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Swing Trading

date 14 Oct 2008 | category Stock Strategy | comments Comments (0)

Swing trading makes profit from swings in price movement over several days. Swing trading is based on the technical analysis strategy, which observe market activity from price and volume. Price can rise stimulated by greed and fall by fear. Swing trading uses others emotion for investing. It starts to enter when greed starting to grow, and exit when fear is coming. The key to successful swing trading is picking the right stocks. The best candidates are large-cap stocks that are actively traded, so that you can easily buy and sell it.
How?
Swing traders use technical analysis to look for stocks with short-term price momentum based on their price trends and patterns. When price move up with high volume it is time to buy. When price move down with high volume it is time to sell. Money management is very important for swing trading. You have to limit your self from loss. When you have reach that loss limit, you must be disipline and close your position.
For who?
Swing trading is very easy for beginner traders, but it can also offers significant profit for intermediate and advanced traders. This is mainly used by individual. Large institutions are too big to move in and out quickly.

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Penny Stock

date 13 Oct 2008 | category Stock Strategy | comments Comments (0)

Penny stock are stocks which trades for less than $5. Some saying that penny stocks are traded below $1. Penny stock is high righ, but can also reward high return. Penny stock can give you huge returns. To succesfully play with penny stock, you have to know the right strategy.
You should not use plenty of money, because it is too risky, and besides with penny stocks you can get huge returns.

If you want to play with penny stock, then you have to understand about technical analysis. See technical analysis section from this website. Understanding chart will be very essential for you to make decision. Charts can help you determine good entry and exit. Support, resistance, high price, low price, and volume can be very usefull for you investing. When a stock reach its support level, it will be hard to go down again. And when a stock reach its resistance level, it will be hard to go up again. Volume is also an important indicator for technical analysis. A huge volume shows strong direction. When a stock fall with high volume, it is a signal that the stock will go down more.

You should also use indicator and oscillators, like Moving Average, MACD, and RSI. Moving average shows average price of a security, which shows trend. MACD can shows downward or upward momentum. While RSI shows whether a security is overbought or oversold. When it is overbought, the commodity usually go down, and when it is oversold, the commodity will go up.

If you can not use technical analysis, then you can search below for services that gives report on stocks which will go up. Try searching “stock penny report” or “stock penny”.

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The meaning of volume

date 06 Oct 2008 | category Stock Strategy | comments Comments (1)

Volume is an important aspect of technical analysis because it is used to confirm trends. Trading volume is the number of shares traded daily, on average. Any price movement up or down with relatively high volume is seen as a stronger, more relevant move than a similar move with weak volume. For example, that a stock jumps 5% in one trading day with high volume, usually goes up again the next day. If the volume is below average, there may not be enough conviction to support a trend reversal. Volume should move with the trend. For example, if the stock is in an uptrend but the up trading days are marked with lower volume, it is
a sign that the trend is starting to lose its legs and may soon end.

Very low trading volumes signal lack of interest. The higher the volume, the more active the security. Low volume levels are characteristic of consolidation periods (prices move sideways). High volume levels are characteristic of market tops when there is a strong consensus that prices will move higher/lower. High volume levels are also very common at the beginning of new trends. Just before market bottoms, volume will often increase due to panic-driven selling.

Volume can help determine the health of an existing trend. A healthy up-trend should have higher volume on the upward price, and lower volume on the downward price. A healthy downtrend usually has higher volume on the downward price and lower volume on the upward price. Volume is closely monitored by technicians and chartists to form ideas on upcoming trend reversals. If volume is starting to decrease in an uptrend, it is usually a sign that the upward run is about to end.

From the image above, there are two signal. One is a sell signal, and the other  one is the buy signal. The line char shows price, while the bar chart below shows volume. The sell signal occurs because the price went down with high volume on November. The stock eventually went down until January. In that month, there is a buy signal, because price was up with high volume. The stock price then rally until the next month.

Accumulation and distribution
Accumulation is when the market is controlled by buyers. A down-trend that stalls while volume remains high signals that accumulation is taking place. Sellers have lost control to buyers and a reversal is likely. An Accumulation occurs when volume increases and closing price moves higher, or when downwards trend there is little or no price movement and an increase in volume.

Distribution is when the market is controlled by sellers. An up-trend that stalls while volume remains high is a sign that distribution is taking place. Buyers have lost control to sellers and a reversal is likely. It happened when volume increases (compared to yesterday) and closing price moves lower, or after trending
upwards, there is little or no price movement and an increase in volume.

Low volumes do not necessarily signal the end of a down-trend. Commitment from buyers is necessary to drive up prices. Prices can fall due to a lack of interest from both buyers and sellers.

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