There are two major styles to evaluate stocks: fundamental and technical analysis (TA).
The debate of TA and fundamental could be endless. I believe TA is good for short term and fundamental is good from longer term (> 3 months) - from one who makes good return for using fundamental.
When the insiders see some new products or unexpected earnings, they buy and tell their families to buy. The TAers notice the rise in stock price and buy. The last one to buy may end up losing money as the insiders would unload when the stock price is over-valued.
Try the following to see whether fundamental is better and share your conclusion.
1. Include all stocks that are below the 200 day ma - opposite to what a TAer would do.
2. The expected P/Es have to be lower than 15.
3. Exclude financial like banks and insurance, miners and bio drugs.
4. Buy these stocks less than 5% market prices - TAers give us the benefit.
Check the result in 6 months and 12 months.
A 200 ma is one every one uses even most fundamentalists know how to use it if they want. It is a good indicator for general market but not the best one for individual stock. There are many sophisticated tech. indicators.
The best ones in TA and the best ones in fundamental always make money in either market. However, fundamental is easier to master and many have make money than TA.
----
Fundamental can be divided into the following.
Value. I use it most. Esp. good for early recovery.
Dividend growth.
Momentum. Best in Up of the market cycle. Be careful of market crashes.
Day trade. In a nutshell on my definition of day trading, you want to get into the wagon when pension, mutual fund managers are buying and sell them at the end of the day. You can identify them from the increases of volumes. It is part of momentum.
Most likely you will make a lot of small profits every day. Watch out for losing a big one that could wipe out all the previous profits and sometimes even more. I enjoy the daily result esp. the good ones.
I just started day trading and so far so good. I do not use any charts.
-------
(c) TonyP4 2012. Written in 12/02/11. Last updated in 12/02/11.
Disclaimer:
Do not gamble your money you cannot afford to lose. Past performance is a guideline and does not guarantee future performance.
All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.
Subscribe to:
Post Comments (Atom)
After making some small changes in day trading, I lost it all in one day.
ReplyDeleteI stop it for a while and resume it when market is on the upside.
The big loss is due to a rosy start in the beginning and lost steam afterwards. Usually I buy at 10 am and sell them all at 3 pm. One day SPY lost 1% but the above time range lost 1.5%.