New Forex Trading Strategy

Tuesday, January 5, 2010

Play The Market with Hot Stocks

By Jason Demand

The strategy in the stock exchange has always been buy low sell high. The strategy of hot or momentum stocks is buy high and sell higher. The concept is to look out for stocks a rising in value, buy them and then sell when they stabilize or begin to decline in value. By trading this way, you don't have to hold onto the stock as long.

The advantage of buying stocks this way is the short turn around time. Your money isn't tied up waiting for an undervalued stock to rise. The old system is still good, but adding hot stocks trading to your investment planning will help grow your money quicker.

This approach works very well for day traders. You need to have your finger on the market's heartbeat. When you see a stock that's rising in price continuously, you purchase the stock. Have a time limit set for holding the stock before you purchase. You can even sell the stock the same day as you bought.

If you chance to pick a stock that starts to stagnate or drop in worth, sell it straight away, even if you have to take losses. Never think the stock will recover and you will get your investment back. If it drops lower you can lose even more. The idea is to maximize your gains and keep your losses to a minimum.

With hot stocks, you may decide to buy and sell a particular stock in one day. To utilize this method of stocking trading, you've got to keep on top of your investments and watch the stocks closely. Study market trends. When a stock drops, sell it straight away. Don't get greedy or use the old gamblers instinct that tells you you can still win. You can't on this one stock, but their are lots of others.

Anyone that is trading seriously in the market should use more than one methodology. Hot stocks are great, but they are often high risk. Your portfolio should be diversified, with proved stocks from different business sectors. This helps offset losses and protects your investments. Hot stocks should only be part of your investment plan.

Hot stocks only work as a short term investment. These are stocks which should be acquired and sold in less than a week. If the stock continues to rise after you sell, that is's OK, you made a profit. The stock could just as easily drop in price.

Many speculators employ a broker to buy and sell stocks. Hot stock investing is not built to be used with a broker. If you have got to pay a broker's fee for every exchange, hot stocks could cost more than you are making from them. Online services for buying and selling stocks are better suited to this investment system. Look into methods to duck brokerage costs if you plan to add hot stocks to your investments.

the market is a good way to grow your investments. Hot stocks is a method to make reasonable profits in a short amount of time. When investing your money always use more than one method and ensure that at least part of your money is in a safe, if low yield, money instrument. Never bet on the market with money you can't afford to lose. Remember the old Wall St. Saying" occasionally you eat the bear, and often the bear eats you." Good luck! - 23305

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