Share Trading Techniques

Share Trading Techniques.

While perusing through one of my trading books, I came upon some fascinating facts that were very thought provoking, so I will pass them on to you.
The author is “Daryl Guppy” a well established author and successful trader as well.

He stated, that over time he noticed that once a share magazine was published that the stocks that were recommended by the magazine went into an uptrend, because the readers took notice of the tips given and bought them. Here are the statistics.

1. One month after publication 90% of the stocks mentioned were still in an uptrend.

2. Two months after publication 80% were still in an uptrend.

3. Three months after publication only around 45% were still in an uptrend.

Obviously it pays to buy the magazines each month and buy the shares mentioned.

But I personally would be watching them very closely and would be hanging on to them only till my preset profit level had been reached and I definitely would be out after a 5-6 weeks.
They would still have to qualify to my buying strategy in the first place if not I would not touch them at all.

Now a hint for you here, How I trial my” New Ideas” out is by “Paper trading.” That way I am not risking any of my money in something that I am not 100% sure of.

If you want to paper trade the places I use are www.asx.com.au and www.sharecafe.com.au both are free sites and you can find free information there as well.

Becoming a “Dividend Stripper.”

An interesting thing I found out was that apart from being share trader I have also become a “Dividend Stripper.” I shall explain this further as to what I do occasionally.

A dividend stripper is a trader who buys shares to qualify for the oncoming dividend and then sells shortly afterwards.

You buy before the “Ex Dividend” then you can sell the next day. Making sure of course you have the dates right in the first place.

But to qualify for the “Franking Credits” you need to own them for 45 plus 2 days.
1day for buying, 1day for selling plus 45 days = 47 days. Anything less and you miss out on those franking credits.

An interesting thing to note is that a stock’s share price invariably falls usually by the amount of the dividend paid after the ex dividend date expires.

Another trick is to buy the stock 2-3 weeks earlier in the hope that the share price goes up prior to ex = dividend.

A Warning About IPO’s.

The market seems to be inundated with IPO’S (Initial public offering) these new companies all seem predominately to be in the mining sector.
All eager to get in on the current “minerals boom”
A few opened up higher than the initial entry price. Most seem to be exploration of some sort or other. The flavors of the month are usually oil or uranium.

These are of course classified as “Speculative Stocks.”

Which can mean that once the cash has dried up and they haven’t found anything, they then have to either raise more cash or shut shop? And your cash has gone with them.

The rags to riches stories are many, but the road is littered with the crushed hopes and dreams of the unwary investors.

All are searching for that elusive pot of gold at the end of the rainbow.
So be wary, do your research, and don’t jump in blind. Be an informed investor.

If it looks to be too good to be true then it usually is.