The Buy Decision

 


Finally, we are at our final checklist of our Investment Decision that is the “Buy Decision”.

Foremost, you need to be convinced with all the other checklists that you have already ticked off and you are in a comfortable position to start your Investment Journey in the following stock. You need to decide at which price you would like to enter the stock. I do take help of technical analysis to help me make that decision (Techno-Funda Analysis). But it isn’t always necessary to use it. Consider these questions before making a Buy Trade:

ü  Are you willing to buy more if it goes down by 10%?

ü  Are you willing to buy more if it goes up by 10%?

If it’s a yes in both the questions, then you are definitely ready to start investing the in the stock. (You are convinced with the stock and its ability to grow in the long term).

One you are done making the Buy Trade, answer these below questions:

ü  Are you willing to sell if it goes down by 10%?

ü  Are you willing to sell if it goes up by 10%?

If it’s a yes in both questions, this means that you are still not convinced enough to start long term investment in the stock. The position is still a trading position for you. If it’s a trading position for you, then you should definitely keep a stop loss. (Sizing of these positions should be such that you should be able to sleep well at night).

Here you can definitely start by building smaller positions of your overall portfolio and as & when your conviction for the stock increases/decreases, you should increase or reduce the sizing of the position.

With this, I come to the end of my Checklist. Hope this helps an Investor perform better in the Markets!!!!! Happy Investing!!!!!

 


An MBA, Passed CFA Level 1. Stock Market Investor. Director at http://E-global.in. Like Researching Listed Companies. Music Lover. Gym Goer. Like Travelling.

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