Why Not To Bottom Pick
By Shaun Rosenberg
Too many traders don't know why not to bottom pick. Not only that, some of these traders actually think bottom picking is a good idea. This is never the case.
It may be tempting to bottom pick. After all who wouldn't want to buy a stock when it is at its lowest and sell it when it gets to its highest. The whole buy low, sell high ordeal.
The problem with bottom picking is that it is extremely hard to tell when a stock will make a bottom. The majority of stocks that have been going down in the past will probably keep going down in the near future. That is why most professional traders tell you not to go against the trend. Any successful attempt to find the bottom was probably more luck than anything.
The other thing people will try to do is to get into a stock after a crash when it starts to rally. BIG MISTAKE! Falling stocks will typically rally every now and then right before they crash again. In fact successful traders will consider sell rallies during a bear's markets good practice.
What you might want to consider is not buying falling stocks but shorting falling stocks along with buying stocks that keep going up. This way you are not expecting the stock to do anything other then what it has been doing.
Also instead of picking the exact bottom it may be beneficial to wait for the stock to stabilize and form an uptrend again before buying. This may lose the investor the opportunity to get in when the prices are at their lowest but the benefits of profiting more often will outweigh the potential profit you may have missed out on.
For more information on trading the stock market visit http://www.stocks-simplified.com
Article Source: http://EzineArticles.com/?expert=Shaun_Rosenberg
Technical Analysis VS fundamental Analysis
by: Shaun Rosenberg
Technical Analysis VS Fundamental Analysis, which one is better. These are two different theories about how the market works and how to make money in them. Hard core Fundamentalist will tell you Technical Traders can not possible make money in the market. Hard core Technical traders will tell you Fundamental Analysis isn't worth the effort.
So, who is right? Let us take a look at both of these theories.
We will start with fundamental analysis. This involves looking at individual companies. You must look at a company's financial statement. You must also be aware of any news that comes from the company.
The whole theory behind this is if you find high quality companies and buy their stock it will eventually go up. After all if a company is a great company its stock should go up.
The problem with Fundamental Analysis is that it favors the large investors. Think about it, if you are investing billions of dollars in a company you can afford to spend millions to find information about that company. You can also talk directly to the CEO's of the companies that they are thinking about investing in. This gives large investors an unfair advantage.
Technical analysis however does not give anyone an advantage. It is all about chart patterns. The more you learn about chart patterns the better an investor you will become. And because it deals with chart patterns everyone who has a computer is on an equal playing field.
Now you may think chart patterns might not be able to help you, but you would be wrong. They have helped millions make money in the market. They also make sense.
If you see a stock bounce between $45 and $60 continuously and it is at $45 you would assume that it is going to go up. Why? Because it has always bounced off of $45 in the recent past. In fact every time it gets to $45 most people consider the stock undervalued and buy it. Also where do you think the stock will most likely go? $60,right?Why? Because it always has in its recent past.
There are hundreds of chart patterns out there that have been tested numerous times by numerous people to be true.
Most technical traders do not concern themselves with a company's fundamentals. This is because they don't really need to. Most of their trades could only last 1 or 2 months. Remember Fundamental Analysis can find strong stocks that may eventually go up in the long term. If you are only in a trade for 1 month it may not be worth looking into.
For more information about how to trade the stock market visit http://www.stocks-simplified.com
How To Plan Long Term Investments For The Future
Most of us want certain things out life. Some of us get what we want while other keep trying but never succeed. Being financially secure during retirement is of prime importance to most of us. We want to be able to do all things we never had time for in our youth. In order to achieve this, we have to plan long term investments so that when we are ready to retire, there is sufficient money in the kitty.
However, long term investment for the future depends on your investment style. If you are an aggressive investor, you will opt for stocks and shares. A more conservative investor will for government bonds and mutual funds. However, there are different types of investments and you can choose what best suits your needs. But having long term investment for the future is a must if you want to lead a worry-free life after retirement.
There are bonds you can think of. Bonds have a wide range of maturity periods from 1 year to 30 years. You can always choose government bonds issued by the United States government and these are quite safe as the bonds are guaranteed by the government so the chances of default are quite low. If you invest smartly in bonds, you could be lucky enough to see your investment double over a certain period of time.
Many people want to stay away from bonds because they consider them risky. These people can opt for mutual fund investments where the fund manager will decide where to invest your money. You can invest in mutual funds through a broker and he will invest it in the fund. However, what many people do not realize is that mutual funds are riskier than bonds, and it is not the other way round.
There are still others who are more aggressive in their investment style and prepare to risk their money in stocks. Stocks can be an excellent vehicle for long term investment for the future. However, you should be prepared to take risks as the company whose stocks you have purchased does not perform well, you will lose money.
No matter where you decide to invest your money, doing research for long term investment for the future is of utmost importance. This means that stocks of well established companies have to be purchased; your broker for mutual funds has to be reliable with a proven track record; and when investing in bonds, make sure that the bonds are guaranteed by the government.
About Author: Pauline Go is an online leading expert in finance industry. She also offers top quality financial tips like :
Loans With Bad Credit History, Using Your 403b To Pay For College, Federal Credit Union & Financial Services
Article Source: http://EzineArticles.com/?expert=Pauline_Go
Channeling Stocks – A Simple, Effective Strategy
Channeling Stocks (or Rolling Stocks) can be a very accurate and reliable trading strategy that will provide the trader with exact entry and exit points.
When a stock repeatedly moves up and down in waves between two parallel lines it is said to be channeling or rolling. A line is drawn across the highs, and one across the lows. This forms the channel. The upper line is referred to as the resistance line and the lower line is referred to as the support line. Some traders choose to trade within the channel and will enter or exit the trade as price draws near the support or resistance line. Others prefer to trade breakouts, entering or exiting the trade, once it breaks out of the channel.
One of the greatest benefits of this strategy is that it gives us precise entry and exit points. Greed and fear are a trader's worst enemies, but emotions have no place in a system that employs strict buy and sell signals, along with stop loss or trailing stop orders.
These are the three types of channels: the ascending channel, the descending channel, and the horizontal channel. The ascending channel is a rising channel that is identified by higher highs and higher lows. The descending is a downward channel that is identified by lower highs and lower lows. And, the horizontal channel (also known as the rectangle channel), is identified by horizontal highs and lows.
There are several ways to trade channels:
-Trade in the direction of the channel. Long positions can be entered in ascending channels, riding the price upward until the support line of the channel is broken. Short positions can be entered in descending channel, exiting, once price has broken through the resistance line.
-Trade within the channel. Long positions are entered as price bounces off the support line, and sold close to the resistance line. Shorts are entered as price bounces off the resistance line, and covered close to the support line.
-Trade channel breakouts. This strategy doesn't provide an exit point. Longs are entered as price breaks through the resistance line and shorts can be entered when price breaks through the support line.
Check for channels in different time frames. Many times you can predict when a channel will be broken, by checking other time frames. The channel that you are currently trading in one time frame may be an advance or decline within a channel of a longer time frame. Choose the appropriate time frame for your particular type of trading: weekly or monthly charts for long term trading, daily charts for short term or swing trading, intra day charts for day trading.
Channel trading is a very simple, yet effective strategy that works well for the beginner as well as professional traders. As you should, with any new strategy, paper trade, before you add channel trading to your trading toolbox.
by: Chris Jones
