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Sitting on the sidelines

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Post by Idéfix Tue Feb 12, 2013 11:17 pm

I used to be a fairly active trader until late 2011. I had strong instincts and I usually acted on them. And I made some decent returns. I liquidated my portfolio for a home downpayment and stopped trading then. Now want to start trading again. The money is sitting in my brokerage account, and I should take some positions. But I have been sitting on the sidelines for several weeks now. I have considered a few trades, but haven't clicked submit on any. For every potential buy, I start second-guessing; I just don't have the same strong belief in my analysis of individual stocks. I am doing at least as much reading / keeping up on the market as I used to earlier. Do you take breaks from active trading? If you do, how do you get back into the thick of it?
Idéfix
Idéfix

Posts : 8808
Join date : 2012-04-26
Location : Berkeley, CA

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Post by Guest Tue Feb 12, 2013 11:20 pm

Heard somewhere that this is the right time to get back in the stock market. I have never traded, but I bought a bunch of bac last week, in my rollover account. Got about 300. Am +130 on them. yay.

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Post by Petrichor Wed Feb 13, 2013 10:33 am

1. Decide first what type of trader/investor you are: Value, Momentum, Day, Long term, Short term etc. etc.
2. Discipline, discipline, discipline - Do not be greedy or go off the reservation.
Stick to your initial set of rules. eg. "If it drops 10%, you will get out nevermind market prognosis."
3. Study the charts, establish context historical, 3 year, 1 year and 6 months. Read financial press.
4. Do hypotheticals for a month or 3. See if you have horse sense. Recalibrate your self-delusion about your ability to predict.
5. Understand what you are getting into - the company, competitors, trading trends (volumes, spreads, any patterns).
6. Consider tax implications.

Talk it out...lot of people want to pick holes in your arguments - use that to your advantage.

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