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Rookie investor episode 3

As most beggining investors I was rather gambling than investing. I had no clue what was important when looking at stock. I had no clue:

  • How to find attractive stocks, 
  • What tools to use for technical analysis, 
  • What copytrading was, 
  • What a support or resistance level was.
  • What a moving average was, 
  • What an exponential moving average was, 
  • What the Fib retracement was and haw to use it property, 
  • What a stop loss was,
  • What Ex-dividend was, 
  • What bullish formations were (Adam and Eve, double bottom, reverse H&S, falling wedge, rising triangle, bull flag) 
  • What bearish formations were ( rising wedge, double top, H&S, falling triangle etc), 
  • What a bullish or bearish divergence on the RSI was, 
  • What the MACD was, 
  • What the Stocastic RSI was, 
  • What the golden Cross was, 
  • What's the death cross was... 
I could go on and on and believe it or not but if you sit down with a person who is good at explaining complicated things to a 10 year old like a fantastic and patient teacher then you could learn all of this in a couple of days. 

Right now it takes me few minutes and I almost immediately know what I want to buy, and what not, by looking at fundamentals (earnings reports). Then once I know what I want to buy I look at the price action and draw out a plan when and how much I will buy and possibly when to sell or add more on a dip.

The most important lesson is: 

  1. "price is what you pay. Value is what you get" - Warren Buffet.
  2. You pay the current price of the future cash Flow so why pay for a Company with a high P/E
  3. Do not FOMO into over hyped stocks that have a Price/Earnings ratio at 100 because if you invest $1 now you will get your invested dollar back in 100 years from now. Are absolutely sure that you really have that much time to wait?, 
  4. A Company with high market capitalization is much harder to move than a company with low markets capitalization,
  5. A company that has low markets capitalization is more risky than a company that has high market capitalization,
  6. Don't buy stocks of companies that massively dilute the shareholder, 
  7. Buy good stocks but never overpay for them,
  8. If you can't buy a good stock because a single unit is too expensive for you then just buy a fraction of the stock, 
  9. Technical analysis works until it doesn't so don't put all your attention into 1 thing,
  10. If you believe in a Company then dollar cost average into it slowly because "the stock market in a short term is a voting machanie but in the long term is a weighing machine" - Warren Buffet, 
  11. "the stock market is a device for transferring money from the impatient to the patient" - Warren Buffet, 
  12. It is almost impossible to buy the absolute bottom and sell at the absolute top. "Time In The Market Beats Timing The Market – Almost Always." - Ken Fisher, founder of Fisher Investments 
In the next eposide I will explain what broker and what trading apps I'm using and why. 

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