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Read This Before Your Next Trade - Weekend Wisdom

By: Zacks.com
Posted: 8/30/2013 5:34:00 PM
Referenced Stocks:

Whether you're bullish on the market or bearish; whether you believe there's more upside to go, or that the market has topped out; it's now more important than ever to make sure you're doing everything you can to get the most out of your trades.

Regardless of which camp you put yourself in, there will be distinct winners and losers as we move forward. So before you make your next trade, please read this first to learn how to put the probabilities of success on your side.


Knowledge Is Power

We've all heard the old adage; knowledge is power.

It's a great saying because it's true.

And that saying couldn't be truer than when it comes to investing.

Take a look at your last big loser for example. After analyzing what went wrong, you soon discover some piece of information that -- 'had you known earlier, you never would have gotten into it in the first place'.

I'm not talking about things that are unknowable, like inside information or surprise announcements that can catch even the most professional of professionals off guard.

I'm talking about things that you could have known about or SHOULD have known about before you got in.


Did You Know?...

Was your last loser in one of the top industries or in one of the bottom industries?

If it was in one of the bottom industries, you should have known to not take a chance on something with a reduced probability of success.

MORE . . .


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That's what is meant by knowledge is power. Knowable things that you need to know.

That's not to say that stocks in crummy industries won't go up -- they do. And that's not to say that stocks in good industries won't go down -- because they do too.

But more stocks go up in the top industries, and more stocks go down in the bottom industries.

And since there are over 10,000 stocks out there to pick and choose from, why settle for one with a reduced chance of making any money?


Did You Know?...

Did your last loser have a spectacular growth rate?

If so, and it got crushed, would you have picked it if you knew that stocks with the highest growth rates have spotty track records?

It seems logical to think that the companies with the highest growth rates would do the best. But it doesn't always turn out to be the case.

One explanation for this is that sky high growth rates are unsustainable. And the moment a more normal (albeit still good) growth rate emerges, the stock gets a dose of reality as well.

Instead, I have found that comparing a stock to the median growth rate for its industry is the best way to find solid outperformers with a lesser chance to disappoint.


Did You Know?...

Do you know how well your stock picking strategies have performed?

Whether good or bad - do you know why?

Do you know if your favorite item to look for is helping you or hurting you?


Answers

Get the answers to these questions and more. And discover what works and what doesn't before your next trade. Learn how to take full advantage of today's uncertain market.

I discovered all the above with the Research Wizard. (including a strategy that has averaged gains of +67.4% per year). And you can too. If you have a question, plug it in and get your answer. Find winning strategies. Or create your own. And test virtually any idea you can think of. Now you can.

Click here to learn more.

Thanks and good trading.

Kevin

Zacks VP Kevin Matras is our chart patterns and stock screening expert. He also personally developed many of the built-in market-beating strategies that come with the Research Wizard.



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