Questions Before You Begin Precious Metals Investing - dummies

Questions Before You Begin Precious Metals Investing

By Paul Mladjenovic

Part of Precious Metals Investing For Dummies Cheat Sheet

Some investing questions can only be answered by your own preferences and trading objectives, not by research or professional guidance. Before you begin trading in precious metals to meet your financial goals, address the following issues:

  • How much “risk” capital will you be “playing the trading game” with?

  • What is your outlook on the asset in question (bullish, bearish or neutral)?

  • Will you be focused in a single specialty or diversified in different assets (such as stocks, options, futures or in different industries or commodities)?

  • At what point will you enter a trade? What signals will you use (such as technical indicators) as your entry points?

  • How long will you stay in your position? Will it be a fixed time period or until a particular event occurs (such as when it hits a certain price)?

  • Will you be doing any hedging (a way to reduce risk by having positions in your account that go up if your main positions go down.)? If so, what kind of hedge?

  • What will you do if the position goes down in price during your time period? Buy more or get out?

  • If you buy more at the lower price, what will you do if the asset’s price goes down even further? What price level or loss percentage will you tolerate before you decide to cut losses?

  • At what point do you cash out profitable trades? Is there a specific amount or is it based on market events (such as technical indicators or news from the industry)? Will your advisory service or software tell you?

  • At what point will you say “I can’t take it anymore! I’m getting a job!”