Minggu, 11 Mei 2008

Simple Technical Stocks Trading Method - Stock Trading Robot

by John Lam

Many people want to earn money from stock market, which they think is simple and easy. Stock market investors should first learn how to protect their capital rather than concentrating on making some quick money. Only 10% of the stock market traders are able to make money, 90% of the traders are in loss. Trading with the medium term target is one of the good and safe methods to make money from stock market. It involves less risk as the stocks will be purchased by paying full amount.

Technically, it is possible to earn 20% within 10 - 15 trading days using momentum theory. Momentum theory can be applied to Stocks or Commodities. Momentum is simple rate of change- the speed at which a stock ascends or declines. It is calculated by taking the difference between prices separated by a fixed interval of time. For example today's 5-day momentum value would be yesterday's price recorded 5 days ago; yesterdays would be yesterday's price minus that of 5 days before yesterday and so on.

Expressed mathematically..

M= Today's Price- 5 days ago price

One basic way to use a momentum indicator is to buy when it becomes positive and sell when it turns negative. Logically, you are buying when the market is picking up momentum and selling when that momentum is lost. The problem is that, by definition, your entering the market after it has made its turn. But even it you miss the beginning of the move, you should catch most of it, if indeed the market is turning. Later, this should also allow you to exit the market with a profit before prices actually start moving against you in earnest.


Price Rise:

1. When the momentum indicator is above zero and moving up, upward momentum is increasing.

2. When the momentum indicator is above zero and moving down, upward momentum is decreasing.

Price Declining:

3. When the momentum indicator is below zero and moving down, downward momentum is increasing.

4. When the momentum indicator is below zero and moving up, downward momentum is decreasing.

Points to remember before starting Stock Trading using momentum theory

Movement of particular stock depends on various factors like good or bad news about that stock and economy of the country.

Its better to analyze the individual stock and the Index. If both are moving in same direction than trade in that particular stock.

This is one of the methods to technically predict the stock price movement. There are so many other methods like Moving Average, Gap Theory, etc. Combining the results of all these theories gives correct price prediction of a stock.

Now a day with the help of computer software, it is very easy and accurate to find the stocks which will double with-in few days.

Check this Trading software that can be very useful to find stocks which will double within few trading days.

Free Classifeds

About the Author

John Lam is in Stock Srading Business for more than 10 years.

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