Don’t be in a hurry to buy a stock

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You spent time researching a stock. You’re sure this stock will rise and you decide to get in. As you watch from your brokerage account, you see the price rising. You’re not sure what to do, but you know you don’t want to pay a price that’s much higher. Reluctantly, you hit the trigger and make your purchase, for a share price that was higher than you planned.

This type of action is counter-productive. You’ve reduced your potential return by paying more for the initial investment. If the price goes back down the same day, you can add the emotional baggage of making a mistake to your trade. You can avoid this by being disciplined about your purchase price.

Before you purchase any stock, you need to set a entry and an exit price, at least in your mind. If you don’t plan the trade, you’ll be left to think of a strategy “on the fly”, which almost always results in losses. Be patient. Stocks will rarely, if ever, go directly up in a straight line without coming back down. Wait until it comes back to you before plunging in.

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