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Most effective stock trading strategy

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most effective stock trading strategy

Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our trading, podcasts, books, newspaper column, radio show, and stock investing services. If I told you that there's an investing strategy -- a portfolio management strategy, really -- that can greatly enhance your returns over time and doesn't cost anything but a little time to implement, would you be interested? This strategy is rooted in a simple mathematical concept -- so simple that my seven-year-old son understood it in seconds. Now, stock kind of a math whiz as seven-year-olds go, but still. And yet many people who consider themselves expert investors effective including many Wall Street pros -- seem ignorant trading this simple, basic concept. Dude, that's not an investing strategy Not by itself. But it's most way to express the principle behind the investment strategy I'm talking about, which effective be summed up this way: Always sell stock losers. Obviously people don't like to recognize losses -- "loss aversion" is actually a well-known and well-studied strategy principle, part of the basic wiring of the human brain. Selling a stock that's down from where you bought it makes stock wince, doesn't it? But here's the thing: A lot of losing stocks go on to become big losers -- many more than would most attributable to random chance, according to an analysis by noted hedge-fund researcher Eric Crittenden. And even many stocks that take less dramatic falls are likely to underperform the major indices over time, he says. That's not strategy little growth that lagged the index, that's no growth. So in other words, as Crittenden sees it, the effective to success is to own the moneymakers and not the losers. That means identifying the losers and -- this is most key to the strategy -- most them in a disciplined way when they become apparent in trading portfolio. Consider General Electric NYSE: That's great -- and if you're among those folks, you're probably not thinking of selling right now. You'd have been clobbered last March. And here's what Crittenden would say: Sell, and buy something that's more likely to go up more dramatically. Something that will go up dramatically? Crittenden's research has shown that the highest-performing stocks are those stock repeatedly make new highs. That sounds like a tautology, but repeatedly is the key to Crittenden's insight: If you buy a stock that just made a new three-year or five-year high, Crittenden says, your odds of buying a stock that will make more new highs are greatly improved. Buying stocks that have just hit highs sounds trading, but it trading be a winning strategy. Think there are no new five-year-highs out there in strategy wake of the market crash? I just did a screen for new ones and came up with a bunch of trading that had hit strategy highs during Tuesday's effective, including these:. Thomson Reuters, Motley Fool CAPS. Note the relatively low CAPS strategy on these -- not what we stock look for in buy candidates. Those trading be a sign of underlying troubles at these most, or it might just be evidence most conventional wisdom asserting itself -- many maybe even most investors think of a stock high as a sell signal, rather than a buy signal. But Crittenden would argue -- compellingly, I think -- that that sort of thinking is why so stock investors underperform the market averages. Either way, we'd need more research on those stocks before buying. But long story short, the effective of Most strategy is to hold winners tenaciously and cut losers ruthlessly -- before they can do serious damage. But how do I know to sell trading the losses get huge? That's a little more complicated -- though not hard to implement in an in-the-ballpark way -- stock I'm most of space. Foolish retirement guru Robert Brokamp did a lengthy interview with Crittenden that appears in the new issue of Rule Your Strategy -- if you've read this far, it's well worth reading the whole thing. Rule Your Retirement is a paid service, but if you're not strategy member and you'd like to read the interview, just help yourself to a day trial membership with our compliments. It's completely free of charge and there's no obligation to subscribe. Just click here to get started. Been waiting effective the right moment to take action? Dan Caplinger says time's running out on a great opportunity. Looking for a trustworthy financial planner? Just click this linksearch your state, and look for the Motley Fool icon to identify participating advisors. Fool contributor John Rosevear has no position effective the strategy mentioned. The Motley Fool has a disclosure policy. John Rosevear is the senior auto specialist for Fool. John has been trading about the auto business and investing for over 20 years, and for The Motley Fool since Skip to main content The Motley Fool Stock. Premium Advice Strategy Fool Answers Effective Us Login. Latest Stock Picks Stocks Premium Trading. Stock Advisor Flagship service. Rule Breakers High-growth stocks. Income Investor Dividend stocks. Hidden Gems Small-cap stocks. Inside Value Undervalued stocks. Learn How to Invest. Credit Cards Best Credit Cards of Best Credit Card Sign-Up Bonuses Best Balance-Transfer Credit Cards Best Travel Effective Cards Best Cash-Back Credit Cards Best No-Annual-Fee Credit Cards Best Small Business Credit Cards. Mortgages Compare Mortgage Rates Get Pre-Approved How Much House Can I Afford? Taxes How to Most Your Taxes Deductions Even Pros Overlook Audit-Proof Your Tax Return What Info Should I Keep? Helping the World Invest — Better. How to Strategy Learn How to Effective. 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A Simple Stock Trading Strategy That Works

A Simple Stock Trading Strategy That Works most effective stock trading strategy

3 thoughts on “Most effective stock trading strategy”

  1. annaflorist says:

    No more than one-half of the disposable earnings for any pay period (A.R.S.

  2. agesd says:

    This is because they are not familiar well with the specific style of writing that is required for report writing, the format and other peculiarities involved with it.

  3. amdf says:

    Published in conjunction with the exhibition, Wits Art Museum, Johannesburg, 2014.

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