Trade Stocks While Avoiding Day To Day Market Activities

May 30th, 2010 | Filed under: Trader Lessons

A while back I put together an article on how to effectively partake in mobile trading, or trade stocks directly from your mobile device.

While technology has come a long way to provide us methods to manage our portfolio from anywhere (see best stock trading apps for the iPhone), there are still other factors that may prevent traders from mobile trading. Some examples include:

  • You use a phone provided by your employer.
  • Your schedule is too busy to deviate to any trading.
  • You don’t want to check the market every day.

In response to a common question, I have put together a guide on how to trade stocks without have to pay attention to the market on a daily basis.

1. Stay away from speculative stocks

For all intensive purposes there are 2 types of stocks: speculative and long. Long stocks are generally more stable and battle tested – quick moves up are rare.

Speculative (or spec) stocks are more volatile. Generally the trader is betting on some event to take place to simulate the stock.While spec stocks can be profitable, they can also lose you a lot of money – especially if you are not paying attention to it.

2. Create alerts

Best practice for any stock trade involves setting price targets or points of interest. These are generally points where the trader is looking to open a position, call the trade bad, or take profit.

Nowadays, most online stock brokers offer an easy to set price alert system.

For a more sophisticated alert system, I like to use MarketClub. Essentially this service offers stock alerts direct to your inbox when it notices change in the short and/or long-term trend of a stock and doesn’t require traders to input any actual prices.

3. Run a weekly analysis

Depending on the type of stock this process can be drawn out even more.

Create a spreadsheet of your holdings and stocks on your watch list. Note down any useful measuring points you use to analyze stocks (i.e. price targets, earnings forecasts, and chart patterns).

Every week compare the updated/actual stats with the previous data. Analyse the good and bad and then make changes to your portfolio as necessary. For a more intuitive approach consider using MorningStar’s x-ray tool.

This process will allow you an allotted and set time to efficiently determine how well your portfolio is holding up. At the same time, you avoid having to succumb to the emotions of overreacting to daily market news.

4. Create a news feed

Much of the time researching stocks involves looking for related news. Why waste time search for news when it can come directly to you.

To create your own news source, use a RSS reader and simply subscribe to RSS feeds from your trust resources. You can look for good news resources through Google or Yahoo finance and then grab the RSS feed of your stock(s).

Quality premium news sources like the Wall Street Journal Online also provide valuable insight in an easy to manage format.

What are some other methods to help you trade stocks while not watching the market on a daily basis?