TOP 5 TIPS FOR SUCCESSFUL STOCK

TRADINGTom Carlson

1. NEVER PLACE MARKET ORDERS (ONES WITH NO SPECIFIC BUY/SELL

PRICE) BEFORE THE OPENING OF THE TRADING DAY

• At the opening bell some unforeseeable things have been known to happen

• You may find yourself paying much more than you intended on the buy side, or you may receive much less than you expected in terms of the sell side

• This is always a risk with a market order, but it is to be taken very serious at the opening

• This tends to be the case in part due to traders reacting to last night’s or the morning’s recent news

• If you feel that you should trade at the opening, guard against too much loss with a limit order

2. THE BEST TIME TO TRADE IS USUALLY IN THE AFTERNOON, FROM ABOUT 1-2:30 P.M. EST

• This is that special time of day when everyone from the east to the west coast is at work and has caught up on the daily news

• Market-shaking government statistics are just about always released in the morning along with most corporate earnings reports

3. ALWAYS CHECK THE “BID SIZE” AND THE “ASK SIZE” FOR ANY EXCHANGE-LISTED STOCK BEFORE SUBMITTING A

BUY OR SELL ORDER• A reliable real-time quote

system will tell you not only the last price of a stock, but also the bid price, the ask price as well as the number of shares being bid for or offered at those prices

• When the bid size is larger than the ask size, it’s a sign of underlying demand for the stock, so it would not be wise to hold out much longer if you were planning to buy

#3 CONTINUED• On the other hand, a large position on the ask

side suggests there are a lot of sellers eager to get out

• Don’t waver if you were intending to sell

• If the bid and ask sizes are almost equal, it is an interesting situation for entering a limit order exactly halfway between the bid price and the ask price

• Most likely, your order will be executed in the middle

4. THE BEST TIME OF THE MONTH TO BUY STOCKS IS AROUND THE

18TH-22ND• Between the 18th and the 22nd of every month cash flows into the market that tends to be lower is prices

• As a side note, the best time to sell stocks is during the first two and last two days of the each month

• September and October are also heavy months to buy as the market has a seasonality to it where it tends to dip quite low in the two months

• Set your calendar to do most of your selling in the month of April and early on in May

5. CHOOSE STOCKS TO BUY THAT ARE TRADING ABOVE

$10 A SHARE• Reason #1: Stocks

below $10 are usually quoted at larger % spreads between bid and ask, so you will need a bigger price increase to break even

• Reason #2: Companies with low-priced stocks are more prone to financial trouble, ie. bankruptcy