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Stock strategy

5 Basic Stock Categories of Market Capitalization

  • Micro Cap: Under 250 million: Smallest and hence the riskest.

  • Small Cap: 250 million - 1 billion: Still have potential growth.

  • Mid Cap: 1 billion - 50 billion: Good comprise between small and large, safety large cap with growth potential.

  • Large Cap: 10 billion - 50 billion: Best reserved for conservative stock investors who want steady appreciations with greater safety.

  • Ultra Cap: Over 50 billion (mega cap): Biggest of the US stocks.

Type of investors

Type of Investors Time Type of Stock
Conservative (worries about risk) Long term: over 5 years Large Cap - Mid Cap
Aggressive (high tolerance to risk) Long term: over 5 years Small Cap - Mid Cap
Conservative (worries about risk) Intermediate term: 2 - 5 years Small Cap - Mid Cap
Aggressive (high tolerance to risk) Intermediate term: 2 - 5 years Small Cap - Mid Cap

10 ways to profit before the crowd does

  1. Use your instinct

Your savvy consumer instincts tell you much about what goods and services are great... or not so great.

  1. Take notice of praise from consumer groups

A company is only as good as the profit it generates, and the profit it generates is only as good as the revenues it generates.

  1. Check out powerful demographics

Stay alert to growing trends in society. Check out the data freely available at the Statistics Canada Website.

  1. Look for a rise earnings

  2. Analyze Industries

  3. Stay aware of positive publicity for industries

  4. Watch mega trends

  5. Keep track of politics

  6. Recognize heavy insider or corporate buying

  7. Follow institutional investors

10 ways to protect your stock market profits

  1. Accurate Cash

  2. Spread your money across serval stocks

  3. Buy more of a down (Yet Solid) stock

  4. Apply Long-Term Logic

  5. Use the almighty stop-loss order

  6. Use the almighty trailing-stop order

  7. Set up broker triggers

  8. Consider the put option

A put option is a speculative vehicle that helps you make money when you bet on an investment (such as stock) going down. Put options are beyond the scope of this book, but that does not mean we can not whet your appetite about something we feel is good alternative to simply watching your investment decrease.

  1. Check Out the Covered Call Option

Writing covered call options is a good way to generate income for an exiting stock in your portfolio. Simply stated, a covered call option is a vehicle that gives you a change to make money from stocks in your brokerage account.

  1. When All Else Fails, Sell

Ten red flags for stock investors

  1. Earnings slow down or head south

  2. Sales slow down

  3. Debt is too high or unsustainable

  4. Analysts are exuberant despite logic

  5. Insider selling

  6. A bond rating cut

  7. Increased negative coverage

  8. Industry problems

  9. Political problems

  10. Funny accounting.

Investment Skills

  • Understand why you want to invest in stocks.

  • Get a good grounding in economics.

  • Stay on top of political trends.

  • Do some research on the numbers behind the company.

  • Investigate the people running the company.

  • Choose a winning industry.

  • Understand and identify mega trends.

Basic Rules of Trading:

  • Don't commit all your cash at once.

  • Have a plan.

  • Taking profits is not a sin.

  • Discover hedging techniques.

  • Find out which events move markets.

  • Check the stock's trading history.

  • Use stop-loss and limit orders.

  • Use discipline and patience versus emotion and panic.

  • Minimize transaction costs.

  • Understand the beta of a stock.

  • Read and learn from top traders.