It's a no brainer that there is money to be made investing in stocks. But then it is just as likely you can lose money. The key is to pick stocks that will perform as you want. There are three terms that you may not have heard of and why they are important to you.
DEAD CAT BOUNCE: This is the temporary recovery of a stock price during a general downward trend. Often it is caused by rumor or market talk ups. People believe the stock has reached its lowest price and begin buying. The dead cat bounce effect means the price will drop again and they are likely to lose money.
What does it mean for me for stock trading? Because no one can predict when a decline will reverse don't rush in. But it may provide you a window to make trading gains while the stock is in this pattern.
A BELLWETHER STOCK: This is a predictive stock, one that usually indicates where the market is going to head.
What does this mean for me? These types of stocks may not be attractive purchases in their own right; there may be little chance of growth realization. But they are stocks to watch when predicting where the market will go next. The biggest investors in these stocks tend to be the big institutional investors.
THE JANUARY EFFECT: It has been recognized that at the beginning of a new calendar year prices tend to increase across the month of January. There can be many reasons for this but often the big two are taxes and investor psychology.
Why is this important? It has been shown in investigations that the January effect is real. However in recent years it has become more difficult to take advantage of. So it may be useful to watch for, but it is unlikely to be a reliable way to make money. - 23309
DEAD CAT BOUNCE: This is the temporary recovery of a stock price during a general downward trend. Often it is caused by rumor or market talk ups. People believe the stock has reached its lowest price and begin buying. The dead cat bounce effect means the price will drop again and they are likely to lose money.
What does it mean for me for stock trading? Because no one can predict when a decline will reverse don't rush in. But it may provide you a window to make trading gains while the stock is in this pattern.
A BELLWETHER STOCK: This is a predictive stock, one that usually indicates where the market is going to head.
What does this mean for me? These types of stocks may not be attractive purchases in their own right; there may be little chance of growth realization. But they are stocks to watch when predicting where the market will go next. The biggest investors in these stocks tend to be the big institutional investors.
THE JANUARY EFFECT: It has been recognized that at the beginning of a new calendar year prices tend to increase across the month of January. There can be many reasons for this but often the big two are taxes and investor psychology.
Why is this important? It has been shown in investigations that the January effect is real. However in recent years it has become more difficult to take advantage of. So it may be useful to watch for, but it is unlikely to be a reliable way to make money. - 23309
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