| The stock market is a difficult place to consistently | | | | Next let's do a little analysis of the individual stock you |
| make profits unless you have learned and | | | | are considering. Make sure your stock has strong |
| implemented the proper trading strategies, methods, | | | | fundamentals. Earnings per share and sales should be |
| techniques, principles and psychology. There is a steep | | | | up at least 20-25%, and better yet, accelerating each |
| learning curve which will take years of proper trading | | | | quarter. You want your stock to be trending upward in |
| education and experience if you want to become an | | | | price before you buy it. Best scenario would be your |
| elite trader or investor. The purpose of this article is to | | | | stock breaking out of a sound pattern with heavy |
| provide you with a few important methods used by | | | | volume. This is something I can cover in a future article. |
| the world's best stock market traders, past and | | | | At the very least make sure your stock is trending |
| current. Each one of these methods you learn and | | | | upward. One way you can do this is make sure your |
| then implement in your stock trading will improve your | | | | stock's price is above a simple daily moving average |
| overall results. The methods in this article will only be | | | | such as the 10 or 20 day average. Learning at least |
| concerned with buying a stock or going long, not short | | | | basic technical analysis would be to your great benefit. |
| selling, which is a whole different ballgame. | | | | An area of great importance is money management. |
| The best traders always put as many factors in their | | | | You absolutely must cut all your losses short to be |
| favor as possible before taking a position in the stock | | | | successful long term in the stock market. A basic way |
| market. It's like rafting on a river. Going with the current | | | | of doing this is to never let your stock price drop more |
| is much easier than going the opposite direction which | | | | than 10% from its buy point. If you bought your stock |
| would be against the current. Jesse Livermore called | | | | at 20.00 per share, no matter what, you close out your |
| this the line of least resistance. It's also called being in | | | | position if the stock drops to 18.00. I suggest putting in a |
| harmony or in tune with the market. | | | | sell stop right after you buy your stock. This way you |
| The general market direction is a crucial factor when it | | | | will be automatically taken out of your position if the |
| comes to success in the stock market. About 75% of | | | | price drops to the predetermined level of your sell stop. |
| all stocks follow what the general market is doing. It's | | | | If your stock moves up nicely, then you can move |
| very important to only make a new stock purchase | | | | your sell stop up to at least the breakeven point. You |
| when the general market is in an uptrend or confirmed | | | | can also keep moving your sell stop up as your stock |
| rally. Its best if the uptrend is during a bull market phase. | | | | keeps doing well. This will help protect some of your |
| You can find the current market direction on my | | | | profits. |
| website. I will update immediately when there is a | | | | In summary, before making a new stock purchase, |
| change in the market trend. | | | | make sure the general market is in an uptrend or |
| Stocks tend to run or move in packs. Every stock is | | | | confirmed rally. Check to see if your stock is in a |
| part of a sector and breaking it down more, also part | | | | strong sector and industry group. Look for strong |
| of an industry group. When a sector is strong and | | | | fundamentals such as solid earnings per share and |
| doing well, it tends to help most of the stocks in that | | | | sales. Make sure your stock is in an uptrend. Always |
| particular sector. When an industry group is strong or | | | | use proper money management. I have only touched |
| doing well, this also have a positive effect on stocks | | | | on a few important factors that will improve your |
| from that particular industry group. About 50% of a | | | | trading if implemented. There is a lot more to learn if |
| stock's price gain is directly tied to the sector and | | | | you want to become a master trader and join that |
| industry group a stock is part of. So make sure the | | | | elite group that consistently makes money in the stock |
| stock you are considering is part of a strong sector | | | | market and amasses a fortune over time. Learning |
| and industry group. You can e-mail me the name and | | | | and implementing the information in this article is a solid |
| symbol of the stock you are considering and I will | | | | step in the right direction. Always keep reading and |
| gladly provide you with sector and industry group | | | | learning from the trading legends. It will be well worth |
| information concerning your stock. Another excellent | | | | your time in many ways. |
| source for this information is Investor's Business Daily. | | | | |