Identifying the Stocks that Matter
Historical data has shown that Stock Markets have consistently delivered much higher returns over extended periods, in comparison with more traditional avenues of investment. This certainly does not mean that everybody invested in Stocks during the so-called Bull Runs would have made big money. The reality is that even during sustained spikes and upswings, only a few Stocks shine through and many bite the dust, taking hard earned investor money along with them.
No Mugs Game
It is not easy for a layman to understand the underlying factors that make certain Equity Stocks standout from the rest as “Hot” or “High Voltage” bets. Those who have been in the fray long enough and understand the nuances of in-depth analysis alone can say with a certain degree of surety that a particular stock has a reasonable probability of bucking all trends and charting its own course for creating wealth for investors. This is where the art of trapping “High Voltage” Stocks comes in. Despite the logic of long term commitment; many investors believe in just the opposite and look to take home their profits when the going is good before shifting their energies to other stocks that have the potential of giving good returns in the short term.
This strategy focuses on pinpointing Stocks that are giving strong indications of upward spurts/ spike in the near term. The amount of money that can potentially be made in such investments is high and the strategy works fine for those who can stomach the inherent risks and don’t mind hiccups if they get it wrong sometime. Proponents of this Strategy maintain that such stocks are generally seen to react first and the fastest to short-term market rallies and therein lays the potential. You get in riding the uptrend and hang on just long enough to book your profits before exiting! Getting your timing right either way is crucial to success as quite often the spikes could turn negative too. A smart investor who has developed the knack of exploiting the move of High Voltage Stocks stands a fair chance of making money even when his selected stock plunges. The beauty is that if your bets have proven right; your chosen stocks could well turn out to be attractive long-term bets too.
So what is the trick?
The trick really is very simple for the practiced investor who keeps tabs on certain well defined; reliable indicators that help him take a call. An important pattern to look out for is ‘Trading Volumes’. Sustained, heavy volumes suggest that in general the Stock is attracting good investor interest and could just take off if other indicators support it. Volumes however are generally not Delivery based. Also to look out for is the “Rate of Change Indicator” which relates to the rate at which a particular Stock is moving in either direction and generates a trend line to gauge momentum. It is important to do your homework right and bet on those High Voltage Stocks that not only give you handsome returns in near term but also have the potential to be multi-baggers in the long term.