How To Buy And Sell A Stock

I've been using technical analysis for years to make money in the stock market through stock trading and have found it to be a key to my success

. Most people just put money into the stock market without any plan on when they are going to buy a stock or sell a stock. But if you don't know when you are going to take your profits then the market will take them from you.

You have to know how to do that yourself. The only way you are going to know when to sell is if you learn how the market trades and why individual stocks move the way they do. That means having an understanding of price action, which means technical analysis - the science and study of price action and charts.

Three principles guide the beliefs of technical analysis. First is that market action (price movements and changes in trading volume) discounts everything. In other words all of the relevant information about a company's earnings and fundamentals are already known and incorporated into the price of its stock. Looking at a company's balance sheet will rarely give you an edge over other investors. Everyone else knows that information too.

The second principle is that asset prices move in trends. Predictable trends are essential to the success of technical analysis, because they enable traders to profit by buying assets when the price is rising, or as the popular saying goes, "the trend is your friend." Borrowing from Newton's Law of motion, technical analysis asserts that trends in motion tend to remain in motion unless acted upon by another force.

The reason why technical analysis works is because investors will never change. Throughout history they have been driven by fear and greed and always will be. There always will be people who buy at tops and sell at bottoms and you just need to know the patterns that show you when important turning points are at hand.

From these principles the technician attempts to identify trends in the market and reversals of trends. To distinguish trends from meaningless short-term fluctuations they use one of two types of analysis or a combination thereof: charting and mechanical trading systems. Chartists use graphs of stocks to identify meaningful patterns in the price and volume action of a stock.

The whole secret to investing is to get your emotions out of it as much as possible. Most people by because they fear missing out on more gains and sell when they let losses pile up and can't take them anymore. You just need to make rules to let your winning positions run and cut your losing positions quickly so they won't eat up your account balance.

Money doesn't fall from the sky. Making money in the stock market requires guts, grits, and tough work. You need to educate yourself on technical analysis in order to use stock charts and make money off of price action in the stock market.

by: Michael Swanson

POST COMMENT

The Top 5 Ways to Leverage Facebook Fan Pages For More Buzz, Visibility and Sales Shop Fitting- A Way To Enhance Your Shop Appearance And Sales Of Course Thinking And Questioning Your Way To Sales Success Easy Fundraiser Ideas; Tips On How To Maximize Your Sales Imports And Exports In The U.k.: The Resellers Guide To International Trading Volkswagen India Reports Over 120 % Sales Jump In Jan-july 2010 Shopping the Sales Effectively JAGUAR CELEBRATES BEST AUGUST SALES IN TWO YEARS How To Choose The Best Reseller Hosting Earning Money By Reading Short Sales Articles Many Of The Advantages Of Hiring Salespeople Important Tips to Increase your Sales with Affiliate Product Platforms 5 Ways to Promote Growing Sales