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Wednesday, January 6, 2010

Fast Profits With Hot Stocks

By Hannah Page

The is a new game in the stock exchange nowadays called hot stocks. This goes against the traditional Wall St. Advice of buy low and sell high. The new hot stocks strategy is to buy high and sell even higher. The way it works is that you purchase stocks that are rising in worth and sell them while they're still rising. The time between the buy and the sale is short.

Instead of purchasing undervalued stocks and waiting weeks or months for them to rise in value, with the hot stocks approach, you buy stocks that are rising in value. Instead of holding the stocks, you wait only a short while and sell them when their value is higher than the price you paid. You turn a quick profit.

This approach works very well for day traders. You must have your finger on the market's heart beat. When you see a stock that is rising in worth gradually, you purchase the stock. Have a cutoff point set for holding the stock before you buy. You can even sell the stock the same day as you purchased.

If you chance to pick a stock that starts to stagnate or drop in value, sell it straight away, even if you have got to take a loss. Never think the stock will recover and you'll get your investment back. If it drops lower you can lose even more. The concept is to maximize your gains and keep your losses as low as possible.

In numerous cases, you may sell the stock only hours after you purchased it. To use this idea effectively, you've got to constantly watch your stock prices and keep on top of the market's trends. Hot stocks are a high risk bet that sometimes doesn't pay off. Learn from your losses and celebrate your gains. If you may a profit on 2 stocks and lose on one, you are still before the game.

You would not go to Vegas and put all your money on the roulette wheel, and you shouldn't put all of your investment capital into hot stocks. This is one of many financial methods you need to use to raise your cash. A solid diversified portfolio will protect your capital, although the returns might be significantly lower. Long term investments should be the cake of your investments. Hot stocks are the topping.

These stocks are planned to be terribly short term investments. Never hold onto a hot stock for at least some days. You sold and the stock continued to rise, you are feeling like you lost money. You made money, the indisputable fact that the stock continued to rise didn't cost anything.

If you are paying a brokerage for your investments, hot stocks isn't an option for you. Brokerage charges can quickly swallow your profits. Look into online stock services that charge a set weekly or monthly charge for unlimited trades. Trans action costs can be very costly. Let your brokerage firm handle your long term investments, take care of your hot stocks yourself.

The stock market is a way to grow your investments. Hot stocks is a method to make reasonable profits in a short amount of time. When investing your money always use more than one strategy and ensure that at least part of your money is in a safe, if low yield, finance instrument. Never bet on the market with money you can't afford to lose. Remember the old Wall St. Saying" sometimes you eat the bear, and occasionally the bear eats you." Good luck! - 23218

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