I've read a lot of books on stocks. They are divided into two different camps: fundamental and technical indicators. The first thing is to know the difference. Fundamental indicators depend on reviewing the company's fundamentals, such as p/e ratios, growth, balance sheets, dividends, etc., etc. This is what Warren Buffett uses to buy companies or stocks. There are many books on this subject that will help you, but I haven't found these books to be helpful in buying and selling stocks at all.
There, I've said it. The truth is out.
If you are Warren Buffett, you can afford to wait two or five or ten years for your stocks to increase in value. I can't wait that long. I need volatility in trading. I need stocks that will change from $50 to $55 to $48 in a day. That's where technical trading comes in.
So, your first lesson, if you choose to begin, is to go to bigcharts.com or stockcharts.com, and fool around with their charts. Try different technical indicators such as stochastics, rsi, dmi, moving averages, etc. See how they affect the stock chart. It doesn't matter what time period you choose, you will see they all are basically the same. They show you what is happening within that time period.
Even if you decide you're not a day trader type, this will still help you understand the market and where it stands at this moment and in the past. In my opinion, understanding the market is perhaps one of the most important life skills you should know.
As we go forward, we will discuss the types of technicals I have found to be helpful and how to read them.
Sue
No comments:
Post a Comment