How I Make Money in Stock
I'm sure you have your own method to picking out what stocks you like to buy. You might be a value investor who buys based on fundamentals. Or you may be a growth investor who looks for companies that have big earnings growth. Whatever type of stock you buy you need a method to know when to buy and sell.
You see you have to do more than just get an idea from TV or read about a hot stock in a magazine to make money. You have to know basic trading tactics and fundamentals and put them to use. That is where understanding price action and stock charts comes in.
Three principles guide the beliefs of technical analysis. First is that market action (price movements and changes in trading volume) discounts everything. In other words all of the relevant information about a company's earnings and fundamentals are already known and incorporated into the price of its stock. Looking at a company's balance sheet will rarely give you an edge over other investors. Everyone else knows that information too.
The second principle is that asset prices move in trends. Predictable trends are essential to the success of technical analysis, because they enable traders to profit by buying assets when the price is rising, or as the popular saying goes, "the trend is your friend." Borrowing from Newton's Law of motion, technical analysis asserts that trends in motion tend to remain in motion unless acted upon by another force.
The reason why technical analysis works is because investors will never change. Throughout history they have been driven by fear and greed and always will be. There always will be people who buy at tops and sell at bottoms and you just need to know the patterns that show you when important turning points are at hand.
From these principles the technician attempts to identify trends in the market and reversals of trends. To distinguish trends from meaningless short-term fluctuations they use one of two types of analysis or a combination thereof: charting and mechanical trading systems. Chartists use graphs of stocks to identify meaningful patterns in the price and volume action of a stock.
There are also some basic mechanical trading rules that are helpful to apply. You want to get your own emotions out of your decision making process as much as possible, because that is where mistakes are made. That means coming up with some solid stock trading rules that you will stick with.
Money doesn't fall from the sky. Making money in the stock market requires guts, grits, and tough work. You need to educate yourself on technical analysis in order to use stock charts and make money off of price action in the stock market. - 23212
You see you have to do more than just get an idea from TV or read about a hot stock in a magazine to make money. You have to know basic trading tactics and fundamentals and put them to use. That is where understanding price action and stock charts comes in.
Three principles guide the beliefs of technical analysis. First is that market action (price movements and changes in trading volume) discounts everything. In other words all of the relevant information about a company's earnings and fundamentals are already known and incorporated into the price of its stock. Looking at a company's balance sheet will rarely give you an edge over other investors. Everyone else knows that information too.
The second principle is that asset prices move in trends. Predictable trends are essential to the success of technical analysis, because they enable traders to profit by buying assets when the price is rising, or as the popular saying goes, "the trend is your friend." Borrowing from Newton's Law of motion, technical analysis asserts that trends in motion tend to remain in motion unless acted upon by another force.
The reason why technical analysis works is because investors will never change. Throughout history they have been driven by fear and greed and always will be. There always will be people who buy at tops and sell at bottoms and you just need to know the patterns that show you when important turning points are at hand.
From these principles the technician attempts to identify trends in the market and reversals of trends. To distinguish trends from meaningless short-term fluctuations they use one of two types of analysis or a combination thereof: charting and mechanical trading systems. Chartists use graphs of stocks to identify meaningful patterns in the price and volume action of a stock.
There are also some basic mechanical trading rules that are helpful to apply. You want to get your own emotions out of your decision making process as much as possible, because that is where mistakes are made. That means coming up with some solid stock trading rules that you will stick with.
Money doesn't fall from the sky. Making money in the stock market requires guts, grits, and tough work. You need to educate yourself on technical analysis in order to use stock charts and make money off of price action in the stock market. - 23212
posted by X - Men @ 2:14 AM
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