Being rich is what many people loan for. There are a few ways for you to enjoy total richness and wealth like starting a business, get a high paying job or by investing. Well stock market is probably the nearest thing you can get besides printing money. Well , that when you are in a bull or a especially hyped up market.
Currently, what we experiencing is a highly volatile market that is affected by sub-prime woes. But there are many things that an average investor can leverage on to make cold hard cash in stock markets. Many average or casual investors look out for news to invest. Well fundamental do take certain weight in counter performances, but by the time you start to buy, you may caught in a ‘off side trap’ position as good news had already been factored into the current price.
Then what should a investor do. Well, a few easy and simple guide for casual investors should put you comfortably in investing in stock market.
1. Learn about technical analysis. There are just too many indicators for you to look out for, that is why individuals should look out for the important ones like MA, MACD and RSI. Candle sticks chart is the most straight forward and easy to read. All you need to know or discern is market strength and direction. An inverted hammer at the top means its going down. Simple understanding of gaping, may get you into a up trend counter rather then following blindly on news.
2. Forget news. Read company prospectus or annual reports as most of the information that may not be on the news can be found. Things to look out for are rights issuance and joint venture proposals. These are the things that news are unable to cover timely. Also take fundamentals of that company into consideration as it must be at a relatively considerably reasonable earning per share (EPS) or P/E ratio.
3. Understanding the strength of the market. If you have some basic knowledge of technical analysis, you should be able to understand market sentiment. Short during bear market and long during bull market. Short is the most dangerous position to take because you are usually expected to cover on the same day unless you are using a margin account. Out of 10 investors, maybe only 6 know the true meaning and the mechanics of shorting.
4. Patience. You need to be calm as to prevent impulse selling or buying by yourself. Look from a technical perspective do not always rely on your gut feeling which is usually 99% wrong.
5. Read more on investing. Investing house or institutions like mutual funds manager are the buyer you should look out for. If there is a increasing signs of new funds of a particular sector or region coming up, you should not be too far wrong extending your position in it. A good example was Asia which has been seeing new heights since late 2006.