The Number One Rule to Keep in Mind When You Start Trading Stocks
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The Number 1 Rule All Traders Should Start With in 2020

stock market stocks trade Feb 23, 2020

 
One of the most important factors to becoming a successful trader is learning how you to tell what is going to happen to the price of a stock.

This is the key ingredient to being successful.


If you can understand this, and you can learn to recognize when a stock is going to go up or down, then you'll be able to profit. 

 

Catalysts

There are a few different ways that you can make predictions about a stock price, but the main term I'll be utilizing is catalyst.

The term catalyst is the word that many market analysts and market commentators use in order to discuss an event, a piece of news or an important piece of information.

  • A data point that is going to determine the price of a stock or going to affect or influence the price of a stock.

So let me give you some examples:

  • A company says that they have a partnership with another company
  • When a company releases its quarterly or annual earnings
  • Joint ventures
  • A company doing layoffs.

 

Earnings

In regards to earnings, Wall Street has a tendency to place estimations upon these companies every quarter too.

Depending on whether the company meets public expectations, people might either buy or sell their shares in that company and if people buy, the price will go up.

If people sell, it'll go down.

 

Layoffs

Layoffs are an interesting example because one would usually think that if a company is doing layoffs, then they're probably not doing so well, but in fact, you would be wrong.

  • You would be wrong because, with layoffs, the price of a stock actually goes up.

Layoffs mean that the company is now shedding its expenses.

It's getting rid of people that they feel are not valuable to the company and that they're streamlining their processes, they're getting more efficient.

 

 

Catalysts are all super important because they're going to determine your day trading.

If you're buying and selling stocks, you need to be in tune with the news.

You need to keep up with

  • the market
  • the company that you're trading 
  • what is impacting that company's stock price

 

Understanding these pieces of information will allow you to effectively buy and sell in order to lock in your profits

 

Good News or Bad News?

The last thing I want to talk about in this video is that just because there's good news in the market doesn't necessarily mean that there's going to be a beneficial effect on the stock price.

  • Because stock trading is so competitive, it's possible that the catalysts will not nest, the stock market price will not always follow your expectations.

 

That's probably the number one way stock traders lose money, by thinking that the good news they read, means the stock price will always go up.

With larger companies, the stock price has often already accounted for an expected product's success. 

 

So while you were thinking that you might be ahead of the curve in purchasing a stock, a lot of the time the good news is already baked into the price.

 

 

 Keep in mind, this is a day-trading strategy and method we're refining.

  • We find that list of stocks and then we wait for the best time to buy it, based on the catalysts. 

 

That's it. There's nothing else to it. That's the whole game.

Obviously there's a lot of intricacies involved in knowing how to do those things effectively, but that's all that it comes down to when you're trading stocks.

  • It's a buy, low sell, high game.

 

At In Penny Stock, everything we discuss is related to what's affecting the market, what's affecting the stock price and what you need to look out for to understand in which direction the stock price is going to move.

Once you can master that, you can be well on your way to being a successful stock trader.

 

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