- Volume – If the stock continue to make record high (up trend) for few days (or weeks), beware of sudden increase in volume (3x more than previous 3 days). Check the price, if the price stagnant or go down a bit, sell the stock immediately. This is the sign of “Big Leg” unload their stock.
On the other hand, if the stock go down (down trend) for few days (or weeks) and the price already stagnant then suddenly the price go down with volume increase, then take a look at the price. If the price not going down further, buy some at this point, it will rebound soon.
- Buy up trend stock - If you want to go north, then find the train go to north. If you accidentally take the train that go south, jump down (Cut Loss) immediately before it's too late. The logic is simple, if you want to buy stock that can moving up, then buy the stock that start to move up. Many investor seem doing the opposite, they did not buy the up trend stock, then always ask, why the stock can not go up?
- Do not expect to buy at lowest – I will not buy the stock that making the lowest record, because you may find tomorrow's price lower than today. However, you can put this stock in your buying list, buy some when the down trend reverse. The best is when the price start moving up 5% or 7% from lowest, bear in mind to follow above strategy in point 1 & 2.
- Do not predict the market – Trade according to market's trend, not only buy the uptrend stock, we need to listen to the market. If you notice the top loser, the gap down is very big and the top winner, the gap up is smaller, then try to hold more cash than share. If you happen to trade the stock at this period, try not to hold too many share, as now cash is king. But remember to pick up the share when it reach bottom by using the above strategy.
- Market Crash – Market crash is an opportunity, this will happen 2 or 3 times every year. This may due to sudden incident or some bad news. Don't panic, this is time to collect Blue Chip. Let the price fall for few days (or weeks) when it stable, just use the above strategy to buy it.
- Keep your winning stake – Beside using stop loss and lock in profit, we need to know when to keep cash. I keep the same amount of fund for trading, the winning part will buy more REIT or some stable Blue Chip stock. This will ensure we do not vomit out what we have made from stock market when market suddenly crash. Though you may have proper cut loss plan, but when your fund grow big it may become hard to control, hence I maintain the same amount (or only increase small percentage) in trading. In case if market crash, I can always sell REIT and buy those good stock when opportunity arise..