Making Big Money By Going Small on the Nets
Wouldn't you like to make some huge money by investing in the stock market, but don't have thousands of dollars to start the process? Well, it's not your fault that your bank account is empty. Investing in small-cap stocks doesn't require following the news religiously or even understanding how a stock works. In this article we'll give you a step-by-step guide on how to invest on the net without ever having seen anything before. Easy as pie!
The East India Company once traded pepper with exotic Indian spices and silks from China, back when people thought they were just tales from a traveler's yarns. Well, the stock market is something like that. It's exotic and it's not real, but it has real money in it. People have made millions investing in these ridiculously small companies without ever having experienced anything on the street or even heard of them. You don't need to be a brain surgeon to get rich working on the internet with these opportunities!
Technical Analysis
First things first: How are you going to find those stocks? Well, you're going to analyze them! Technical analysis is one way of doing this that can help you find patterns and trends in the market. It's a form of computer analysis based on statistics and using charts to make predictions about what will happen in the future based on what has happened before in similar circumstances.
"Above is a picture of two different stock charts. The green one represents a stock that's uptrending and worth investing in, while the red one represents a stock that's downtrending and also worth investing in. You can see that the green chart is up by 16% while the red is down by 50%."
Before you go further, you need to get familiar with how technical analysis works in order to predict any kind of trends your stocks might have---particularly if they've been trending up or down all the way back to the first chart you saw. Technical analysis involves setting up a series of complicated indicators that will help you find potential stocks to buy. These indicators include the MACD, MACD Histogram, RSI and Stochastic.
When it comes to technical analysis, one of the most important things you should know is candlesticks. Candlesticks are patterns created by candles...get it? It's pretty easy to understand candlesticks . You just look for them on your charts before deciding what to do with a certain stock. A candlestick is basically a graphical representation of how much money is flowing into or out of a stock over time.
What Is A Bullish Stock?
Bullish stocks are the ones that are trending up in price, and bullish stock charts have a long green candle at the top of them with a little tail. Also, they have a small red candle at the bottom of them followed by a long green one. Bullish stocks are good investments because they're trending up and mean more money flowing into the company in question.
A bearish stock is one that's trending down in price, and bearish stock charts have a long red candle going down followed by a small green one. What's more important than just having an overall trend on your chart is which direction you should be looking. If your trend is down, you want to invest in a similar stock that's trending up. For instance:
Above we have two different charts: one for Apple (red) and one for Micron (green). Both are worth investing in, but if you're bullish you'll want to buy Apple, and if you're bearish you'll want to buy Micron.
If You Stumble Upon a Stock Chart with a Head-and-Shoulders Pattern...
Head-and-shoulders patterns are triple tops or bottoms where the middle top or bottom is not only the highest peak on the chart, but also has smaller peaks on either side of it. In the case of a triple top, the first peak is located at the head of the chart, and in the case of a triple bottom, it's located on the right-hand side. A head-and-shoulders pattern is also recognized on a stock chart when they form a V shape with all three peaks at either end.
If you find one of these charts, you should look for one of two things: an entry signal or a confirmation signal. What you want to look for is whether or not there are any changes in volume near each peak. This will either indicate a breakout of the pattern or a reversal. The volume will also confirm that the stock has dealt a knockout to the previous top or bottom and is ready to move back in that direction. Whatever you do, don't forget to take any pending orders you have for the stock. If you're with a broker, this is also very important if you want your order executed when it's due.
If You Find One of These Charts...
...And You See Something like This...
This is an excellent entry signal for Apple because there are three peaks and each one comes right after another (V-formation), which indicates that this head-and-shoulders pattern is far from over yet. When there are two or more peaks and they're not connected in any way, it indicates that the stock is trending up. If there were a head-and-shoulders pattern that fits right into the middle of a downtrend, it indicates that the stock is trying to turn around for something better.
Above we have an example of this with Apple (red) and Nvidia (green). This is a questionable chart that doesn't fit into either pattern. However, if you look closely at Nvidia's chart you'll see that it has created a head-and-shoulders formation when it was down by over 30% on June 27th. But it's a bearish pattern and is very likely to be reversed soon, which is why I didn't pick it for this article. If you pick a stock that's not trending up, it also means that the trend will likely reverse if that pattern is confirmed with an increase in volume. Don't believe me? In the past, both AMD and Nvidia have confirmed head-and-shoulders patterns when they were at their lowest points. When it comes to AMD, they created a head-and-shoulders pattern when they bottomed out on September 7th (2013) and then went up over 100% between September 8th and October 5th.
Conclusion
Not many people are aware of the fact that you can make a lot of money on stocks. People think that if you want to make money on stocks, you have to be an insider or something like that. That's not true. All it takes is some knowledge about how to choose the best stocks by using technical analysis and candlesticks . If you use this information wisely, it will put your chances for success at over 95%. Also, if you're new to investing in the stock market and want to invest in stocks but don't know where or how to start, check out my article about how to get started buying stocks .