Everybody’s got a system, a hot tip, or an advanced way to select their winning stocks. They use dice, bones, game boards, dart boards, maybe even pick the stock like the pick the ponies, just based on the name. But you can’t buy systems (actually you can, and they’re pretty expensive) you should buy stock.
We’ve give you some simple tips on how to pick the stocks that are going to make your portfolio pump profits like a Saudi oil machine pumps crude. Stick to the basics, buy companies you know and trust. We’ve always selected stocks in the $15 and under range for the most part because they have huge upside and potential. Buy what you buy. Look in your cabinets and choose the companies where you spend your money.
Some of the best advice you will ever get is to ignore the market. You see, successful traders know that you have to have more winners than losers, and that you are going to pick some losers. The market reacts out of panic, like a frightened horse bolting the gate. This reaction can come based on news, on missing a goal, on a hint. There are even some cases where traders at larger companies will hold back shares, or slowly buy them up over a period of time and flood the market to depress prices or manipulate the market based on scarcity.
So what can you do as a simple day trader?
How can you fight the big boys? Don’t. Ignore them. Ignore what they do (unless you can recognize what they are planning to do and position yourself for it.) You need to learn how to do your own research, and educate yourself with the language used, and the methods used to make money in the stock market.
Small stocks for example are a great way to bring your portfolio back to profit if you are a long term vision kind of trader. Small stocks are favored by the global economy so as the economy recovers, they have more potential for upside growth. The companies don’t carry much debt, so balance sheets look good, and historically, small stocks recover faster after a recession and pay almost ten percent more than large caps.
Now how can you take advantage of this as a day trading superstar?
You’re going to pick five companies that you like, who people will use as the economy turns around. What services will small business owners need to help their companies recover? Printing, marketing, manufacturing, etc. Select the companies that provide those services and do your research. Then, each day of the week make your plays. Set your insurance to take advantage of upswings and protection from downturns. Play the news.
Conservative stock experts want you to be satisfied with a 15%-29% annual return. What you want is a 1% growth per trading day, and to find a few homeruns that return 100-500% over time. They are out there. Had you invested in telecoms after the giant earthquake in China just one year ago, your stock would have grown by over 500% in one year. Which return do you want 20% or 200%?
Are earthquakes going to stop? Or do you think they may happen again? The giant earthquake may have had an impact on the economy of China. It certainly slowed down (the economy) but rebuilding in the region and preparing for the next earthquake present some incredible growth opportunity. Are you positioned to capitalize on the next natural disaster?
Florida and California are in economic funks right now. Real estate is overbuilt and home values are plummeting. Economies based on real estate construction, sales and ancillary services are suffering. What Florida needs is a good hurricane. A category 5 that blows through like Andrew and eliminates broad swaths of homes and businesses. If that happens, short insurance stocks the day the hurricane hits. Then invest in home builders to ride out the boom that follows. For the past five years, no large hurricanes have landed on the Florida coast. Sure, Ike hit Houston, but the only result there was some flooding and a mini-baby boom nine months later. You shouldn’t hope for a natural disaster. But they are going to happen, and when they do, no matter where they are in the world, you can turn a profit by investing in the companies who are there to help after the storm has cleared away.
