I once told a friend that once a stock starts moving up, then we should hop into it to ride the momentum. My friend says it is too dangerous, better buy when it is low. I understand his statement, he wants to earn the highest percentage. The problem is how do you know that the current price is the lowest? Can you be sure that it will not continue rolling downhill?
There is only 1 way to make money in Malaysian stocks, that is when the stocks going up. Then only you can sell at a higher price. You can't short a stock as it is illegal. That means you need to identify a stock that is going up in the early stages.
How to identify a stock that will continue to go up? You may be scare that it is only a rebound and will then continue down. Yes, fear if you do not understand the characteristics behind the movement of every stocks. That's why we need to learn technical analysis. Why does technical analysis works? Because the professionals are using it. The action of these people that moves the stock. These are the people that buy in large quantity.
So, I think that we should stop fishing for low price stocks. Instead, we should jump into a stock when it shows the odds of rallying further. Buy high, sell higher. Then only we can make money.
2 comments:
We may perhaps use the Guppy multiple moving average to buy when the stock is trending up
yes, i'm using it now...I modify it a little bit. Find that it is quite effective, at least I got 4 out of 4 right in my last trade.
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