Monday, July 7, 2008

High priced stocks

Surprising buying expensive stocks does not seem to be a bad idea in the market as long as the given stock is in an uptrend. This is true even though the majority of people believe that they should buy after a stock has taken a hit.

One reason why buying high priced stocks in an uptrend is that when a stock is in an uptrend it tends to stay in it. So the bullish pressure tends to stay with the stock for a very long time. Strong up trending stocks can make big returns over and over again.

Many people seem to think that because a stock is so overpriced that it will not go up and if it does it will not go up that much. I have found this to be very untrue. Stocks in an uptrend will normally go up faster than stocks that have been crushed.

This way instead of buying low and selling high it may be better to buy high and sell higher. In fact stocks that have been going down typically keep going down for a while. Like up trends downtrends can last for a long time and trying to pick the bottom can lead to a lot of losses.

Of course knowing when to buy is only half the battle. The other equally important half is knowing when to sell. Selling at the wrong time can either leave you upset from how much profit you missed or upset of how much you let the stock go down before you sold.

Every investor and trader should develop their own ways of determining when to sell their stock. Most traders will sell strong stocks when they are starting to turn around. In other words if their stock was in a strong uptrend but had a big crash they might decide to get out of that trade before the stock crashes more.

For more information about trading in the stock market visit

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