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Buy Stocks

There are so many methods available to investors who are looking to buy stocks that it can be overwhelming. Some investors are looking to practice long term investing in which they wish to own interest in a company over time. Their goal is to see their investment grow in value over time so that they make a profit when it is time to cash in. Investors who purchase stocks over the long term practice fundamental analysis which looks at a company’s intrinsic value. There are also stock traders who practice short term stock trading when purchasing stocks. These stock traders typically rely on technical analysis when purchasing stocks which looks only at the price movements of stocks and not a stocks intrinsic value. There are of course those investors who practice both long and short term investing as well. They combine methods in order to make a profit.

Whether you decide to buy stocks in the short term or long term you are still required to do your research. Fundamental analysis of stocks requires that the investor study each company of interest, their financials through quarterly earnings reports, and pretty much every other facet of the company. Technical analysts, on the other hand, must research different stock trading methods, such as Japanese Candlesticks, technical indicators such as the moving average, and more. Technical analysis tools are more complicated and take time to learn, but there are many successful traders out there who make a great living. Additionally, most successful traders combine technical analysis tools instead of relying on just one. Day trading and swing trading are both styles of trading requiring the use of technical analysis tools. 

Regardless of the type of investing you practice, you will need to go through a brokerage firm. If you are investing long-term you may opt to go with a real live full-service broker who can offer you investment ideas to assist you in your investment decisions. Many short-term traders have an online discount broker that they utilize. This stock broker does not provide any investment ideas, however you can simply and quickly buy stocks as needed. If you are new to trading you may not want to use a discount broker but instead use a full-service broker until you are totally comfortable with what you are doing.

Additionally, once you have an understanding of investing in stock, and you have trading plan in place that works, you can begin to research other methods of investing. Perhaps you want to look into mutual funds, bonds, or foreign stocks. There are so many investment options at your disposal. Make sure that you do your research and find investment options that work for you. 

Market Direction:  Do the market indexes need to be showing a trend to make good profits? Definitely not! Although the markets sold off heavily in 2008, it was a very profitable year. Participating in the short funds produced good profits. Participating in the oversold bounces produced huge profits. Most investors depend upon a rising market to make money. When utilizing candlestick signals, a rising market is not a necessity. As witness over the past six weeks, neither the Dow nor the NASDAQ has shown any convincing trend. Both indexes have shown a somewhat slow uptrending channel but nothing of any great magnitude. Most money managers are still waiting to see whether this market has bottomed or not.


Taking advantage of the information revealed with candlestick analysis has made this sideways trading mode extremely profitable. The markets may not be going up with any enthusiasm, but they are not showing any bearish elements either. This makes for a logical trading program when using candlestick analysis. There is not any great wisdom revealed when stating that even in a sideways moving market, there will be some sectors going up and some sectors going down. This allows for the candlestick investor to use the benefits built into candlestick signals. The sectors that are showing the most bullish signals can be easily identified. During the past few weeks, it has been observed that our recommendations have leaned toward the shipping stocks and the mining stocks. Also, some of the energy stocks have been recommended.


Today's afternoon comments for the members addressed an observation that a few of the members have recently made. They have commented on the inordinate number of stock positions that they are now participating in that have shown excessive gains. The implication was that there was some good stockpicking going on. The credit does not lie with making stock picks, the credit lies with analyzing which chart patterns have the highest probability of producing strong returns. In market conditions as these, the signals reveal where the money is flowing to. This does not require any stockpicking skills. But common sense interpretations of each signal allows for investors to evaluate price moves with a high degree of accuracy. This is created by the reoccurring mental thought processes found in normal market conditions.

The shipping stocks have produced 50% gains over the past few weeks. Mining stocks have produced 25% to 45% gains over the past few weeks. Participating in these gains was not derived from any mental assessment of which stocks or sectors might perform well. Participating in these gains was the result of identifying a strong candlestick signals and patterns.

Another major aspect for successful investing is not only understanding what your trading platform is telling you to do but also having the right mental frame of mind to apply that information correctly. Learning how to analyze where the big price moves may be occurring is just one element of successful investing. How to control your emotions and maintain a rational trading perspective is also an essential aspect for making profits. The next few months the  Candlestick Forum will be providing material and training addressing most investors weak spots, their  emotions. This is a topic that very few investment trainings address. Logical question should be, "If specific trading methods are successful, why can't I get them to work for me?" The thought processes get completely thrown out of skew when it comes to investing. Candlestick analysis has basic elements that can offset the flaws of emotional investing. Next week, a major e-book will be available addressing some of the common fupaws most investors make over and over. Look for our special offering.


Good investing,

The Candlestick Forum Team

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