You must come equipped to the Street or you will bet buried: It is that simple. If you buy stocks on line and do so with out a strategy you will more than likely lose your money fast. With the strategies I mention below you should be able to confidently buy stock on line and receive great returns on your investment. The following strategies have been used to buy stocks on line and have been very profitable. Here we go:
Buy or sell a stock after 10:00am
If you buy a stock that is making its high or short a stock that is making its low at 10:00 you will more than likely become a successful trader over the long run. Some say 10:00 and others claim 10:30 is the time at which the market settles down from the covering of short positions, euphoria and other emotionalism. I personally have seen the 10:00 time period, especially as it relates to commodity driven stocks, give the clearest indication. If you want to play it safe, at the risk of losing substantial gains, go with the 10:30 time period. This strategy is a day trade but can be extended to several days with the proper stops in place. As always, I recommend you paper trade before you buy stock on line. This will help you to build confidence before you buy stocks on line.
Playing the news
One of the mistakes that many newbies fall into is to buy into a breaking news story they hear about on CNBC. They get caught up in the hype like so many others. The problem with this approach and the reason why it so often backfires is because CNBC was not the first to know about this. The large institutions have already played into it or the news was already priced into it. There is an old saying on the street, "Buy the rumor and sell the news." The approach to take with playing the "hot stories" is to take into account the golden rule, "if the stock is supposed to go higher and it doesn't then it is going lower. If the stock is supposed to go lower on the news but doesn't then it is going higher." As you watch this happen and get more comfortable you will find many opportunities for short term gain. This may be one of the most compelling reasons for watching "The Faber Report" on CNBC. Practice, practice, practice. Remember to paper trade before you buy stocks on line.