How to Find Top Stocks
Even Traders Want Fashion When They Buy Stocks. Many traders trade because of public opinion, not because the transaction itself makes sense. When a particular stock seems popular they are anxious, so they do not feel that they missed a chance. As a result, they end up buying at a price point where transactions may not materialize. You should always avoid "hot" stock emotions.
Here is an example: What you should not do when you buy a stock: Let's say you've been tracking a stock in the "hot" industry, it just announced the stock split. Now that the stock is now at $ 18, you calculate it can reach a split time of $ 25 or more. The market is currently bullish and looks like a great trade.
The problem is that stocks have been rising for the past four days. It starts at $ 12, but you do not notice until it reaches $ 18 and it's still rising. The stock split is a month's time, and you know it's going to drop between now and split prices. However, everyone is talking about this stock. If it continues to rise and become the next blockbuster? You are afraid that if you do not do a deal, you will miss a great opportunity. (Also, you want to be able to tell people that you have a place in the stock because it makes you look smart.) So you buy 1,000 shares at $ 18.50.
In the next two weeks, the stock price is $ 19, Losing momentum to the leading Nasdaq couple provides a warning that the market is falling and the stock slips to $ 15, triggering a stop you set for $ 16 half you hold. Stocks traded within this range for a week, then began to rise slightly to split. Your plan is to sell one or two days after breaking up. The stock rose a little $ 20.50 after the split the next day and then rolled it out, and you sold it for $ 2 profit. However, since you have halved your share of $ 16 per share, you have lost $ 2.50 per share on this half and the net loss on the 500 is $ 0.50. What went wrong?
What's wrong, you will not let the stock come to you. Instead, you chase its prices up, well aware that the stock market trend after differentiation, it may come back and then rise again. It's more likely to pull back instead of continuing to run uninterrupted for $ 25, you know, and if you buy at $ 18 or higher you may pay too much. You ignore what you know is more likely to support what might happen.
You should give the stock a chance to come to you at a price you think is reasonable. If the stock pulls a surprise and never gets where you think it will be good. There are many other stocks to trade, some of which will fall to your price. You do not own the stock.
What is the right way to play this particular situation? When the market is bullish, the stock is likely to rise on a split, break down after a few days of rally, and then rise again a week or so before the split. If this is a trend, there is no solid reason to believe that the stock will rise immediately, wait a few days for the stock to drift down and stabilize after buying it. If you are in this case, you can buy it at $ 16.50 and then sell $ .50 for $ 4.00 to earn the entire 1000 shares.
If you have a solid reason to believe that stocks may continue to rise, The desired stock price may have become too high, waiting for a lower price to buy the other half. If it turns out it is too high, it will only reduce your profits. (No stock is up or down in a straight line, waiting to buy back.)
There's a good way and a bad way to buy stocks or trade "hot" stocks. Good methods require discipline and careful market assessment. The bad way is to trade from your senses. As you can see from this example, trading good methods is always more profitable.