The Most Basic Question

jarad_khan · #1 25th November 2008, 09:57 AM

Hello all newbie here so please be gentle. From what I see the ultimate goal of everyone who might visit this forum is to make money. And the most fundamental way to do that in a stock market is to buy and sell at the correct price.
So how do you make that determination? What is it in a stocks value, charts, etc that would make you think the value is correct?
And once you have acquired it what is it that tells you when the price has peaked?
To me if these questions are answered satisfactorily, you make money at least 50% of the time. Please tell me if these questions even have answers. Or is it like asking how much water is there on the earth....

Capricorn · #2 25th November 2008, 10:02 AM

From your questions it seems that you are attempting to catch the tops and bottoms. I feel you should redefine your approach.

jarad_khan · #3 25th November 2008, 10:05 AM

Quote:

Originally Posted by Capricorn

From your questions it seems that you are attempting to catch the tops and bottoms. I feel you should redefine your approach.

Thanks for your prompt response. I am a total newbie to this. I have an engineering background and don't know the first thing about finance. In short I dont have an approach

Capricorn · #4 25th November 2008, 10:09 AM

Cool. Define your objectives, chalk out a plan for yourself. You will find lots of material here.

Look around.

GauravC · #5 25th November 2008, 10:37 AM

Hi , please download Saint`s `teach a man to fish` pdf and go thru it , also , google , wiki/investo pedia are ur friends , scour through these pages on this forum , there is a wealth of knowledge and some very nice people to help and to guide ,

Adheer · #6 25th November 2008, 04:03 PM

Quote:

Originally Posted by jarad_khan

Hello all newbie here so please be gentle. From what I see the ultimate goal of everyone who might visit this forum is to make money. And the most fundamental way to do that in a stock market is to buy and sell at the correct price.
So how do you make that determination? What is it in a stocks value, charts, etc that would make you think the value is correct?
And once you have acquired it what is it that tells you when the price has peaked?
To me if these questions are answered satisfactorily, you make money at least 50% of the time. Please tell me if these questions even have answers. Or is it like asking how much water is there on the earth....

The concept of fair value is a perception based on guess. Therefore it is subject to the laws of mass hysteria, euphoria, optimism, pessimism, exuberance and panic.

If everyone concluded to the same fair value, there would no volatility.

Every time a trade is made, there is a buyer and a seller. The buyer feels that he cannot buy this stock at a better price (without risk of opportunity) - thus he feels the stock is cheap. Likewise, the seller feels that he cannot get a higher price for the stock (without risk of loss) in the near future and wants to sell - thinking it is overpriced and there are better opportunities.

Thus a trade happens based on perceptions and not valuations.

Valuations are based on guess work (perhaps with a good degree of accuracy).

sudoku1 · #7 25th November 2008, 04:07 PM

"Working Towards Success..
Will make u a Master Of It,

But,

Working Towards Satisfaction
Makes u a Legend Of It..

Keep working on ur goals friends & hope for the best....

fast_rizwaan · #8 25th November 2008, 08:06 PM

Quote:

Originally Posted by jarad_khan

Hello all newbie here so please be gentle. From what I see the ultimate goal of everyone who might visit this forum is to make money. And the most fundamental way to do that in a stock market is to buy and sell at the correct price.
So how do you make that determination? What is it in a stocks value, charts, etc that would make you think the value is correct?
And once you have acquired it what is it that tells you when the price has peaked?
To me if these questions are answered satisfactorily, you make money at least 50% of the time. Please tell me if these questions even have answers. Or is it like asking how much water is there on the earth....

The main goal of charting and technical analysis to "chase" the smart-money, who knows the fundamentals of a company and accordingly buy/sell the equity of that company.

smart money, has all access to internal/private information of companies. they knew banks would collapse, hence exited early. we on the other hand do not have any access to the inside information and the news which come on tv is literally "latest" (as in very very late) news

which will put us in more trouble.

The secret of making money is to protect your money. smart money, knows that you will follow it, so, it will play tricks and try all methods to put you into a losing position. The analysts on the tv, they are also part of the smart-money tricks, they'll ask you to buy such and such at such levels, once you buy that, the prices start falling.

So, the secret is to quit your losing position instantly (say 1 to 3% loss is a good-bye signal) or go reverse inline with smart-money.

saint's system is all about chasing the smart-money relentlessly without using the technical tools.

candlestick patterns, moving averages (MACD), stochastic oscillators/RSI, etc., are used to understand what the smart money is doing with the prices.

understand the overall market, then understand the individual scrip in relation to smart money actions, that'll help.

gsalvadi · #9 25th November 2008, 10:45 PM

Hi,

Above members have said enough. Let me try to help you to refine your question.

Quote:

Originally Posted by jarad_khan

ultimate goal of everyone who might visit this forum is to make money.

Though you are right, it is not all about.

Quote:

Originally Posted by jarad_khan

the most fundamental way to do that in a stock market is to buy and sell at the correct price.

There is no correct price. There are only opportunities.

Quote:

Originally Posted by jarad_khan

So how do you make that determination?

Determine yourself to learn, practice what you learn and polish your trading system.

Quote:

Originally Posted by jarad_khan

Or is it like asking how much water is there on the earth....

Not exactly.
"The gull who flies the highest is the gull sees the farthest" - Richard Bach in "Jonathan Livingston Seagull"

Happy Learning