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Monday, May 25, 2009


The best results are achieved through concentration: putting all your eggs in just a few baskets that you know a great deal about and continuing to watch those baskets very carefully. The more stocks you own, the slower you may be to react and take selling action to raise sufficient cash when the next serious bear market begins. The winning Investors have one or two big winners rather than dozens of very small profits!

How long do you keep your stock is not IMPORTANT, concern about buy THE RIGHT STOCK at the right time. Sell your stock whenever it touch your sell rule! Some of the winners hold more than 3 months, six, one, or maybe two year. Do not day trade!!

Should you used MARGIN? If you are new comer do not use margin. At least one or two years after stay in The Market Exchange. The best time to use margin is usually during the first two years of a new bull market. Once you recognize a new bear market, you should get off margin immediately and raise as much cash as possible. If you are unquestionably active and more seasoned, you may consider limited short selling.

Should I sell short? Do not sell anyting short during a bull market. Save short selling for bear markets. The second rule is never sell short a thinly capitalized (small number of shares outstanding) stock; it's too easy for the stock to be run up on you (that's called a short squeeze, and it doesn't feel very good when you are in one).

Two best chart for short selling are :

1. The Head and Shoulders top. The right shoulder should be lower than the left, and the best time to short is after the third upward pullback in price in the right shoulder is about over. Furthermore, the stock’s relative strength line should be on a clear downtrend over at least 3 or 4 months or longer!

2. CUP and Handle or other similar patterns that have definitely failed after an attempted breakout. The stock should be just picking up trading volume an starting to break down below the handle area.