Before trading one of our QAV Light stocks, we recommend you pay attention to the following.
Average Daily Trade Sizes
One of the guidelines in QAV is that Tony tries to make sure that any time he buys a stock, the dollar value of his purchase is capped at 20% of the Average Daily Trade of that stock. Sometimes he will go up to 50%, but that’s usually only if he can’t find anything else to buy on that day.
The reason for this is that you might find yourself stuck trying to get out if you have to. If there’s a rush for the exits, you don’t want to find that there aren’t any buyers.
This usually isn’t an issue for smaller investors, but if you’re someone who is investing millions of dollars per transaction, you want to make sure you’re not buying too much of a company’s stock.
This is why we have been putting out a small cap and a large cap stock each week.
So, as a general rule, when buying, we will try to make sure that any single trade is capped at 20% of the Average Daily Trade. You should consider doing the same thing.
Based on the A.D.T. poll we’ve been running on QAV Light, we are currently issuing stock recommendations across three bands of Average Daily Trade volume.
- a micro stock with ADT $15-$24k (suitable for people investing up to $5000 per trade)
- a small cap with ADT between $300k and $400k (suitable for people investing up to $80,000 per trade)
- a large cap with an ADT > $1.5m. (suitable for people investing greater than $300,000 per trade)
Of course, people in bands 1 can also buy stocks in bands 2 and 3, and people in band 2 can buy from band 3.
If you have any questions, please let us know.
Watch The Share Price Movements
If we recommend a stock at a certain price, and by the time you look at it the price has gone up =>10% , we would recommend holding off and waiting until the following week’s email. Our QAV score is determined in part by the price, so as that goes up, the score goes down.
How to Use Rule #1
One of our guidelines for selling a stock, is to use a stop loss we call “Rule #1” (from Warren Buffett’s old saying “Never Lose Money”). For us, the R1 stop loss is set at ten percent less than our original purchase price. For example, if we pay $1.00 for a stock, then the R1 is going to be $0.90. We will always advise members when one of the stocks we buy breaches R1 and we have to sell it. However — if you purchased the stock at a different price to us (eg you bought it a couple of weeks later), then your stop loss price might be different to ours. So if you get a sell alert from us for a stock you own, please make sure you check that your sell price is that same as ours.