Over the past 2 years I have been trying almost any trading method known to human kind.
During 2007 I saw many traders losing huge amount of money despite the fact that main US indexes on Jan-01 07 were almost similar to Dec-31 07 values.
I came to the conclusion that
while it's nice to hear TV experts giving economical insight,
these experts can never recommend which stock to buy to the average person.
Most of the time they recommend mid/long term "buy and hold" approach of what they consider to be a good company.
The average person doesn't have the skills to "buy hold and manage" stock for long term though.
Even after improving technical and fundamental analysis skills,
I saw portfolios that crashed because of bad practices of risk management, timing and self control.
The average person buys at the top and hysterically sell at the bottom.
Other average person trades against the trend believing that he already found the bottom.
Eventually he loses his confidence and sell at much lower price.
What to buy?
I usually buy stocks with pattern like this (I recommend something like 2007 pattern, not necessarily the stock itself).
On a bear market period, I like to find stocks that continue to go up even on days that main idexes move down.
When to buy?
I buy stock on its way up.
I buy on breakouts to new all-time high when the volume is much bigger than average.
This way I participate in insider information without even reading the news.
Many times, after a breakout, I wait for a short term pull back.
I draw a trend line that connects historical bottom peaks.
I buy, when the price reaches close to the trend line and start moving up again.
Alternatively, I buy stock at a clear, high volume breakout, after a long term downtrend.
In this case I connect historical high peaks in order to determine breakout of a trend line.
How to manage?
I always limit my loss (unlimited profit). After buying a stock I put stop-loss right away and adjust it as the stock goes up. This method is more art than science. You need some time to practice. I never keep any position without stop loss. Never sell stock that goes up.
2 comments:
In today's trading system, you need to pay a very minimal commission rate to the broker and he does all online transactions for you. In addition, the stockbroker also helps you in buying and selling of stocks on time.
• Rapid trading execution: Unlike traditional trading system, you don't have to wait for your broker to initiate trading. Since, buying and selling of stocks are done online, rapid trade execution can be done online.
• Invest as per your financial strength: This is one of the most excellent options that investors get. So, for new investors who want to start with small funds can do so without any difficulty.
• Easy and hassle free: Since trading is done online, you can do trading from any corner of the world. The whole process is very simple and traders are not required to have a comprehensive computer or Internet knowledge.
Once you are done with your planning, you need to open an online account on a trading company website. There are several online trading companies available, but you should always look for the best company website like Sogotrade - do some online research and pick the best one. Once your account gets activated, you can start trading online.
I like this blog. It is a rich content topic. It helps me solve a lot of problems. It updates at a very fast rate, and provides for me many opportunities. I think it can help me to solve many problems, thank you
Stock investment
Post a Comment