Stock Market
Analysis, The Secret of Successful Trading !
Focus on
the big picture;
Trade with the big picture in mind by
take a step back from the market !
The
secret of successful trading is don't
follow the market closely by take a step back, trade
with the big picture in mind. Look at the whole forest
from bird eye view instead of focus on the
individual tree.
Start
with analyze Business Cycle and Asset Allocation; Stay
on the alert for events which could have a significant
effect on the global (or US) economy
only. The usual suspects are:
wars, Interest rates, oil prices, and currency
collapses. Develop a macroeconomic view of the world
using Kondratieff Cycle, Business Cycle, Federal Reserve
interest rate policy, world economic trends and currency
movement. If the fundamentals are bullish then go long
with the technical analysis.
Market
Cycle; The overall market has more influence
to stock prices
than other, follow the bull market,
when coming to bear market, even the best stocks
also decline,
follow the market trend and not individual stock. The direction of the
overall market influences the behavior of individual
securities. Study the overall market first before
looking at any stocks in isolation. It is worth
repeating the axiom that it is better to buy a poor or
an unknown stock when the
timing is right than it is to buy a great stock when the
timing is wrong.
Why
Analyze Market
Cycle?
Market
cycle have the most influence on the stock prices
compare to market sector and individual stock !
The
market is the major influence on the performance of an individual
security.The impact of the market
compare to other factors are listed below: Market risk 66%
Sector risk 24%
Stock risk 10%
Actual
figures may vary substantially but the largest influence for most
stocks will be market risk.
So
what is the secret formula?
-
Start
with analyze
Business Cycle and Allocate
Assets
to
appropriate and profitable
investment vehicles such as stocks, bonds
or commodities.
-
Study
the overall market cycle and direction.
Trade
with Big Picture in mind
(Cycle,
Company outlook).
-
Select
leading stocks that are outperforming the
market.
What
to buy?
-
The
key is to buy when the market signals the start
of a bull trend.
When
to buy?
-
Sell
when the up trend has ended.
When
to sell?
-
Exceptions
to rule 5: Sell the stocks if
it move
against you.
Money
and Risk Management.
-
Repeat
step 1,
When
to reallocate capital?
