That is right! What goes up must come down! The market/stock does not move up on a straight line. It will consist of rallies and price retracement along the course of their journey. What an investor/trader does during each of these rallies and price retracement matters a lot to their portfolio.
- Do you know what is the overall Big Picture Trend of your stock? An Uptrend Stock will consist of rallies and price retracement which will normally create higher highs and higher lows in the near future. During each price retracement is where it present a great buying opportunity to the investor/trader. A Downtrend Stock will consist of rallies and price retracement as well but usually at every price retracement it will lead to lower lows and lower highs in the near future. This is only suitable for short term play. So which scenario do you prefer?
- Have you been so concern on what causes the price of the stocks and the market to go down that you are digging for news and articles everywhere? Need not to simply because when a price is being overbought, its a norm for the price to go for a price retracement. When a price is being oversold, its a norm for the price to go for a price rally. Bad news tend to pop out right in front of your eyes when the market/stock is already being oversold. Good news tend to pop out right in front of your eyes when the market/stock is already being overbought. If you can decode this psychological game then you will do well.
- As volatility is something everybody need to adapt, what matters the most till the end is the performance of our stocks. Hence spend more time on understand your portfolio of stocks performance rather than what is happening around the world.
Stocks that present buying opportunity after their price retracement
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(10 years position trader, Founder of trendfollowingmalaysia.com)