Category: Money tips Release Date: 2006-11-28
We mentioned the importance of clear understanding of the trend. What is the trend we are talking about? Is the broad market indices do? Definitely not. Index is a very rough description of the market, which encompasses the variety, and even the crowd was too heterogeneous to reflect the transaction, so that it can only serve as a guide for a rough understanding of the general trend. Because: the one hand, the index change has a greater impact of the so-called heavyweights tend to be more suitable for large funds to invest in large organizations, not suitable for retail investors; the other hand, the information explosion today, amateur investors can not be right all the various sectors trends in the field are very clear and timely grasp, so grabbed his eyebrows and beard, might as well concentrate on concentrate on areas 1,2. Facts have proved that this approach although it may miss trading opportunities arise in other areas, but it can significantly reduce the time and effort spent.
Having identified the industry's own interest, the next step in the 1,2-sectors where we should pick stocks to build a private equity pool. Selected pool of stock shares include the following objectives:
1, high-risk stocks. Is a high beta coefficient of stock, usually small-cap stocks, speculative stocks. Such stocks move faster than the broader market more active trading of such stocks can effectively improve the rate of return.
2, some blue chips. Large-cap stocks is the major financier of large corporations favorites. Relative to small-cap stocks, the shares of such stock is not particularly active, but having a downturn, the lack of liquidity of the market in general circumstances, the liquidity of these stocks stand out the advantage. Therefore, in certain market conditions, such stocks may be the only thing we can trade variety. We will stock them and combine the high-risk pool on the stock, once Quotes starts, against the big blue-chip let spaces for small-cap speculative stocks.
3, has a stable trading range of stocks. Such shares may be several months cabinets up and down in a shock, do not provide opportunities for one-time windfall, but it is a stable running track gave us a wealth of trading opportunities, "puerile" is the best description of it.
4, like the transaction of stocks. Their value is not recognized for many investors, its trading volume tend to be more depressed. However, it will always be a sudden the price of transaction. Because of concern to small investors, and therefore a small part of the funds under the impetus of its price will appear very excited fluctuations. And this phenomenon is likely to be repeated again and again. We put such stock into the private equity pool for close observation and control of their habits in order to obtain windfall profits opportunities.
5 years, stocks a large range of price fluctuations. For the year, the highest price and lowest price differences between the large stocks, we must pay close attention. According to trading psychology, when a huge price volatility when the stock hit a new low, those who have bought and sold it the price investors will believe that it is likely to rebound to its original height, and thus admission bargain-hunting. Such a batch of the crowd after another admission will be gradually pushed up its price, leading to profit opportunities.
6, running in line with technical specifications of the individual stocks. Whether we are accustomed to the use of technical analysis indicators are moving average, RSI or MACD, they all can not be applied to all stocks. Therefore, once we find a great fit for our stock indicators used, do not hesitate to put it into a private equity pool, because you know it's a great chance of winning.
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