In the last year, many investors have lost faith in the financial markets and their financial advisors after huge losses in their accounts. However, experienced investors are preparing to buy the big winners in the next bull market.
How can you identify these potential big winners? Well, the first good sign is a stock that has actually been rising while the market has been heading lower. The list of these stocks is actually pretty small. You can find a list of stocks making new 52 week highs or with high Relative Strength ratings in Investors Business Daily or in the Wall Street Journal. Personally, I use the TC2000 software produced by Worden Brothers.
Once you have found a list of stocks that have been outperforming the stock market, it is time do dig a little deeper. One strategy for finding great new investments is the CANSLIM method discussed by William O'Neil in his book "How to Make Money in Stocks.". This book is an excellent read and a great source for learning how to invest and trade individual stocks. However, it is not a mechanical method for trading and requires some knowledge about a company's business, management and products.
I prefer a method more similar to that discussed in Nicholas Darvas' classic book, "How I Made $2 Million In The Stock Market." This methodology identifies the stocks that have been rising the fastest on good volume, and then, using his Box method, determines a point of entry. Exiting the trade is a little more subjective as far as the initial stop loss is concerned, and using the pyramiding boxes as trailing stops can leave a lot of money on the table when the stock's trend is over.
However, there are many different styles of investing and trading, and one would do well to conduct significant research into the Darvas method and the CANSLIM method. I also recommend the work of Gary Smith, author of "How I Trade For A Living" and "Live The Dream By Profitably Daytrading Stock Index Futures."
Now is the time to start looking hard at the stock market for the next group of big winners. They may not appear for a few months, but the easiest and fastest money made in the stock market is in the first couple years of a bull market. Furthermore, even if the next big rally turns out to just be an intermediate term rally within the context of a larger bear market, there will be a few stocks worthy of trading to catch that ride up.
Do your homework, and your portfolio will benefit handsomely in the years to come!
Copyright (c) 2008 Scott Cole
How can you identify these potential big winners? Well, the first good sign is a stock that has actually been rising while the market has been heading lower. The list of these stocks is actually pretty small. You can find a list of stocks making new 52 week highs or with high Relative Strength ratings in Investors Business Daily or in the Wall Street Journal. Personally, I use the TC2000 software produced by Worden Brothers.
Once you have found a list of stocks that have been outperforming the stock market, it is time do dig a little deeper. One strategy for finding great new investments is the CANSLIM method discussed by William O'Neil in his book "How to Make Money in Stocks.". This book is an excellent read and a great source for learning how to invest and trade individual stocks. However, it is not a mechanical method for trading and requires some knowledge about a company's business, management and products.
I prefer a method more similar to that discussed in Nicholas Darvas' classic book, "How I Made $2 Million In The Stock Market." This methodology identifies the stocks that have been rising the fastest on good volume, and then, using his Box method, determines a point of entry. Exiting the trade is a little more subjective as far as the initial stop loss is concerned, and using the pyramiding boxes as trailing stops can leave a lot of money on the table when the stock's trend is over.
However, there are many different styles of investing and trading, and one would do well to conduct significant research into the Darvas method and the CANSLIM method. I also recommend the work of Gary Smith, author of "How I Trade For A Living" and "Live The Dream By Profitably Daytrading Stock Index Futures."
Now is the time to start looking hard at the stock market for the next group of big winners. They may not appear for a few months, but the easiest and fastest money made in the stock market is in the first couple years of a bull market. Furthermore, even if the next big rally turns out to just be an intermediate term rally within the context of a larger bear market, there will be a few stocks worthy of trading to catch that ride up.
Do your homework, and your portfolio will benefit handsomely in the years to come!
Copyright (c) 2008 Scott Cole
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