Stage 1: Accumulation, shares are transferred from weak hands to strong hands. This stage usually occurs after a long decline or even after the stock has had a pretty good advance. In this stage, stocks will often trade in a narrow range, the forces of supply and demand are about equal.
Stage 2: Starts at "big" money accumulation. Seller will eventually thin out and disappear. The stock become stronger, as the stock continues move higher, the public become interested and they begin to buy too. Combined, all of these activities, pushes the stock higher.
Stage 3: Profits are usually being taken out of the stock, the stock begins to trade in a range and move sideways. It will usually bounce off of new points of support and resistance in the process. Compare to stage 1, this stage has greater volatility and large price swings.
Stage 4: Begins after demand for the stock dry up. Sellers become King, the sell off starts. At the bigining of this stage, average traders often believe the pull back is just a pemporary correction, and become bag holders. The longer the price advances in stage 2, the more popular the stock will be once it enters the begining of the stage 4 sell off.
To be a successful trader, you must understand that it is financial suicide to buy a stock that is in a stage 4 sell off, and it is completely idiotic to buy a stock that it is topping out (stage 3).
This article was written by light of stockhideout.com Stock Message Board
Ever wonder how the penny stock market works? Why it is there? How come some people talk about penny shares going up and down? Who are these so called stock brokers? Two words should be enough to give you a brief idea. These are because of investments and profits. The stock exchange is a public center where company stocks and shares are being sold and bought everyday. People keep on investing in penny stock trading daily because there is money to be made.
Everyday, shares sold in the market rise and fall. While every investor's goal is to earn good hefty profit, there will always be lost investments and gain at the end of the day. Some investors own penny stocks in several small cap companies. They do this to increase their probability of profit. They could lose in one deal but gained a great amount of income from another buy.
Investing in penny stock companies is a good challenge and can be fun too. If you're new to this business, check this outline:
- Some facts about investing in penny stock - Common penny stocks are traded between one dollar and five dollars per share. These shares are not traded frequently. Information is usually scarce in this arena. Penny stocks are usually hyped and are more exposed to media press releases. These stocks are usually difficult to accurately price. While it is true that penny stocks are not easy to sell, investors still believe in investing in penny stock trading because of its huge potential leverage.
- Hints of fraud - It is commonly know to investors that penny shares are prone to fraud. This is mainly caused by the lack of information and inaccurate pricing. There are some ways to determine if a penny stock or the stock broker is reliable of not. Here are some of them:
1. When a stock broker claims about his successful business without any documents to support it;
2. Over-exaggeration of media and too much hype, making it almost too good to be true;
3. Sales strategies that give names about huge companies which started out with penny stock investing;
- Stock brokers and advisers - These firms are your best friends in the business. They can do a lot for your investments for a commission. Stock brokerage firms possess the stock market intelligence to level up your confidence. So when investing in penny stock trade, consider getting a broker. You've seen how major stock exchanges like NYSE, AMEX, and NASDAQ work. You just can't do it alone.
- Tips in Investing in Penny stock - Learn, learn, and learn. Your assumption must also include the risk of investment loss whether in part or in whole. Research and analyze the trends. Know the best stocks available. Knowing all these things may still not be enough. The stock market is a very fast paced business environment. You must be extremely alert if possible if you decide on investing in penny stock trading. There is actually no guarantee. At the end of the day, what counts most is your decision. And that is always based on how much you know and understand it.
Both Robs & Malcolm Torren are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Robs has sinced written about articles on various topics from Finances, Forex Trading Forex and Penny Stocks. light of stockhideout.com . Robs's top article generates over 18100 views. to your Favourites.
Malcolm Torren has sinced written about articles on various topics from Finances, Penny Stocks and Finances. Check out how successful people go about . Learn more basic guidelines on. Malcolm Torren's top article generates over 8100 views. to your Favourites.