Investing In Stocks - Three Ways To Think About Investments
It's a no brainer that there is money to be made investing in stocks. But then it is just as likely you can lose money. The key is to pick stocks that will perform as you want. There are three terms that you may not have heard of and why they are important to you.
DEAD CAT BOUNCE: This is when a stock price increases after a long and sustained downward movement, but the effect is only temporary and the stock reverts to its down ward trend. In many cases the increased price causes investors to buy again and then lose when the price drops again.
Why this is important for stock trading: No one can really predict when a market or stock recovery will happen. It can however provide an opportunity for investors to buy or sell quickly to take advantage of the temporary price increase.
A BELLWETHER STOCK: This is a predictive stock, one that usually indicates where the market is going to head.
Why is this important to me? These stocks usually have a large percentage ownership by institutional investors - the big boys on the scene. While these stocks may signal the direction of the market they may not be the most attractive investment choice for those wishing to make gains. They are useful to watch however to get a feel of what might happen next.
THE JANUARY EFFECT: It has been recognized that at the beginning of a new calendar year prices tend to increase across the month of January. There can be many reasons for this but often the big two are taxes and investor psychology.
Why is this important to me? While research shows the effect to be real, it is hard to turn these gains into profits. The chances have become less and less. However it is important to be aware of this phenomenon so that if an opportunity presents itself, you may be lucky to be able to take advantage of it. - 23222
DEAD CAT BOUNCE: This is when a stock price increases after a long and sustained downward movement, but the effect is only temporary and the stock reverts to its down ward trend. In many cases the increased price causes investors to buy again and then lose when the price drops again.
Why this is important for stock trading: No one can really predict when a market or stock recovery will happen. It can however provide an opportunity for investors to buy or sell quickly to take advantage of the temporary price increase.
A BELLWETHER STOCK: This is a predictive stock, one that usually indicates where the market is going to head.
Why is this important to me? These stocks usually have a large percentage ownership by institutional investors - the big boys on the scene. While these stocks may signal the direction of the market they may not be the most attractive investment choice for those wishing to make gains. They are useful to watch however to get a feel of what might happen next.
THE JANUARY EFFECT: It has been recognized that at the beginning of a new calendar year prices tend to increase across the month of January. There can be many reasons for this but often the big two are taxes and investor psychology.
Why is this important to me? While research shows the effect to be real, it is hard to turn these gains into profits. The chances have become less and less. However it is important to be aware of this phenomenon so that if an opportunity presents itself, you may be lucky to be able to take advantage of it. - 23222
posted by X - Men @ 6:37 AM
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