If you have ever made an investment decision and regretted it shortly after the trade was executed, you are not alone. Consider the following checklist consisting of three, basic pre-trade points. While these three points are not considered exhaustive, following them will easily help eliminate or at least reduce those post-trade doubts.

Arguably the most important factor to consider when weighing whether to purchase a security is the amount of risk it presents to the investor. While risk is virtually impossible to measure, the next best option is to understand how volatile the security can be relative to the overall market. The tool to accomplish this with is called Beta, and this can be found at Yahoo! Finance.

Beta compares a stock’s volatility to the overall market’s. At 1.0, a security will match the market’s movement. At a Beta of 3.0, that same security will move 3 times more than the market will. So, if he market rises by 2%, the security with a Beta of 3.0% will rise by 9%.

A second valuable statistic is the price to earnings ratio (or PE ratio). This ratio tells investors how much they are paying for each dollar of earnings. So, a PE Ratio of 6 indicates that the shares are priced at $6 for every $1 in earnings. While this alone might not indicate whether one should buy a stock, knowing what competing companies’ shares are selling for. For example a PE of 6 for one security when all other competitors’ shares are trading at a PE of 30 should set off a red flag, warranting further investigation.

A third valuable statistic is the Earning Per Share (EPS) value of a share. This tells investors how much each share has contributed to the earnings of the company. So, an EPS of $7 tells someone who owns 100 shares that his or her ownership stake entitles him or her to $700 ($7 X 100 shares = $700). Alone, EPS is not really very useful, but when compared to other shares that perform in the same sector, it can provide investors with red flags or prompt them to do more digging (remember, if a company has more shares outstanding, the EPS will be diluted).

Beta, Price to Earnings and Earnings per Share do not collectively provide a green light or red light. In most cases, some sort of red flag will go up when investigating these figures and comparing them to other shares. These red flags should lead investors to the company’s financial statements and accompanying notes to see what the company is really about and whether this is the type of investment they want to make. And with more time spent studying the company, the more comfort (or discomfort) an investor will have before making investment decisions. And that, after all, is the whole point.

Chris is the founder of the Mutual Fund Site, a site that aims to help people determine Where To Invest.

Investors who are looking to take the plunge into the equity markets now that the economy is starting to recover will need to follow these basics if they are looking to make wise equity investment choices.

1. Familiarize yourself with the security’s Price-to-Earnings ratio. Also known as the PE ratio, this figure tells investors how much they are paying for each dollar earned by the company. In other words, the lower the PE ratio, the better the price for the security. Investors can gauge whether one security is deemed more expensive than comparable securities, such as competitors within an industry.

2. Understand the security’s Debt-to-Equity ratio. This simple ratio tells investors how much debt a company owes for every dollar they have in equity in the company. Obviously, the higher this number, the more debt the company has, which can translate into solvency problems during difficult economic periods. The lower the debt the better, but understand that debt-to-equity ratios will vary from industry to industry, so one security’s ratio needs to be compared to another security’s in the same industry.

3. What are Analysts saying about the stock? Most professional investment institutions will rate specific securities as buy, hold, or sell. These ratings are made after a firm researches and reviews a publicly traded company for possible inclusion on their own book or for recommendations to their own advisors or clients. Knowing what the professionals are feeling about a particular security can help an investor become more comfortable with an investment decision or, alternately, help investors re-evaluate a potential position.

The tips noted here are nowhere near complete and exhaustive. However, investors who take the time to dig deeper by understanding these key areas and why the numbers or recommendations are as they are will find their trading success improve almost instantly.

For investors who would rather not deal with the research aspect of investing, mutual funds provide a great alternative as the research and effort is done by the fund company.

An informational website, MutualFundSite.org provides investors with information about Investment Management and the top issue discussed here: High Yield Investments.