— Calling The Trend Column, by George Leong, B.Comm.
In my last commentary, I talked about guidelines you can use to make you a better investor and trader and, in the process, turn profits.
The stock market is no doubt one of the most exciting forums through which individuals can participate in an entrepreneurial venture. Investing in the stock market can be one of the most thrilling, rewarding and riskiest ventures you can undertake.
A lot can be said about the stock market, but there are only two certainties that the stock market can offer you: prices will fluctuate and the risk to your capital will always be high. With this in mind, however, there is always a good trade somewhere in the market at any given time. The trick, of course, is finding this opportunity, without losing your shirt!
Even if you get advice on stocks, you should still do some of your own research and monitor your active positions. If you do the work on a regular basis, you will come across amazing companies with outstanding wealth-creation abilities. I’ve found countless wealth-creating companies by running daily screens on the stock market. I’ve even found great stocks by perusing company headlines during earnings season. When a press release says, “…revenues grow 57%, net income grows 82%,” it is worth following up with some research.
Great success is available to you with an hour’s worth of research every day. The bonus is that, by getting into the habit of doing your daily research, you really get a defined sense of the flow of the stock market. This will give you the confidence to act on the best opportunities. With a little experience, you’ll end up knowing which stocks offer the best potential at any given time, regardless of what Wall Street thinks.
Also, don’t forget to hurry up and wait. Patience really is a virtue in the investment business. One of the best habits to form as a pro trader is to take your time when approaching the stock market. Watching and waiting is a commonsense strategy that could pay big dividends over time.
The best thing you can do as an independent pro trader is to run your stock screens on a consistent basis, do thorough due diligence on promising companies, and watch as many stocks and the entire market as much as possible. The process of even following individual stocks on a daily basis will significantly improve your market view, as well as highlight patterns on which you can speculate.
You don’t need to act on every interesting opportunity that comes across your path. Watch and wait. Act only on the most desirable stories and only when you feel the timing is right. Keep your money invested in a money market fund in the interim. Watch the market and go collect on the best opportunities. If you find only a dozen great stocks in a year’s time — that’s a great success! You’re only after the best, most promising stocks the market has to offer. And now you have the tools with which to find them.