What to consider when Buying Stocks

Buying stocks can be scary especially in a down economy. When you factor in how most people are afraid of the market, then you want to make sure you are making the best decision possible. There are many ways to make a great decision prior to purchasing stocks such as the type of stock, cost of the stock, average volume, market cap etc.

Type of stock

The type of stock is crucial to making serious money in this economy. Stocks in general have no particular guideline, otherwise everybody would be rich. You have to gauge the type of industry the stock is located. For example, if you buy energy stocks, then you can guarantee you will see activity around a certain time of the year. If you were to purchase stocks in the retail industry it becomes a little bit risky because you don’t know how well a product will perform.

Cost of the stock

How you pay per share determines the amount you will receive on your return on your investment. When you purchase stock try to buy low and sell high. If you are interested in penny stock you will ensure your chances with bigger returns. Penny stocks are stocks purchased at less than $1 per share. When you buy stocks make sure you understand how much you possible get on your return.

Average volume

When monitoring the average volume you should make sure there is a surplus of shares. There are many companies out there with an attractive price per share but do not offer high volumes. When there is limited volume it limits your purchasing power. Volume should be taken into consideration before you look at the price per share. Hint: When the company you invested in purchases another company usually they issue out more shares.

Market cap

Market cap is the most you can spend on the number shares allotted. When you purchase stocks you the market capitalization varies from investor to investor. I.E if you are a millionaire investor you should and see a company with a market cap of $350k the chances of making a lot of money is less than likely. A millionaire investor should focus on a company which has multi-million or multi-billion dollar market cap.

There are many things to consider when prior to purchasing stocks. You should always start small, get the hang of it and then go bigger. When you need help always seek professional help. Good luck!