subject: Joseph Wang Financial - Is It Possible To Detect At Least A Drop In Stock Market? [print this page] Ideally find some way or system to detect the minimum (and maximum) of market movements. But it is not realistic. Some tools try to detect the minimum (and maximum) of each movement, such as graphic and technical analysis, Japanese candlestick or candlesticks, the analysis of money flows, etc.. But no tool is infallible and sometimes give false signals.
Many investors expect to get advice from someone more experienced to tell them how far it will drop the stock to buy the shares that are scheduled at a better price and thus increase profitability. But to perceive the true difficulty of the task is to put it in perspective:
One investor who was able to know the highs and lows become a millionaire in a short space of time. For little money to count, thanks to the leverage of derivatives such as options and futures, the results would be absolutely spectacular.
Therefore, realistic strategies should be designed bearing in mind that you will not buy the smallest and will sell at the highest. Also, to have a good return, even very good, not essential.
A good solution when entering stock diversification is temporary space that is shopping at the time with malice aforethought. Two possible ways to space purchases are:
Regular intervals: Consists semana/15 buy each day / month / ... a fixed amount of money. The interval chosen depends largely on the amount of money available. Someone with a high liquidity that can be divided into several dozen small purchases could make a purchase a week. However, a person who has an amount capable of being divided only into 2 or 3 parts could make 1 purchase every month or even every quarter, depending on whether you expect a more or less rapid recovery.
Using technical analysis: You can also use the graphics and technical analysis (or any other tool) to be making purchases every time a value do (or seem) some form of return or continuation of the upward trend once resume. This option should be used by investors with experience in this type of tool. In this case there is no fixed number of days between each purchase, but should avoid concentrating purchases in a period too short for prudence. No tool is perfect and could lead to invest at once in a series of false signals close in time. Also be established to avoid any temporal spacing on purchases, though in a more flexible than the first option
By selecting the values to be invested should not be selected which have fallen over, but the cheapest. In some cases may overlap and in others, because a value is not cheap just because it has fallen a lot.
To test whether a value is considered cheap or can not account balance, income statement or both. Balance study is to assess the assets of the company, factories, land, trademarks, affiliates, etc.. By studying the income you would typically look at the PER and dividend yield, although there are more variables. It is important to note that not only should look PER and dividend yield last year, but also the prospects that the company has. In general, the average investor is easier to analyze the income statement and balance sheet developments of the companies, although both are complementary and should ideally be analyzed together.
These strategies apply to long-term investors, not short-term traders.
by: Joseph Wang
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