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Hey everybody! Welcome to stockmarketforbeginnersschool.com where we help you unleash your trading genius.
My name is Thembi
and you've got to know by now what time it is. It's SMQ Wednesday!
In this lesson, I'm going to teach you how to hold
stocks longer for bigger profits.
Once you've bought a stock, how do you hold it so that you make BIG profits? So let's start!
Today's question is from Assof. The question is: What techniques are there for determining when to buy and sell stocks?
What techniques are there for determining when to buy and sell stocks?
Great question. The only reason you're there in the market is to, hopefully, buy low and sell high.
The only reason you're there in the market is to, hopefully, buy low and sell high.
You're in the market to make money.
I want to give me 2 buy and sell techniques
So that I can I answer your question adequately and give you some
compelling stock market and dynamic stock market content
We have technical analysis and fundamental analysis.
I love technical analysis
But I do use a little but of fundamental analysis.
I don't dig into the
financial statements. I don't care about the P/E ratio
because I'm more of a short-term trader.
I'm flat at the end of the day. I don't have any money in the market because
I'm a day trader.
If I say long-term investing, I don't mean that you buy a stock
hold it for 20 years, hope for the dividends and hope for the stock to
go up to a thousand. I don't know how well that technique
works anymore in the market because the markets are a little volatile.
We're in a global economy. So what happens in China affects the US market
It affects the Australian markets and the European markets.
It affects the Australian markets and the European markets.
I think it probably worked 50 years ago
but I'm not so sure how well the buy-and-hold-for-10-years works right now.
When I'm referring to long-term trading,
I mean you holding a stock possibly a year or less than a year
That's that's what I'm referring to. There is short-term trading which is like,
day trading, swing trading time frame, intermediate trading time frame
and long-term trading which is like 2-5 months.
Here are the 2 best techniques
that you can use determine how or
when to buy and sell your stocks.
First is technical analysis. I rely more on technical analysis
I rely more on technical analysis
I teach beginner traders how to understand technical analysis.
I add a little bit of fundamental analysis.
But only the important parts of fundamental analysis that make
your trades high probability trades.
Or you can let your broker trade your money. I know a lot of beginner traders who have
I know a lot of beginner traders who have
their brokers trade their money. Here's what I want to advise you.
When it comes to having a broker trade your money, you have to take
responsibility. I know we don't like to
take responsibilities. We want to give up our responsibility
give it to somebody else and when they lose our money, then we want to
burn them at the stake.
Broker are just human beings too.
They can make mistakes. What I advise you to do
is to learn technical analysis and understand fundamental analysis. Learn how to
to put them together so that you can have an intelligent conversation with
your broker.
You can ask your broker why you're trading a stock
Have your broker be accountable.
So when they lose your money, you don't find yourself blaming them in the end.
I specifically focus on technical analysis and fundamental analysis but
more so, 90%, on technical analysis and then
possibly a 5%-10% focus on fundamental analysis.
Why do I love technical analysis so much?
Because charts don't lie! You get the exact price of the support area
so you can buy with the professionals. There are 3 market
participants. There are hogs, sheep and professionals. The professionals always make money.
The hogs and sheep always get slaughtered.
What technical analysis does is that it gives you the
areas where the professionals are buying that stock.
So you're not just guessing. You're not just picking a number out of your thumb.
Technique analysis is the study of charts.
By studying the charts and by seeing where the professionals
are buying that stock, you have an
edge compared to other investors
like the hogs and sheep, right? Technical analysis gives you the exact price.
like the hogs and sheep, right? Technical analysis gives you the exact price.
You get the exact price of an area of resistance so you can sell to the hogs and sheep
You get the exact price of an area of resistance so you can sell to the hogs and sheep
This is what the question was, what are the techniques to use
to buy and to sell. Technical analysis gives you the support area.
-- that's the exact price It gives you the exact price, which would be
the resistance area -- so that you can sell your stock
before the stock falls apart. You have higher
before the stock falls apart. You have higher
probability trades if you use technical analysis. What do I mean by that?
There are no absolutes in the stock market. Meaning that you cannot
absolutely know with a 100% certainty that the stock is going to go up when you get in.
absolutely know with a 100% certainty that the stock is going to go up when you get in.
The best you can get is 80% probability.
There's a 60% probability and a 70% probability.
that the trade is going to work in your favor.
And there's an 80% probability that the trade is going to work in your favor.
When you use technical analysis, you know exactly what the probability of the trade is
When you use technical analysis, you know exactly what the probability of the trade is
when you get in or even before you get in. Then you can choose whether you want
to get in that trade or not.
Let me show you how to properly use technical analysis techniques.
Let me show you how to properly use technical analysis techniques.
Always buy at support. The 200-day period moving average
is an area of support and it gives you 60% probability that the trade will go up.
As you can see here -- Facebook
came all the way down to the 200-day period moving average
and then you see a rally
It's a small-lived rally but it's still a rally The stock went from $25
all the way up to $28. It's a 3-point rally. It's not bad, right?
It's a 3-point rally. It's not bad, right?
Here's a stock that's trading above the 200-day period moving averages.
It has a 60% probability of going higher.
You wouldn't see this in fundamental analysis. How would you see
that the stock has come to an area of support?
That's why I love technical analysis. You can actually see the charts.
The stock is away from an area of support, it's at an area of higher resistance
The stock is away from an area of support, it's at an area of higher resistance
So you can see now the stock falls apart.
You would sell
when the stock is coming away from an area of support.
You buy as the stock comes an area of support.
You sell at an area of resistance.
This is why I love technical analysis. This is why I love understanding charts
And this is why I
teach technical analysis because you can see it. It's not a guess
It's not like "Oh my gosh, let me try and look at some bank statements
balance sheets" or " Let me try and guess if the company's going to have a
new product and how
the market will react to that new product" There's no guessing. You can see exactly.
This is what it is, let me buy there, let me sell here, right? You even know the prices.
That's why technical analysis ROCKS!
What if you don't use techniques analysis techniques?
More missed opportunities for you. You're going to be guessing.
Trading shouldn't be a guessing game.
It should be a probabilities game.
It's knowing that if I get in at this area,
I have a 60% probability. If I get in at this area, I have a 70% probability.
If I get in at this area, I have an 80% probability.
You can sleep when you get into high probability trades.
You can get into a trade and not stress out.
NO more "Oh my gosh is that trade going to go up?" "Is that stock going to go up?
You can sleep because you've got your probability sorted. The higher the probability is the better your
trades work out.
The more money you make. You rely on chance to make money if you're just using
fundamental analysis.
You've got to add a little bit a fundamental analysis. I'm not going to tell you that
you don't need fundamental analysis at all.
Just a little bit to sweeten the pie. Most of the ingredients are going to be
derived from technical analysis.
If you don't use technical analysis, you don't have a set plan on how to maximize
profits and minimize risks.
You're just guessing. You just get in by guessing.
You don't have a set plan.
Trading is a business. It is not a hobby.
It is a business, you have to have a business plan
as if you want to have a successful business, you would want to have a
business plan.
It's the same concept in trading If you want to have a successful
trade, if you want have a successful trading business
you've got to have a plan. You've got to plan all your trades.
You've got to plan how you'er going to get in, get out
and minimize your risks. Eventually you're going to run out of trading capital.
and then
you're going to be done. You're done as a trader when you don't have money.
When you don't have money, you are done as a trader.
I hope that I have answered your question and I hope that the answers have served you.
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Bye!