Wednesday, 30 December 2009

Learn To Trade: Your source for investment or investments, stock, stock market, and stocks info

Imagine a 15 car train sitting in a train station. Now, take a look at the train operator. Imagine the locomotive gears are jammed and the train operator is frantically working too unlock the gears. He is only able to move the train forward or backward about 10-15 feet in either direction. It’s safe to say that the train isn’t going anywhere until the operator fixes the train or until the situation gets resolved. This example, is the same type of thing that happens to a stock in the stock market. Let’s say that a stock has been going up and down for 3 to 5 months without much upside or downside progress. Sometimes a stock can get “stuck” trading in a range. When a stock starts trading in a range where support and resistance are clearly defined, it’s best to pass on that opportunity and move on to another stock that is moving. A stock that is moving will provide more of an opportunity for good fortune on your investment or trade. If for no reason other than to have your money work rather than idle by because even if you get stopped out rather quickly. You can then move on to another potential winner, rather than be stuck with a position that vacillates back and forth for an extended period of time. There is an opportunity cost to having your money sitting in an investment or trade that isn’t doing anything. The cost is lost potential profits (i.e. opportunity) from stocks that are trending up, while you’re sitting in a stock that isn’t doing anything. Now, imagine a train that is moving top speed across the country.But this train DOES slow down to make intermittent stops. The train allow passengers to get on and off with ease. Try getting off a train going 157 miles per hour. The result isn’t pretty. This example is characteristic of a great stock. A stock in which the trend is clearly up (and picking up steam), but it DOES pullback occasionally (because people are exiting or lightening up on their position and other people are now getting aboard this uptrending stock. And this new group of passengers will take the stock to higher highs. Stick to stocks that are active and stay away from stocks that are not going anywhere.

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