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Making Money with Stocks

There are a number of ways of making money with stocks. This requires the ability to anticipate whether a stock price will rise or fall. Making money with stocks is possible over spans of many years with long term investing. Making money with stocks over the short term is the business of stock traders. Both long and short term investing as well as trading rely on fundamental analysis of stocks and technical analysis of stock price movement. Candlestick analysis with its clear and easy to read signals allows traders and investors to anticipate changes in stock prices and profit thereby.

The mantra of buy and hold investing is that if one picks the right stock it will appreciate, pay dividends and make the investor rich. The fact is that even excellent growth stocks can turn into conservative dividend stocks with little growth. Microsoft is a good example of this. Excellent stocks with continual growth and excellent dividends can also fizzle. IBM in the early 80fs is a good example of this. Stocks may become so dominant in their market sectors that they become targets of antitrust action, such as happened long ago to Standard Oil and in the 80fs with AT&T. The point is that there is no guarantee to making money with stocks over the long term with buy and hold investing. Investors as well as day traders need to routinely follow their stocks with fundamental and technical analysis. By following market sentiment with Candlestick charts an investor can anticipate market reversal or continued market trends. He can profit from buying at the bottom of a price curve or know when to bail out of a growth stock that starts to cool off.

Traders know that the fundamentals of stocks are quickly discounted by the stock market. Thus traders follow stock price patterns. When a stock has been climbing there often comes a moment of indecision. Will the stock continue to climb or will there be a market correction? Making money with stocks in this case requires that the trader have a clear sense of if the price trend will continue or reverse. Candlestick chart formations such as the Doji Candlestick help the trader in this sort of situation.

The Doji Candlestick is a time honored means of identifying market indecision. This Candlestick is very short with shadows of varying lengths. The shortness of the candle tells us that opening and closing prices of the stock are almost the same for a trading day. The shadows projecting up and down from the body of the candle tell us that price speculation throughout the day has driven stock price higher and lower. Traders are testing upper and lower price limits but fundamentals bring the price back to the middle at the end of the day. This is a moment of indecision. The Doji tells us that the market is uncertain and, typically, tells us that a market rally will reverse or that a falling market will recover. It does not tell us what a flat market will do, only that the market is indecisive. Making money with stocks requires that the long term investor or day trader follow stock prices and fundamentals of the stocks which he trades. By using Candlestick pattern formations he can commonly predict the rise or fall of stock prices and take home profits.


Market Direction: Candlestick signals are extremely powerful in preparing an investor for what to do next. Although Friday's trading showed strength going into the close, the end result was the formation of a hanging man/Harami signal in the Dow. This provided an easy analytical format for seeing what to do next. The signals are extremely high probability roadmaps for the next price move as well as price patterns showing what the next probable move will be.

Candlestick signals work as effectively on market indexes as they do individual stock prices. This coming Thursday, July 14 we will have guest speaker Brad Powell for Thursday night stock chat demonstrating a very effective software for trading the ETF's. Mark your calendars, Learning how to utilize effective software programming and adding candlestick confirmation to your trading platform produces extremely high probability results.

Chat session tonight at 8 PM ET for Candlestick Forum Members.

Good Investing,

 

The Candlestick Forum Team


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