I like number 2. I was bullish on WCOM without realizing that many others are probably buying the call options and subsequently the option began to fall.
Know everything about a company. They can instantly recite everything from the date that a company will report its earnings, to the status of a pending legal action, to which analyst just upgraded the stock. I strongly encourage you to follow their example. You need not know a company's ratio of current assets to liabilities to be a successful trader, but you had better know the date of the meeting that is going to determine whether a stock split is declared. Remember that if you are not steeped in information, you will ultimately lose the trading game to those who are.
That is so true. It enables me to enter trades more quickly knowing about the company in advance. I've seen threads where they talk of entering a specific stock about waiting for this and that to happen and I'm already in one or two hours before. A lot of traders think fundamental analysis has no place in trading, that's why they are still mulling and considering until the trade has already passed them by. Other traders see an company has 30% or more earnings growth and buy without realizing the analysts' expected 32% and the stock subsequently tanks.
It doesn't always work however, you can still make mistakes, but at least you are heavily armed and can change weapons at a moment's notice. I noticed traders were at a loss today because of pressure in the internet and technology sector, but i was prepared for that with the earnings plays. It also tempers your losses, if you have an alternative game plan. I lost in the morning but turned over to the game plan #2 and was able to make the very best of a day that started out pretty dismal.
Know your stocks, study their price patterns, their potential, their market share, competition as much as you can. It will prepare you for instant decisions. For example, had I not been prepared with everything I need to know about SONE I might not have reentered after the first sell, or might have sold near the close as the stock didn't exactly show strength. I remembered the chart patterns from the previous 2 earnings quarters, remembered reading about the new customers they were getting, its place in the internet banking world, etc.. |
