Stages of a stock

Today I want to talk about the stages in which a will pass through. The basic rule to follow when trading stocks is: Buy low sell high! Obvious, right? But how can you tell if a stock is low or high? A stock at $200 could be considered low while a stock at 8 cents could be considered high... It all depends on where it came from and where it is expected to go. You should never judge a stock by its chart alone. Always research your stock and see if the company has any new developments or business deals that are very recent or happening in the near future that may financially benefit the company. There are four stages in a stock. Stage 1, stage 2, stage 3, and, you guessed it! Stage 4! Here is a basic line drawing that I pulled off the internet:

I heard somewhere that stocks are not a reflection of of what IS happening. But a reflection of what is going to happen. You can see that stage 1 is when the stock has come from a recent spill and is now leveling off. This is when an experienced trader will be purchasing the stock. Stage 2 is when it is starting to climb again. This is what happens after a bunch of people have purchased a bunch of shares. Simple supply and demand. More people buying, price goes up. Stage 3 is when the stock starts to plateau. This is when all the experienced traders are looking to sell. A lot of inexperienced traders such as myself may have just caught wind of recent developments in the company and can already see the price starting to rapidly increase. We want to buy! Bad mistake. Once all the big players sell off their shares there is now more supply than demand and the stock moves onto stage 4. The downward trend. This is where you lose your money. This is why you do your research. Don't follow every stock tip you hear. Now the stock will eventually move back into stage 1 and repeat. All stocks trade at different speeds. There is no way to tell what will happen and when just by looking at a chart. It just helps to know what you're looking at. If you look at a chart you will also notice that stocks do not climb and fall in such a smooth manner. They go up and down on their way through the different stages. These are called waves. Here is another picture to help you understand.

Stage 1  involves wave 1 and 2. Stage 2 is wave 3, and wave 4. Wave 5, and wave A are stage 3. It is very important to be able to recognize these stages and NOT to let your greed cloud your decision to SELL. If you are good enough you will be able to identify and sell at wave 5. Wave B and wave C are stage 4. You do not want to own shares at this time. That's all for learning today. I suggest that you go look up some of your favorite stocks and see if you can analyze the charts. Next time I will be talking about ways to identify how strong the trend is and how to identify it so you know when to buy or sell :) Here is a 3 year chart of Tempur Pedic International Inc. If you click it you can see that it has just entered stage 4 and either wave B or C. Time to sell!

Happy trading!!

James

Time to learn more!

So, I am still watching AMWI for the fun of it. It's all over the place. Up 50%, down 75%, up 100% more... I can see potential to make money from it if you are very intuitive and buy and sell at the right times... I do need to find new stocks to invest in though. I was thinking to myself... How the hell does anyone find the right stock to invest in? Nobody ever got rich off playing stock tips their whole lives... They had to go out there and do their own research... But where do you start? Well, if you know how to analyze a stock chart properly you would definitely have a head start. There is actually a formula to finding great stocks. :)  So, I will tell you what I learn about these charts as I go. As for now, I have a lot of reading to do! Talk to you soon!

James

Was AMWI a Pump and dump?

Today I was at work kicking myself for deciding to wait until the new year to get a less restricted investment account set up. The stock I am watching (AMWI) Was up to $1.40 a share from the $0.23 it was at when I tried to buy it initially. That is almost a 700% gain! But then at around 1:00 in the afternoon in plummeted all the way back down to $0.26 a share almost instantly. I still would have made money, but I would have been real pissed if I had have lost my 700% gain. Although, I probably would have gotten scared and sold it at about 100 or 200% Either way, it really sucks for all the people out there that had large quantities of money riding on this stock. This is a classic example of why it is important to do your research. No matter what. Even if you get the stock advice from a friend. I was talking to a man today, who's friend had tipped him off on a company called Bre-X Minerals Ltd. a while back. He bought in at just over $1.00 a share and it sky rocketed to $77.00 before he finally sold it. But it kept going up to about $200 per share and he was regretting selling. But what goes up must come down, right? Turns out the company was reporting false information to the media about their company to raise the value of it and sell all their shares in an attempt to get extremely rich. When they were finally caught the stock dropped right off the chart and millions of hard working people lost their pensions, life savings, college money, everything they had. In case you would like to read more here is a link to Wikipedia about the stock.

http://en.wikipedia.org/wiki/Bre-X

Remember: Do your due diligence and make sure you feel comfortable with your decision before buying shares of anything.

Until next time,

James

What I'm looking at:

So, given my decision to not play the market until the new year, I don't have a lot to say today. I thought I would just let you know what stocks I am looking at right now and what's going on with them. If you click the ticker symbol you can see what the stock is doing right now and I also have their websites linked so you can learn about the company too. And if that's not enough you can always google them!

AMWI: 
Amwest Imaging Inc
http://www.amwestimaging.com/

This is the first stock I started watching. I started watching it when it was at $0.19 and wanted to buy it at $0.23. If you have been following my blog you would know I couldn't buy it through my TFSA so I missed out. 

Today it was up to $0.50 and closed at $0.38  That is a 165% gain from when I originally tried to buy it.. Sort of pissed about that one! ahah.

CFQ:  
Carbon Friendly Solutions
http://www.carbonfriendly.com/


KOOL:
Thermogenesis Corp.
http://www.thermogenesis.com/


That's all for today.


James

Blue Monday

I tried, once again, to invest in a stock today. And once again, I was told I could not invest in the particular stock through my TFSA. I'm starting to see a pattern. It turns out that many stocks are not able to be purchased through a TFSA. I think it's because in a TFSA you don't have to pay taxes on your money and any money that you don't physically transfer into that account yourself does not count towards the cap on your TFSA. You are allowed to put $5000 per year into your TFSA. Because I have never made a deposit as of yet, mine is currently eligible for $15K and will be at $20K as of January first. If I were to put $15K into my TFSA today and invest it into some crazy stock that exploded 500% I would have $75,000 in my TFSA, but only $15K of that would have been deposited by me and the other $80,000 would be allowed to be kept in the account without being taxed. The government would not be too happy about that! So, I have reason to believe that, that might be the reason why there are so many stocks I cannot invest in through it. So, I have decided to keep studying the market and all the rules that come with it until January first. I will then open up a new account that does not restrict what I can buy. I chose January first so paying taxes would be less complicated for me at the end of this year and next. I'm pretty sure the tax rate on investment earnings is about 25%. So remember to put that aside every time you sell a stock! You may even want to check with your financial representative on the exact tax rate in your area. Also, don't forget, when buying foreign stocks you will have to pay a fee to have your money exchanged into the market that you intend to purchase from on top of your brokerage fees. Hope you are learning from my blog. Have a good one.

James

Fiday... Time to rest my mind and get a little drunk too.

It's Friday night. I have not gotten far with my bank as of yet. I am still waiting for my TFSA to be linked to my brokerage account so I can use it online. In the meantime I have been all over the internet researching as many stocks as I could from the minute I get home from work until the wee hours of the morning. My brain is tired. I am so glad it's the weekend. I have been reading a lot into "penny stocks." Although there is no exact price that makes a penny stock a penny stock, it basically means any stock that you can buy for cheap. Not like Microsoft or Google and stuff like that. These stocks are like $0.01 to $5.00. Some people even consider $10.00 stocks to be penny stocks. Must be nice! There are good and bad things about penny stocks. The thing I like about penny stocks is you can make a lot of money on them. For example.. Lets say you bought 1000 shares of a stock that was trading at $0.05. Then the stock goes up to $0.10 in the course of a couple weeks or a month or whatever. You just doubled your money! Now, if you bought a share of Google at like $600.00, or whatever astronomical price it's trading at right now, and it went up to $600.05 you probably wouldn't even make enough money to cover your brokerage fees. It's all about percentages! Now.. The bad part about penny stocks: You can just as easily lose all your money too. Not only that, but there are also assholes out there that will flood the internet with newsletters, and posts, and what have you, about how awesome a stock is and how it's expected to soar in the coming days. ALWAYS DO YOUR RESEARCH! The people that push these stories have invested in this stock when it was selling at half a cent and are now trying to "pump" it. A shitload of people then catch wind of this and start "pumping" their money into it hoping to become rich over night. The stock jumps to $0.30 and the person responsible for all the hype dumps his or her shares and everyone else loses out. This is called "pumping and dumping." I bet you only thought you could do that to women! So you should always keep an eye out for a pump and dump stock. They are very common. Some people, however, have made a living chasing the pump and dumps. They catch wind of the hype early on and invest heavily into the stock and dump it before the pumper themselves decides to dump it. It's a good way to play off someone else's greed. But always very risky. You should probably wait till you have a lot of experience before trying to land that trick. Anyways, I'm going to go get drunk. Have a good one! Hope you learned something!

James

Trading day. Pt. II

From the cell phone:
I went to the bank before work and transferred some money into my TFSA (Tax Free Savings Account). Now I'm ready to buy stocks! So I call my broker and tell him what I want to buy and how much. He puts me on hold. I'm nervous now. My very first trade! :)  The man comes back on the line and tells me the stock I am interested in is not available for purchase through a TFSA... FUCK! What else can go wrong!? So now I have to go back to my bank and open yet another bank account. I guess I will use it as a secondary trading account in case this happens again... The upside though, I get to visit the extremely good looking financial representative again :) Maaaaybe she will feel sorry for me and I will get a pity phone number...
Thanks again for reading and I hope you are learning as much as I am about becoming a stock trader.
James