Wednesday, March 9, 2011

Aware of the Trend, chase the up trend, cut the lost trend


The bull run market already reach 2nd years aniversery, nobody know when is the end of bull run. Hence, if anyone going to continue trading in the stock market, he should at least know the company before invest. Read news paper, blogs, research and come out conclusion on which industry having the greatest potential to continue the up trend for the next 6 months. Technically, in 5 years time, if you can hit right only 6 times, with 100% profit every time, 50 thousand become 1 million is not a problem.


Cut loss is very important strategy, this may cause you miss a chance of making some money in certain time, but it will help to protect the pricipal from bigger loses in most of the case. Some people would like to know how much percent to cut loss, I think it would be wise to cut lost if a stock already down 10% from the peak. 


Also, need to learn the opposite way, chase the up trend, do not cut the profit, let the profit run. Once you understand concept, you can apply "buy the up and not buy the down" investment strategy. Only buy the up trend stock (the stock that making profit) will ensure you continue making profit. Buying a losing stock (down trend stock) may only incurred more loses, as you might already making the wrong decision to buying company that going to turn bad or management is not honest. The strategy can combine with 10 days moving average buying method, do not buy those stock below 250 days or 50 days moving average.  

Let the profit holding continue remain in your portfolio, no need to take the quick profit, there's nothing to worry for the winning stock. This will ensure you having the greatest profit in the bull run. 


Invest in stock market is similar prepare a war, preinvestigation on current scenario is a must, knowing when is the right time to trade, what's the current trend, plan and execute the strategy, combine with technical and fundamental analysis, do not panic or fear when something unexpected happen. This will increase your successful rate. 
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