For local stock market players, they saw this week the meteoric rise and spectacular fall of IP - all in one week. The lucky speculators made money while newbies may have lost money and are now IPit. Tough luck? I suppose.
I'm not surprised most people are still turned off by the stock market. With movements like these, most of the general public still think that the stock market is just one form of gambling. It can be... only if you are a speculator and not an investor.
When you're a speculator, you can gain a lot, and lose a lot more if you're not careful and especially when you're greedy.
As previously mentioned, I don't review charts anymore for the simple fact that I don't have the software. When I trade, I just employ hit and run tactics, or buy on breakout and sell once it hits the second or third day. On average, I've noticed that stocks that breakout (i.e. price goes up from the usual trend of more than 5%) only last for up to three days at the most.
There are some stocks though that go up continually and if I'm not mistaken this was what happened to ORE recently. I don't know why it went up.
Mostly, these breakouts are fueled by speculation and stories of interest. If you didn't already know, E-Games (EG) was listed this week via introduction (don't ask me, I'm not particularly familiar with what it means). Since IPVG (IP) is the owner, its shares went up. Again, I don't know why. Perhaps it would add value to the mother company since listing of shares is one way of raising capital.
Whatever the reason, the stock went up. And it went up in style.
It went from 2.02 last Feb 15, to 2.70 to a high of 2.80 on Feb 16. That's a one day profit of almost 40%! You can't get that deal from a savings account nor a time deposit. Of course, with great price swings come great risks. After Feb 16, the stock just went downhill.
On Feb 17, it opened 2.70 only to close at 2.36. Following the bearish close of 2.36, it fell further to 2.12 on Thursday. By Friday Feb 19, the stock was only worth 1.98.
So if you did not sell on Feb 16, you actually lost money!
How will you know when to get out? I don't but charts can help.
I didn't read the chart in the first place though I doubt chart reading mattered for this stock. Again, while technical analysis (TA) is a good friend for any trader, you must also understand that at any given point, you should also be aware of the story. The story for IP was EG. There was no other compelling reason to buy the stock.
I guess common sense and having an honest and objective broker (yeah they exist) can save the day for you.
I'm still a believer in TA, but you also have to combine it with other disciplines, whether it be fundamental analysis, or just simple common sense. Of course, being less greedy would help a lot as well.
Until the next post...
No comments:
Post a Comment