Stock Trading 101
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.
That is where technical analysis can come in. Technical analysis cannot tell you if a stock is cheap or expensive based on fundamentals, but it can tell you when you should buy and sell, which is just as important. Technical analysis is all about using price action to time your entry and exit points.
There are three key things you need to know when it comes to charts and technical analysis. First you must understand that the price of a stock is already factoring in the future. A stock is high because people think the future is good and low when they think it is bad. So if you want to make money based on that you are trying to outsmart the entire world.
The second principle is that prices move in trends. There are predictable trends that repeat over and over again that you can take advantage of. The trader's mantra is "the trend is your friend."
The third principle is that history repeats itself. Traders and investors will react in the same way to the same conditions of the past, because the psychological motivations that drive them never change. This enables you to profit from patterns that repeat themselves in the stock market.
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.
The whole secret to investing is to get your emotions out of it as much as possible. Most people by because they fear missing out on more gains and sell when they let losses pile up and can't take them anymore. You just need to make rules to let your winning positions run and cut your losing positions quickly so they won't eat up your account balance.
It is all about learning and planning. You do those two things and you can make money in the stock market. Most investors don't and that is why most investors don't make a whole lot of money in the stock market or are just at average. You can do better if you just take action for yourself. - 23222
That is where technical analysis can come in. Technical analysis cannot tell you if a stock is cheap or expensive based on fundamentals, but it can tell you when you should buy and sell, which is just as important. Technical analysis is all about using price action to time your entry and exit points.
There are three key things you need to know when it comes to charts and technical analysis. First you must understand that the price of a stock is already factoring in the future. A stock is high because people think the future is good and low when they think it is bad. So if you want to make money based on that you are trying to outsmart the entire world.
The second principle is that prices move in trends. There are predictable trends that repeat over and over again that you can take advantage of. The trader's mantra is "the trend is your friend."
The third principle is that history repeats itself. Traders and investors will react in the same way to the same conditions of the past, because the psychological motivations that drive them never change. This enables you to profit from patterns that repeat themselves in the stock market.
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.
The whole secret to investing is to get your emotions out of it as much as possible. Most people by because they fear missing out on more gains and sell when they let losses pile up and can't take them anymore. You just need to make rules to let your winning positions run and cut your losing positions quickly so they won't eat up your account balance.
It is all about learning and planning. You do those two things and you can make money in the stock market. Most investors don't and that is why most investors don't make a whole lot of money in the stock market or are just at average. You can do better if you just take action for yourself. - 23222
posted by X - Men @ 2:17 AM
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