple: Make me money and I’ll keep subscribing.
Here is my strategy so far:
1. Small amounts
No more than 25% of my cash in one stock. This will limit my risk.
2. Diversify
No two stocks in the same sector. Diversification is always a good option. This will hopefully keep me from being killed by any bad news for one sector.
3. High Relative Strength (RS)
4. Positive EPS
For annual and next /last quarters. I’m picky about investing in profitable companies.
5. Volume %
I want to see activity on the stock. That may be a good sign of a break out and PROFIT!
6. Simple Moving Average going up
Never invest in a sinking ship.
As I try out this new strategy, I’ll make changes as needed. My goal is to have a strong under $10 strategy that I can use to help increase my portfolio.
Like all valuable lessons, this one cost me money. I did my research and bought my stock. This was the one (aren’t they all). I set my alerts to notify me if it dropped below 5% of my buy point. I even went as far as to set an automated Sell Limit to take profits when the stock would hit (because I knew it would!).
All was well, except!
Meanwhile at my day job (I don’t trade professionally), I was in a meeting and my cell phone was going nuts (I was losing money). I couldn’t leave, I couldn’t sell, I was stuck. Once I got back to my computer, I sold the stock for (yikes!) an 8% loss instead of the 5% that I originally planned (just in case). Moral of the story, I need to set automated Stop Loss and Sell Limits to both protect and profit.
Another reason to automate is to protect from the greed voice. That little voice that whispers, “What if it goes higher?” or “It’ll go back up, really!”. It’s rarely right.
I learned my lesson and hopefully you too won’t make my mistake.
This is a horror story of making and losing money in one hour. One hour!
I bought my stock, set my alerts for my sell price and my loss price (not all are winners and I’m ready to cut my losses after a certain point). Cell phone was charged and ready. The stock was bought on Monday and I knew (yes KNEW!) it would hit my sell point within a few days. I was right. It hit the next day. My cell was buzzing with anticipation of profit! It sang and cheered! It vibrated all over my desk, SELL SELL SELL!
I didn’t sell. No I wasn’t breaking my rules for greed. I didn’t know. I didn’t have my cell phone with me. An hour later, I picked up my cell phone to see the alert! Yes! Profit!
No!!! The price had dropped to just above my loss sell point. The stock peaked where I expected it too (sometimes I get it right). So, the profit that I was expecting turned to a loss and the stock kept dropping. Fortunately, I kept with my rules and sold at the loss limit.
If you are like me and can’t monitor your stocks at the pace that they change, learn from my mistake. Keep your cell phone with you when you expect an alert and always set a Sell Limit. It’s the difference between profit and loss.
Tip:
Set to automatically sell at your expected sell point. No emotions and you get to walk away with the profits without the worry.
I gave this free app a spin for a week and used it to do most of my stock research on my lunch break. For a freebie, it’s got a few good features.
Features:
• Major Indices
• Top News
• Imports existing Yahoo! Finance portfolio (very nice feature!)
• Good break down of categories in the research tab
• Videos
The stock quote part of the app included:
• Last trade amount (delayed by 15 minutes)
• News
• Stock fundamentals (open price, high, low, 52 week high/low, EPS, etc.)
• Industry news and competition
• Twist for a full screen chart (1d,5d,1m,6m,1y,2y)
Pros:
• Good easy to use interface.
• Can rearrange stocks and give different details for each of your stocks in your portfolio.
• 15 minutes delay isn’t bad.
• Stable (only crashed once in the week I used it).
• Remembered previous stocks that I looked up.
Cons:
• Doesn’t remember my chart preference. I had to choose 6m each time I looked at the chart.
• No Loss/Gain information.
• Slight delay on searching for new stocks I had not previously searched for.
• Basic chart information. Does not have any market indicators like simple moving average.
• Had some trouble with the video playing on a Wi-Fi network.
Overall it’s a nice IPhone application. Could improve by adding some basic features like gain/loss and chart preference. It’s free, so no harm in trying. If you already use Yahoo! Finance, then you can skip the horrible part of having to manually enter your stocks on the IPhone.
This is a free service offered by Yahoo!. To get the most out of the service is best to have a Yahoo! account which will include free e-mail.
This service offers:
• News
• Stock quotes (opening and closing amounts, 52-week range and day’s range, last trade amount)
• Charts
• Company fundamentals (dividend, EPS, P/E, etc.)
• Investing information (stocks, bonds, ETF’s, etc.)
• Personal finance
• Personal portfolio tracking
Stock research
This is a good resource to research new stocks. Yahoo finance gives current news about the company from respectable sources like the Wall Street Journal, Fools, and Investment Business Daily (among others). The charts have a variety of settings including daily, three-month, six-month, year-to-date and max date ranges. You can compare stocks, show events (stock splits, dividend, etc.), and use a variety of technical indicators (simple moving average, volume, etc.).
Portfolio
The service allows you to create different stock portfolios. You can create one for your holdings and one for your watch list. The portfolio page gives a nice grid layout of your stocks with a variety of information like last trade amount, percent change, volume and details about your shares (number of shares, priced paid, gain/loss, etc.). The downside of this service is that the stock price has a 20 minute delay.
This is an excellent resource to use when you’re getting started investing. I have personally used the service for several years and would recommend it to anyone just starting out.
The only way to make money investing is to start investing. If you know nothing about investing then you can begin by learning. Read a book about investing, magazine, website, or listen to an investing podcast.
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I am not a professional investor, I am an amateur investor. I have been investing since early 2008. I was unfortunate enough to start investing at the beginning of the recession. I had to learn some lessons the hard way. I hope to share with everyone what I have learned and I hope to help everyone not make the same mistakes I made.
Examples of my successes and my failures. I hope this will help everyone to profit and avoid my previous mistakes.
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Disclaimer:
Periodically I will use stocks to emphasize a certain key point in a post. This is not an endorsement of that stock. Any stocks owned by me that are mentioned or products that I am affiliated with or use will be noted within the post. I am not a professional investor or financial advisor. This website’s intention is for educational purposes only and does not take the place of professional advice. Keep in mind any investments come with risks, please research your investments to better understand your risks.
