Trading Hot Stocks

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Trading Hot StocksTrading Hot Stocks

Investors and traders can profit from pickingInvestors and traders can profit from picking
stocks that are hot.stocks that are hot.

But, how does one go about trading hotBut, how does one go about trading hot
stocks?stocks?

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One problem in long term investing is thatOne problem in long term investing is that
by the time a stock is hot it has commonlyby the time a stock is hot it has commonly
risen to a high price to earnings ratio orrisen to a high price to earnings ratio or
price to sales ratio or fallen dramatically.price to sales ratio or fallen dramatically.

A hot stock rises in price as the stockA hot stock rises in price as the stock
market discounts its intrinsic stock valuemarket discounts its intrinsic stock value
or falls on poor earnings reports.or falls on poor earnings reports.

Good stock picks in long term investing areGood stock picks in long term investing are
overlooked stocks.overlooked stocks.

The smart long term investor or the dayThe smart long term investor or the day
trader picks these stocks and sells themtrader picks these stocks and sells them
when they become hot stocks.when they become hot stocks.

Trading hot stocks is a different matter.Trading hot stocks is a different matter.

Trading hot stocks has to do with stocks thatTrading hot stocks has to do with stocks that
are currently popular, falling or rising inare currently popular, falling or rising in
stock price, and which often present withstock price, and which often present with
high trading volume and stock volatility.high trading volume and stock volatility.

Candlestick stock charts are the tool ofCandlestick stock charts are the tool of
choice of many who trade hot stocks.choice of many who trade hot stocks.

Technical analysis of stocks withTechnical analysis of stocks with
Candlestick analysis gives traders anCandlestick analysis gives traders an
objective view of market sentiment andobjective view of market sentiment and
easy to read signals up which to act.easy to read signals up which to act.

Hot stocks recently include Boeing withHot stocks recently include Boeing with
increased sales, Amazon with earningsincreased sales, Amazon with earnings
that did not fall as much as anticipated,that did not fall as much as anticipated,
and Allegheny Technologies whoseand Allegheny Technologies whose
earnings went up 70% while the stock fellearnings went up 70% while the stock fell
3% because analysts had expected better.3% because analysts had expected better.

In these types of situations traders buy stockIn these types of situations traders buy stock
or sell stock based upon theiror sell stock based upon their
expectations of adjustments in stockexpectations of adjustments in stock
prices.prices.

There is typically a short period of marketThere is typically a short period of market
inefficiency as traders and investorsinefficiency as traders and investors
decide how to price a stock based upondecide how to price a stock based upon
both new information, and moreboth new information, and more
importantly, new expectations.importantly, new expectations.

In trading hot stocks with CandlestickIn trading hot stocks with Candlestick
patterns a trader reacts to signals thatpatterns a trader reacts to signals that
predict the next movements of stockpredict the next movements of stock
prices.prices.

Easy to read Candlestick signals giveEasy to read Candlestick signals give
traders an objective appraisal of what thetraders an objective appraisal of what the
market as a whole is thinking about anmarket as a whole is thinking about an
individual stock or stock index.individual stock or stock index.

Candlestick signals work for trading hotCandlestick signals work for trading hot
stocks directly and for options trading andstocks directly and for options trading and
futures trading of hot stocks as well.futures trading of hot stocks as well.

Depending upon what made a stock hot, itsDepending upon what made a stock hot, its
period of high trading volume, high stockperiod of high trading volume, high stock
volatility, and stock trading opportunityvolatility, and stock trading opportunity
may by just a few hours or may last formay by just a few hours or may last for
days, weeks, or months.days, weeks, or months.

It will depend upon how long it takes for theIt will depend upon how long it takes for the
market to reach a consensus on the valuemarket to reach a consensus on the value
of the stock in question.of the stock in question.

In all stock trading it is important for theIn all stock trading it is important for the
trader to have a clear idea about thetrader to have a clear idea about the
fundamentals that drive a stock price.fundamentals that drive a stock price.

Then the trader knows the general range inThen the trader knows the general range in
which a stock will trade and the generalwhich a stock will trade and the general
factors that will affect price.factors that will affect price.

However, it is with technical analysis toolsHowever, it is with technical analysis tools
such as Candlestick patterns that traderssuch as Candlestick patterns that traders
can profit most from trading hot stocks.can profit most from trading hot stocks.

These stocks can change price rapidly andThese stocks can change price rapidly and
reverse in price quickly.reverse in price quickly.

With the use of Candlestick signals a traderWith the use of Candlestick signals a trader
can successfully and profitably anticipatecan successfully and profitably anticipate
price changes.price changes.

In the very short term the Candlestick traderIn the very short term the Candlestick trader
is able to objectively read the market andis able to objectively read the market and
avoid the mistakes of getting carried awayavoid the mistakes of getting carried away
with market enthusiasm orwith market enthusiasm or
disappointment.disappointment.

No matter what the market is doing it hasNo matter what the market is doing it has
done it before. Price patterns repeatdone it before. Price patterns repeat
themselves and Candlestick signals allowthemselves and Candlestick signals allow
traders to profit from that fact when tradingtraders to profit from that fact when trading
hot stocks.hot stocks.

Trading Hot Stocks

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