Don't Let CHEAP Stock Price Entice you to Buy!

An IMPORTANT equally valid words of wisdom for investors could be, "Don't judge a stock SIMPLY by looking at its share price or in relation to its peers in the industry." Despite much readily available information for investors, many people (including me!😀) still incorrectly assume that a stock with a small dollar price is cheap and a BARGAIN, while another with a heftier price is expensive and OVERVALUED. This misconceived notion can lead investors into some bad decisions for their money and burn a big hole into their pockets.

Unfortunately, the cheapest stocks - "penny stocks" - also tend to be the riskiest. Not to mention the penny stocks are a COMMON GAME PLAY of stock pump and dump and stock syndicates. Looking at a stock's share price is only useful when taking many other factors into account.

Some Relevant Factors to Consider before Buying😎

• Relative Strength in Industry

• Company's debts in balance sheet

• Share price to Earnings (PE Ratio)

• Number of shares issued in market

• Management Competence

• Any Bad News on Company and Industry

Conclusion

Some investors may focus on share price when looking at a stock, because it is the most visible and talk about number in the financial press. Investors should not get fixated on share price alone, because companies can manipulate share prices dramatically through various means without changing fundamentals. Please dig a little deeper when thinking about your next investment, and remember that a stock with a high price can go much higher under the right circumstances, just as a stock with a low price can sink even further if it isn't really a good value.

38 Steps to become a Successful Trader

1 We accumulate information - buying books, going to seminars and researching.

2 We begin to trade with our 'new' knowledge.

3 We consistently 'donate' and then realize we may need more knowledge or information.

4 We accumulate more information.

5 We switch the commodities we are currently following.

6 We go back into the market and trade with our 'updated' knowledge.

7 We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in.

8 We start to listen to 'outside news' and to other traders.

9 We go back into the market and continue to 'donate'.

10 We switch commodities again.

11 We search for more information.

12 We go back into the market and start to see a little progress.

13 We get 'over-confident' and the market humbles us.

14 We start to understand that trading successfully is going to take more time and more knowledge than we anticipated.

MOST PEOPLE WILL GIVE UP AT THIS POINT, AS THEY REALIZE WORK IS INVOLVED.

15 We get serious and start concentrating on learning a 'real' methodology.

16 We trade our methodology with some success, but realize that something is missing.

17 We begin to understand the need for having rules to apply our methodology.

18 We take a sabbatical from trading to develop and research our trading rules.

19 We start trading again, this time with rules and find some success, but over all we still hesitate when we execute.

20 We add, subtract and modify rules as we see a need to be more proficient with our rules.

21 We feel we are very close to crossing that threshold of successful trading.

22 We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.

23 We continue to trade and become more proficient with our methodology and our rules.

24 As we trade we still have a tendency to violate our rules and our results are still erratic.

25 We know we are close.

26 We go back and research our rules.

27 We build the confidence in our rules and go back into the market and trade.

28 Our trading results are getting better, but we are still hesitating in executing our rules.

29 We now see the importance of following our rules as we see the results of our trades when we don't follow the rules.

30 We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.

31 We continue to trade and the market teaches us more and more about ourselves.

32 We master our methodology and our trading rules.

33 We begin to consistently make money.

34 We get a little over-confident and the market humbles us.

35 We continue to learn our lessons.

36 We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our contract size.

37 We are making more money than we ever dreamed possible.

38 We go on with our lives and accomplish many of the goals we had always dreamed of.

Source: http://financefloor.blogspot.my/2012/01/38-steps-to-becoming-trader.html?m=1