By Daragan V.
This booklet is for momentary investors, i.e. for investors who carry shares for one to 8 days. temporary buying and selling assumes trading shares usually. After to 4 months a dealer can have reliable facts and she can begin an research of buying and selling effects. What are the most questions, which will be responded from this analysis?- Is my buying and selling process profitable?- Is my buying and selling method safe?- How am i able to raise the profitability of my process and reduce the chance of trading?No doubt it really is larger to invite those questions sooner than utilizing any buying and selling process. we'll reflect on equipment of estimating profitability and hazard of buying and selling recommendations, optimally dividing buying and selling capital, utilizing cease and restrict orders and plenty of different difficulties concerning inventory buying and selling.
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Extra info for How to Win the Stock Market Game
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Dependence of the average loss on the stop order level in A units for 1, 2, 4, and 8 days stock holding From this figure one can conclude that to minimize the average loss from the stop orders you need to place stops either very close or very far away to the current price. Your decision should be based on the number of days you are going to hold the stock. One again: all calculations have been made for randomly selected stocks. For these stocks the average growth probabilities are close to 50%.
They buy stocks, place the sell limit order and wait for the stocks to touch this limit. Unfortunately, this is a not a good strategy. There is a non-zero probability of complete disaster. The wait for the limit to be touched can be very long and during this time the stock price can go to very low levels. Using the non-random walk model it can be shown that the limit order will never be executed with probability P P = (p/q)^L if q>p Let us remind the reader that p is the growth probability and q = 1 - p is the probability of decline.
Your decision should be based on the number of days you are going to hold the stock. One again: all calculations have been made for randomly selected stocks. For these stocks the average growth probabilities are close to 50%. What will happen if we consider specifically selected stocks when the growth probability is not equal to 50%? Before starting to look at this important question we need to consider some technical parameters, which are very helpful in stock selection. They allow to select stocks with the highest growth probabilities and develop very profitable trading strategies.