How Do People Know When to Buy or Sell Stocks?

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How Do People Know When to Buy or Sell Stocks?

by Adnan
(Toronto, Canada)

Hi,
I'm not asking for advice on which stocks to buy and sell just to start off.

I had 2 questions which were:

1. How do people know which stocks to buy. For example one random day I want to buy a stock, how would i know which stocks i should buy. What happens if you buy it and then it falls, or it may go up. How can people tell when they are buying a stock, that it will be a good transaction.

2. How do people know when to sell there stock. After buying a stock how would you know that you should sell it or you should keep it?

Thanks for you answers !!!

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How Do People Know When to Buy or Sell Stocks?

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Oct 31, 2010

Stocks Simplified Writes
by: Shaun

Everybody is a little different, but basically there are two schools of thought. One school of thought is fundamental analysis and it involves buying stocks based on financial ratios such as the PE ratio and using that to tell if a stock is actually backed by something solid and if it is fundamentally worth the investment.

If it is then it remains a good buy as long as the financial indicators they used continue to tell them it is a good investment.

The second school of thought is by trading chart patterns in the market through technical analysis. For instance if a stock keeps bouncing back and forth between $30 and $40 then logic says the next time the stock is trading at $30 it is a good buy. If it breaks below $30 then it is acting outside of its pattern and in that case a trader would exit the position.

Here is an example of how I used technical analysis to decide when to enter and exit a trade.

http://www.stocks-simplified.com/stock_options.html

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How Do People Know When to Buy or Sell Stocks?

Comments for How Do People Know When to Buy or Sell Stocks?

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How Do People Know When to Buy or Sell Stocks?