| We will assume that you are considering going into | | | | 2. If you use technical analysis i.e. Bollinger Bands, you |
| the stock market. Of course you have high | | | | might see a break through about to appear after the |
| expectations of acquiring a very significant return on | | | | stock has been side tracking for a while. Or you |
| your capital on which you intend to invest. | | | | might see where a stock has been consistently |
| Hopefully it should also provide a far better return | | | | hitting a resistance line for a while but is trending |
| than what you would otherwise achieve by investing | | | | slightly upwards. Obviously it is only a matter of time |
| your money into managed funds (less risky than | | | | till that resistance line will become the new support |
| single stocks) or even possibly term deposits where | | | | line. |
| your returns are guaranteed. | | | | Of course this all involves time and research, but let |
| Well, how do you achieve such nice fat returns? The | | | | me assure you that it is well worth the effort you |
| answer naturally is very simple. All you need to do is | | | | put into it. |
| Buy low and sell high.If you can do that just about | | | | Eventually there comes a time when is it really the |
| most of the time you will turn out to be a very | | | | best time. to sell? When you have made a profit of |
| successful profitable stock trader. | | | | course. Easy? The hard part is knowing how much |
| It sounds so very easy,but in reality it takes a bit | | | | profit to take. |
| more effort than just doing that. | | | | For example: we shall assume the stock has risen up |
| But firstly what type of trader do you want to be? | | | | to around a nice 20% profit, so what are you going |
| There are mainly two types but of course it is all a | | | | to do? Sell now, or wait until it is up 50%, 100% or |
| matter of degree as some traders have a bit of | | | | 200%? This really is up to you. Get too greedy and |
| each type in their makeup. | | | | you might risk seeing a reversal in the share price |
| We shall cover the first type of trader, the most | | | | and you could possibly end up with a little or worse |
| prolific of all traders. Just answer these questions | | | | no profit at all. |
| truthfully .I don't care if you don't as the only person | | | | I myself have usually sold by the time it has has hit |
| you are fooling is yourself. Do not worry we are all | | | | 20% as I personally have a preset profit set. If and |
| guilty of that from time to time, myself included. | | | | only if the stock is still trending upwards consistently, |
| Do you listen to the financial news and do you do | | | | then and only then will I put off selling. But I always |
| what exactly what everybody else is doing? Are you | | | | without fail, make sure a stop loss is set in place to |
| selling when the market sells? Are you buying when | | | | lock in my profits. |
| everybody else does? You hear there is a run on | | | | You will hear traders say in chat rooms "I had that |
| Gold or Uranium or whatever, and right NOW this is | | | | stock, I sold it when it was up 20%, but if I had not |
| the time to buy in before you miss out! Does this | | | | sold it at that time, now it would be up to 300% |
| sound familiar? It should, because this is happening | | | | profit at least. How stupid I was I when I sold it!" |
| every day in every stock market around the world. | | | | If only! It could have just as easily gone the other |
| If this sounds like you do not despair, you are in | | | | way and you ended up penniless. Hindsight can be a |
| good company for at least 80% traders are | | | | wonderful thing if you can learn from the mistakes |
| influenced by these outside circumstances. You have | | | | you make. |
| gone and joined that exclusive club called the HERD. | | | | Next how much of the stock you should sell? All or |
| This is an acronym for: How Everybody Reacts | | | | nothing? Again this is really up to you. The situation |
| Differently. | | | | that I like happens when I am trading a Penny |
| In case you are wondering I just made that up.But it | | | | dreadful. If the stock has made me 100%.(it does |
| gets my point across. There is no method or system | | | | happen occasionally) I sell of exactly half, get my |
| being used in the Herds reactions in the market place, | | | | original investment back and that leaves me with a |
| all you will find is panic,mayhem and emotions that | | | | stock which has virtually cost me nothing, and I still |
| reign supreme. | | | | keep an eye on it, let it go, and raise the stop losses |
| The second type of trader is forever learning, in fact | | | | when needed. Money for Jam! |
| it never ends. They have learned by bitter | | | | Many traders are losing good money today because |
| experience how emotional trading can cost them | | | | they are second guessing and are always trying to |
| money.The difference between the first and second | | | | beat the market. If you are very new to this game |
| trader is that the second trader has become aware | | | | and are NOT planning to spend much time on either |
| of their emotions , though they still experience | | | | research or teaching yourself then unfortunately the |
| problems in this area. | | | | chances are you will lose your money. In fact I can |
| The first trader is just swept along in a sea of | | | | guarantee that you will, because the odds are against |
| emotion. Please bear in mind the second trader will still | | | | you right from the very start. |
| slip up from time to time as no one is ever perfect. | | | | You might not be aware of it but you are competing |
| With out belaboring this point too much as this area | | | | with professional traders, big players and smart |
| of the second traders expertise and what is required | | | | insiders who are consistently making good profits |
| has been adequately covered in past articles. | | | | mostly because many other traders keep losing. Plus |
| Ok, now for some basics.Believe it or not.Not every | | | | what are the chances that you can predict the |
| trader uses these basics, if they did there would be a | | | | market? The chances are exceedingly slim. I shall |
| lot more profitable traders around. | | | | reiterate once more "There is no crystal ball! |
| Now the first thing you must learn: is how do you | | | | The bottom line is that it is very easy to look at the |
| know when it is the right time to buy? As I said | | | | past and see all the mistakes you will have made, |
| above Buy low and sell high | | | | and you will. However it can be very hard to make |
| There are a couple of ways to do just that.There | | | | the right decisions needed in the future to make a |
| are other ways of course but two will suffice to give | | | | profit. Unless you learn to know all the market trends |
| you some idea. | | | | well, and begin to understand how the different |
| 1. As we have covered in a very recent article. A | | | | stocks perform, and take the time to educate |
| good time is when a quality stock has been oversold | | | | yourself then most likely you will not be able to make |
| due to either bad news or just plain panic selling. We | | | | profitable trades. |
| are seeing a lot of these types of stocks in today's | | | | Even professional traders do make mistakes and lose |
| markets.These are ideal stocks for medium to long | | | | money. |
| term gains. | | | | |