Winning Big in the Stock Marketby Gary E KerkowMany people begin trading the stock market, with the belief it will be rather easy to make a lot of money. Some of them pay big money for a so-called secret indicator or method that promises great riches. Others will pay out big bucks to get stock recommendations, generally from someone who does not trade the stock market themselves. It is sad, but many people fall for the get-rich-quick fallacy when it comes to trading the stock market. Unfortunately, there are no short cuts if you want to achieve success long-term in the stock market. It is set up to fool most of the people most of the time, and it works very well. All great stock market operators know how to properly observe, interpret, and then execute trades with the odds strongly in their favor. Money management is another important part of the equation. Keep all losses small. Learn to be wrong small and right big. One of the keys to success in the stock market is to determine the general trend of the overall market. This can be achieved by the proper use of price and volume analysis. Speaking in general terms, you will see a strong bull market take 2 steps forward, then one step back, over and over again. The market is making a series of higher highs and higher lows. You want to see heavier volume when the market advances, and lighter volume when the market declines. Heavier volume when the market advances, and lighter volume when the market declines tells us that big institutions, which account for over 75% of all trading activity, are buying, and not selling their shares. To be successful, you need to ride the coat tails of these huge entities. They basically decide when the general market goes up or down, and if individual stocks make a major price movement or not. When searching for individual stocks, the best performing stocks will almost always be growth stocks. These stocks tend to be newer companies, with exciting new products and/or services the public really likes. Look for stocks with superior earnings and sales. Through price and volume analysis, make sure the stock is being accumulated by big institutions such as mutual funds, pensions funds, and hedge funds. These big institutions will ultimately decide if a stock makes a major price movement or not. Buy leading stocks in the top industry groups and sectors. Basically, what you want to do, is acquire the best of the best at the optimal time. Technically, you want your stock to be developing solid chart patterns or bases. Then purchase your stock at a proper buying point after it breaks through key resistance, with heavy volume. Historically proven chart patterns include the flat base, cup shaped bases, double bottoms, and three point bottoms, also known as 123 patterns. Without getting into details, I have shared with you, successfully proven trading principles. A whole book could easily be written about each and every one of these principles. The key to successful trading is to put as many factors as possible in your favor, before taking a position in the stock market. Also, implement solid money management, and you could be well on your way to making a fortune.
About the Author:Hi, I'm Gary E Kerkow, founder of Tradingmarkets4u.com. This site provides information to help traders and investors become successful. I have over 20 years of trading experience including stocks, futures and options. I implement the strategies, methods, and psychology of the world's best traders and investors. This includes Jesse Livermore, William J O'Neil and others. Visit my website at http://www.tradingmarkets4u.com |
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