Strategies For Buying Stocks
We all know the market goes up and the market goes down. Thousands of people will give you advice on what their favorite stock is. But there are no magic answers as to which stocks will make you money, and which won't. When you are looking at investing in stocks here are three theoretical terms that might give you something to think about.
DEAD CAT BOUNCE: This is when a stock price increases after a long and sustained downward movement, but the effect is only temporary and the stock reverts to its down ward trend. In many cases the increased price causes investors to buy again and then lose when the price drops again.
Why this is important for stock trading: No one can really predict when a market or stock recovery will happen. It can however provide an opportunity for investors to buy or sell quickly to take advantage of the temporary price increase.
THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.
Why is this important? These sorts of stocks usually have a history of correctly indicating which way the market is going to go. They on themselves may not be attractive in terms of gains to be made, but will be useful to watch to get a general feel for the market sentiment.
THE JANUARY EFFECT: this is pattern that is often seen at the beginning of the calendar year when markets traditionally rise. Often the rise starts in the last few days of December and strengthens through January. Sometimes this is due to tax implications and psychological influences of the investor.
Why is this important? It has been shown in investigations that the January effect is real. However in recent years it has become more difficult to take advantage of. So it may be useful to watch for, but it is unlikely to be a reliable way to make money. - 23218
DEAD CAT BOUNCE: This is when a stock price increases after a long and sustained downward movement, but the effect is only temporary and the stock reverts to its down ward trend. In many cases the increased price causes investors to buy again and then lose when the price drops again.
Why this is important for stock trading: No one can really predict when a market or stock recovery will happen. It can however provide an opportunity for investors to buy or sell quickly to take advantage of the temporary price increase.
THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.
Why is this important? These sorts of stocks usually have a history of correctly indicating which way the market is going to go. They on themselves may not be attractive in terms of gains to be made, but will be useful to watch to get a general feel for the market sentiment.
THE JANUARY EFFECT: this is pattern that is often seen at the beginning of the calendar year when markets traditionally rise. Often the rise starts in the last few days of December and strengthens through January. Sometimes this is due to tax implications and psychological influences of the investor.
Why is this important? It has been shown in investigations that the January effect is real. However in recent years it has become more difficult to take advantage of. So it may be useful to watch for, but it is unlikely to be a reliable way to make money. - 23218
posted by X - Men @ 10:38 AM
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