Sunday, January 31, 2010

My general investing/ trading tips

Here are some of my general tips:

1. Don't chase a stock simply for the sake of chasing it, unless there are supporting technical indicators( eg. breakout in price and volume)

2. Look to volume as a supporting indicator. Increasing volume confirms the trend. Decreasing volume on increasing price shows that the trend is suspect.

3. Go for value. (to be determined by FA) "Price is what you pay, value is what you get."- Warren Buffet

4. Try to see the bigger picture- the long term view over the next 6-12 months. Don't be overly focused on the short-term.

5. Employ good TA( technical analysis), FA, money management, risk management and emotional control (taken from createwealth8888)

6. Look at investor sentiment as a contrarian indicator. Quite reliable at predicting market tops/bottoms. In Mar 2010 the % of bulls was only 2%, whereby the market soon bottomed.

7. The stock market is a leading indicator, forward-looking by 6 to 9 months. The market usually bottoms out or peaks before the economy. So buying stocks when the news is all good may not be a very good idea.

8. Always do your own research and analysis before making decisions on whether to buy or sell. Don't always take analyst's recommendations for what they are. People might have their own motives or intentions for their stock calls.

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