Smart Stock Investing - Do You Have Time to Exit a Trade if it Goes Wrong?

Take your time

The US Securities and Exchange Commission have a great piece of advice for smart stock investing: Online trading is quick and easy, online investing takes time. This is very true. The proliferation of online brokerage accounts offering instant trading facilities for very low fees means that it has never been easier for individuals to trade a stock.

Trading a stock may have become easier and quicker however making a smart stock investment still requires the same amount of research and risk assessment. Do not go off and buy the moment you feel a trade may be a good investment, instead go away and do some more research.

Always have an escape route

If you want to make smart stock investments always make sure you have an escape route in case the trade goes wrong. A simple and effective way is to set a stop loss limit with your broker so if the price falls to a preset level, your stock will be sold, limiting your loss.

If your broker does not offer stop losses then another option is to always make sure you have access to market information and a phone so if the market moves against your stock, you are firstly aware and secondly able to contact your broker to again close the position out. Obviously if you have a massive trade on in a period of market instability, going on a 4 week jungle trek in South America with no mobile phone probably isn't the best option.

If you want to find out more information about smart stock investing, learning to trade commodities or investing in general, please visit the authors website.

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