One of the most important aspect of how to trade stocks effectively is the catalyst. Every time I mention the catalyst, people want to talk about something else. Why? A trader buddy of mine said well Lance, I just read the chart and follow that. What?! No!
How To Trade Stocks For Beginners
If you want to learn how to trade stocks for a living then you need to know how to buy stocks that are likely going to keep going higher because a catalyst is pushing them higher.
You can be the best chart reader in the world. You can have an account on stockcharts.com and you can spend years studying every technical indicator ever invented. You can subscribe to John Murphy, the father of modern day technical analysis, and learn all about how to read a chart and how to use various technical indicators. You can master the MACD, volume, stochastics, Bollinger Bands, ADX… every indicator ever invented! But if you don’t know what the catalyst is, you will find it very difficult to make money stock trading online.
Here’s what most traders don’t understand. You can know absolutely nothing about how to trade stocks online or how to read a stock chart or even how to use any technical indicator. If you are good at determining catalysts, you can make a fortune on Wall Street. In other words, you can make a lot of money with online stock trading and know nothing about how to read a chart, if you are good at finding catalysts. The opposite can not be said. You can be the best chartist in the world but if you don’t know how to define catalysts, you will find it difficult to make money stock trading.
A catalyst is news or an event that can change a trend in a stock. A catalyst is the engine that will drive a stock either up or down.
Catalysts change the perception of a stock’s worth or value. A catalyst is often referred to as a story. Stocks with strong catalysts are called “story stocks”. A catalyst can be a lot of different things: earnings releases, lawsuits, FDA rulings, management changes, new products, product recalls, and even marketing campaigns.
How To Trade Stocks After Hours
With catalyst stock trading, you need to be careful of the “after hours” market. Big news stories that can impact the price of a stock are often released after the market closes in “after hours” trading.
It is easy to learn how to trade stocks in the after hours market. Most brokerage firms allow you to trade in the after hours market easily. For example, in etrade you select the option to trade in after hours from a drop down menu under type of trade.
I don’t recommend buying stocks in the after hours market because the seller knows that he has the upper-hand and can demand whatever he wants for the stock. However, you might have the rare occasion where you need to sell a stock quickly and the after hours market is the only way for you to do that.
Frequently Asked Questions about How To Trade Stocks
In the video below, you’ll learn more about the catalyst and just how important it is to understand, when you learn how to trade stocks for a living. I’m also going to give you a look at Jason Bond’s 4 DVD set called The Basics of Swing Trading that sells for $497. Enjoy!
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