Like most investors, one of your top goals has been to enjoy financial freedom at whatever age you choose.  So, it stands to reason that your money should ideally generate above-market returns with below market risk.

But to do so, you need to have a game plan as you search for opportunity.

Tip No.  1 – Create a Stock Watch List

A watch list is simply a list of potential stocks you may or may not be interested in trading at some point.  It can range from a couple ideas to dozens.  But I always suggest keeping the list small so you keep from overwhelming yourself. Wait for a particular stock to meet your personal criteria before blindly throwing money at it.

Tip No. 2 – Check the Fundamental and Technical Signs

Economic indicators are a great way to identify what’s happening in a particular sector.  Is the overall sector trend up or down?  Is earnings growth on the up and up.  Are there emerging catalysts that can impact the sector and your trade in particular?

Simply put, fundamental analysis — at its core — entails using real data to arrive at stock’s intrinsic value. Part qualitative and part quantitative, this method analyzes the financial data that is ‘fundamental’ to a company’s future prospects.

As such, fundamental analysts make their investment decisions based largely on:

A company’s competitive advantage

A company’s earnings growth

A company’s sales revenue growth

A company’s market share

A company’s financial reserves

A company’s product pipeline

The quality of the company’s management

In doing so, fundamental analysts focus on a company’s financial statements and profit by finding gems that the market has mispriced.

Tip No. 3 – Have a Stop Loss in Place Always

As an investor, you should be familiar with a stop-loss, or the order given to a brokerage to sell a position once it drops by a certain amount or hits a certain level.

In addition, a trailing stop-loss can also be used, as it adjusts higher as the price of an asset rises, thus allowing the investor to lock in gains.  For example, if a long position were bought at $10 with an initial 25% stop-loss set at $7.50, the trailing-stop would rise in tandem with the asset.