Wednesday, April 09, 2008

Do you look for stock trends?

Have you ever got cold? I'm sure you would have got one. Did you ever notice how it all started? It would've started with a sore throat. The next day you would've sneezed a few times. The third day, you would've got some running nose. If it is a severe cold, you may also get some coughs. If it is a very very severe cold, some may also get a little fever. You would know at least 3 or 4 days in advance, that you are going to get cold. That is called TREND.

Have you ever noticed trends when buying or selling stocks? As a novice investor, most of my early investment decisions in the stocks weren't based on trends. I never computed moving averages. I never plotted a trend line to predict the stock's directions. When a popular stock goes down by 5% or so, I buy it. The next day, the stock would go down by another 5%. The following day, it would go down by another 5%. I've literally seen my capital getting eroded. A trend line or moving averages would help you to understand the stock's direction. Thereby, you can make wise investments. There are several tools available in the market to plot trend lines. You can even use your Microsoft Excel spreadsheet to compute moving averages and trends.

Always, look for trends. Understand, the reason behind the trend and make investment decisions accordingly !

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