Strategies For Trading 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.
What does it mean for me in stock trading? It is usually difficult to determine when a slide is going to turn around, so don't bank your house on a reversal. However for short term investors a dead cat bounce may present a selling opportunity.
A BELLWETHER STOCK: This is a predictive stock, one that usually indicates where the market is going to head.
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 the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
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. - 23311
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.
What does it mean for me in stock trading? It is usually difficult to determine when a slide is going to turn around, so don't bank your house on a reversal. However for short term investors a dead cat bounce may present a selling opportunity.
A BELLWETHER STOCK: This is a predictive stock, one that usually indicates where the market is going to head.
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 the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
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. - 23311
posted by Mr. Forex at
9:26 AM
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