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Stock Trading Tips
and Secrets
by Kurtis Hemmerling,
eHow Contributing Writer |
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Which stock market tip or secret will help you to be the last investor
standing?
Trading stocks is not too difficult. Web-based brokerages make it easy
to buy and sell shares. Yet developing the ability to profit from the
stock market is much more difficult. Why not pick the brains of
investing titans? Their tips and secrets provide insight into some of
the most well-known investors in history ... for your profit.
Warren Buffett's
Proverb
"If a business does well, the stock eventually follows,"
says the Oracle of Omaha, Warren Buffett. Short-term prices may
fluctuate, but an efficient running business should eventually
experience share price appreciation, according to Buffett, chairman
and chief executive officer of Berkshire Hathaway. Value investing
dictates that stocks should be purchased primarily on fundamental
strength.
Benjamin Graham's Tip
"Operations for profit should be based not on optimism but on
arithmetic," Benjamin Graham said in his book "The Intelligent
Investor." A large portion of the daily share turnover is based on the
emotions greed and fear. Graham, who died in 1976, sought to keep
trading grounded in mathematics by using formulas such as price to
earnings divided by growth, or return on shareholder equity among
other ratios. He was convinced that financial formulas would help
investors improve profitability by comparing intrinsic value to the
current trading price.
Peter Lynch's Secret
"Go for a business that any idiot can run--because sooner or later,
any idiot probably is going to run it," says Peter Lynch, the former
Magellan Fund manager who was able to turn $18 million of assets into
$14 billion in just 13 years. People investing in precarious
businesses or companies that have complex operational models could
experience problems because of the vast number of complicated
processes. Simple and straightforward businesses may be able to
tolerate a wider variety of management styles and still be profitable.
This follows the KISS principle: Keep It Simple, Stupid.
John Murphy's Law
John Murphy, author of the book "Technical Analysis of the
Financial Markets," advises to trade with the price trend. Although
stock prices may appear to move randomly to the untrained eye, Murphy
teaches how to spot and predict large price movements and recurring
cycles. Technical analysis tools that are useful in determining and
trading trends are average directional index (ADX), trend lines and
moving averages, along with support and resistance levels.
William J. O'Neil's Advice
"What seems too high and risky to the majority generally goes
higher, and what seems low and cheap generally goes lower," writes
William J. O'Neil, author of the book "How to Make Money in Stocks."
O'Neil, creator of a popular growth stock strategy, encourages buying
quality stocks as they rise from consolidation patterns. He advises
against buying bargain stock that is trading at all-time lows. He
further says that although high growth stocks may be suitable in bull
markets, they are often the quickest to drop in bear markets. He
asserts that investors need to understand how to determine confirmed
bear and bull markets before buying and selling stocks |
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Active Model
Portfolios
& Trading Logs
4-Week Price
Performance
Year-to-DateTrend
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