Buy Cheap StocksAs stocks have taken a beating of late it could be time to look for bargains and buy cheap stocks. When deciding to buy cheap stocks for long term investing the investor is looking for different characteristics than a day trader who might buy cheap stocks in expectation of a quick profit. In long term buy and hold investing one looks for stocks that are underpriced in relation to their eventual value. Such stocks will commonly have a low price to earnings ratio, a strong margin of safety, and forward looking intrinsic stock value. An ideal stock for a long term investor is often lying forgotten by the market. It is not especially volatile. On the other hand when traders decide to buy cheap stocks they are commonly looking for stock volatility. They may look for stocks that have had drastic changes in their fundamentals and are in a period of market inefficiency as market sentiment settles on a stock price. Using Candlestick stock charts traders can buy cheap stocks before they rebound or sell short before the market makes them cheap stocks.
Picking stocks in a down market is only part of how to make money if one chooses to buy cheap stocks. The other part is timing. Candlestick analysis provides traders with an objective means of stock market and individual stock analysis. Long ago traders recognized that market price patterns repeat themselves. Rice traders in ancient Japan developed an easy to read system of signals for trading rice. Today Japanese Candlesticks are used to trading commodities, stocks, options, futures, and foreign currencies. Candlestick patterns essentially predict the future by remembering the past. When a trader or investor wants to buy cheap stocks he does so in order to profit when the stock rises in price. Although the long term investor may have a longer time horizon in mind he, as well as the trader, wants to buy stocks at the lowest possible price. He does this with an eye on the fundamentals of the stock but with his full attention on technical analysis tools such as Candlestick stock charts where he expects to see clear signals telling him when to buy stock, sell stock, sell short, or stay out of the trade.
Traders, unlike long term investors, look to profit from both the ups and downs of the market. By following stocks with Candlestick charts traders seek to buy cheap stocks before they rise in price, sell expensive stocks before they fall in price, and repeat the process each time the market cycles through the same set of stock price patterns that it has followed for many years. By assessing the fundamentals of a stock and gauging market sentiment with Candlestick pattern formations traders are able to distinguish between cheap stocks that are likely to rise in price and cheap stocks that deserve to be cheap and may be on their way to bankruptcy or a buyout by a stronger competitor. The point, when using Japanese Candlesticks, is to profit from buying cheap stocks in either the long or short term.
Market Direction: There has been a constant debate between technical investors and fundamental investors as to which information is more important. Candlestick analysis can be simplified to a mere description that the Japanese Rice traders have professed for centuries. The market will tell you what the market is doing! This will not necessarily pacify a fundamental investor. Many money managers promote to their clientele that you buy good companies and hold them longtime frame and they will always perform. This scenario is true if you have any definite time frame to choose from for exiting trades. But reality has shown that somebody attempting to buy a long-term position in the third quarter of 2007 would have a completely different perspective by the first quarter of 2009. Most investors anticipate prices to move based upon the information Wall Street 'professionals' spew out year after year. Find good companies and hold them long-term. You cannot time the market.
Technical analysis is the assemblage of information that dispels the concept that the market cannot be kind. The most proven and analyzed technical method, candlestick analysis, is the result of hundreds of years of observations. The most compelling factor discovered in investment entity price movements is very simple, investor sentiment moves prices in reoccurring patterns. It has been observed throughout history, that investment robber barons made huge profits by manipulating stock prices. They knew what investor reactions would be based upon a strong selloff in price or a huge upward spike in price. These maneuvers profited those that knew what investor reaction would be. The candlestick investor can produce immense and consistent profits knowing how prices react. Candlestick signals are merely the graphic depiction of investor sentiment. Once you have learned how to interpret and recognize candlestick signals and patterns, you gain control of your own investment destiny.
The Candlestick Forum is the leading educational website for demonstrating how to utilize candlestick analysis successfully. There are no "secrets" that are being revealed for the first time to investors. The information built into each candlestick signal is the reoccurring thought process that has produced reversal signals for centuries. Learning how to invest/trade successfully requires time and effort to effectively utilize information revealed from the market. Utilizing candlestick analysis eliminates a major risk factor. Learning a trading method that is just now revealing new secrets on how to make profits out of the markets requires taking time and effort to learn that system as well as discovering whether that system actually works. Candlestick signals have been around for centuries because they do work.