Buying Low Priced Stocks


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Buying Low Priced Stocks

Buying low priced stocks is often how to profit when buying stocks or trading stocks, providing that the stock prices go up.
Simply buying low priced stocks does not necessarily lead to profits as a low priced stock may well be on the way to bankruptcy.

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Buying Low Priced Stocks

  1. 1. Buying Low Priced Stocks By
  2. 2. Buying low priced stocks is often how to profit when buying stocks or tradingstocks, providing that the stock prices go up.
  3. 3. Simply buying low priced stocks does not necessarilylead to profits as a low pricedstock may well be on the way to bankruptcy.
  4. 4. For traders and investors toprofit from buying low priced stocks the stocks must, atsome point, increase in value.
  5. 5. There are two ways to assetthe prospects of a low priced stock.
  6. 6. Fundamental and technicalanalysis both have their placein helping the investor decide on what stock to add to or subtract from his stock portfolio.
  7. 7. Both types of analysis are also useful for stock traders.
  8. 8. However, the trader will wantto rely more heavily on strong technical analysis tools such as Candlestick analysis to assess upcoming market sentiment.
  9. 9. Fundamental analysis in stock investing is typically concerned with long term investing and not short term profits.
  10. 10. In buy and hold investing thegoal is to find a stock that willappreciate over the years andweather economic upheavals and stock market crashes.
  11. 11. Intrinsic stock value is whatlong term investor looks for. It is the discounted value of forward looking earnings.
  12. 12. This concept goes back to the1930’s in the aftermath of the 1929 market crash and the dark days of the Great Depression.
  13. 13. An investor seeks to anticipate the earnings that a company will generate over the years.
  14. 14. He will look for a strongproduct line and the ability to add new products through R&D, acquisitions, and an acute sense of what theconsumer wants and will pay for.
  15. 15. He will also look at the ability of the company to contain costs and to compete effectively in the variousmarket sectors where it sells its products.
  16. 16. In the case of the long term investor, buying low priced stocks has to do with a stockbeing low priced in relation to its long term prospects.
  17. 17. Technical analysis with tools such as Candlestick stockcharts is largely the province of the day trader and short term investor.
  18. 18. Although a well chosen stock may appreciate over the years, the same stock willoften be the most profitable at points of acceleratedmarket trends or a big market reversal.
  19. 19. For example a downwardtrending stock may benefit from a new product announcement or theacquisition of a competitor and reverse course.
  20. 20. It is not uncommon that most of the capital gains that a stock experiences in a year will come in a month or even days after a turnaround.
  21. 21. Buying low priced stocks forthe day trader has to do with hourly and even minute byminute stock price valuations.
  22. 22. Penny stock trading can be a lucrative undertaking.
  23. 23. However, the fact is that manylow priced stocks are not likely to appreciate in value.
  24. 24. Fundamentals may beuncertain and hard to analyze.
  25. 25. It is often through careful evaluation of technicalanalysis indicators such as Candlestick
  26. 26. pattern formations that the trader can succeed in buyinglow priced stocks in this realm before they break out.
  27. 27. In other words it will be the clear indication of marketsentiment that Candlesticks patterns offer that makes buying low priced stocks a profitable undertaking.