Saturday, April 6, 2013

Find the right stock to trade?

I wonder how our future building might look like? Perhaps from outside, a building with 50 story is nothing great, but when one go inside, there’s another 50 floors under the ground, which make it total 100 floors. There may be 10 lifts inside the building, each lift with indicator to show now the lift is “moving up” or “moving down”.

For active trader in stock market who buy and sell frequently, or those who want to learn how to trade in stock market, the first thing to know is understand this logic. If you want to go up to 50 floor, which lift should you take? The lift that currently “moving up” or the lift that “moving down”? It’s no harm to take the lift which currently on the way “moving down”, the worst is it might go down another 50 floors under the group and sooner or later, it will move up again. The point is, if you do so, you are not only wasting the time but also losing the opportunity as well, what if the lift go down 40 floors and stuck there? Hence, the wise move is to select and jump into the “moving up” lift and ride with it.

Since trader is a fighter, when they go to "battleground", they must have the right attitude and can not afford to wasting time. To buy low and sell high, the very first step is to select those stocks that are currently on the move, or we call it strong counter. This is similar to select the lift that currently move toward the direction you intend to go. If the intention is to sell higher, then select the uptrend stocks which on the move is the right choice. The tendency for the moving stock to continue move on the same direction is greater than select any other stock which stand still.

At times, we might jump into wrong lift. If this happen, admit the mistake and jump out of the lift immediately. In the stock trading, admit the mistake means to pay fee, or we call it cut lost. Admit the mistake and act fast so that the lost will be minimum. Regret now is better than regret later. Admit the mistake done and find ways for solution. There's always many stocks “on the move” out there.