Money and cash return will drive you to trade now!
To start off, there is no 100% right or wrong as to when to click trade for a stock but rather, the best use of information at that moment to make the best decision. When an investor did the research and felt confident that the stock price will rise in the short or long term, and then is the right time to trade or buy the stock. But what make the investor feel confident then to click to trade?
Let’s look at some quantitative guides. The Relative Strength Index (RSI). This is a momentum oscillator that measures the stock's price to determine if it is reaching a point of reversal. The RSI oscillates between zero and 100 and generally considered overbought when above 70 and oversold when below 30. In the RSI, it is also believed that one can observe for support or resistance lines. In a bullish trend, the RSI tends to remain in the 40 to 90 range with the 40-50 zone acting as support and conversely during a bear trend, the RSI tends to stay between the 10 to 60 range with the 50-60 zone acting as resistance. The time spent is those ranges will determine if one should trade that stock then.
Next, one could look for any trend of increasing sales. If it is increasing, verify if the sales growth is sustainable. This can normally be seen in the company’s press release where the management would say something about the sales per quarter. The numbers plus the comments given can guide one to understand if the company is experiencing growth or just a sudden sales spike. If increases in sales, naturally, revenue and profit will rise and so does the stock price. However the quarterly reports always made my heart missed a beat whether it was for good or bad outcomes. In general, smaller companies in the $100 million to $1 billion sales range, should grow around 10% annually. Larger companies should be growing by at least 3% a year to determine a good buy with a good trend.
Next one should go through analysts’ reports and consensus price targets, which average out all the other analysts’ opinions. It is sometimes helpful to start learning with stock which one is familiar with. Knowing about the company first can help to put the earnings reports into context. For my rule, from top peak to bottom peak over past 2 years and stock price at less than 50%, then it is worth me even considering. After which one should be looking at the price-earnings ratio (or P/E), which takes the price per share and divides it by earnings per share. Generally for U.S. companies, a P/E below 15 is considered a good value and a P/E over 20 is considered a bad value. P/E can also be compared against other stocks in the same industry.
Subsequently, the discounted cash flow (DCF) analysis, which brings projected cash values and discounts back to the present day should be considered. This will give the investor a theoretical price target; if the actual price is below the target, then it is a good buy.
Thereafter, I would look at the dividends. Dividends have played a notable role for the investor to make decisions. The dividends, if reinvest, can give a hefty compounding interest in the long run. Sizeable dividends compared to those companies in the same industry will make one buy the stock. However, a stock that distributes profits in the form of dividends to shareholders may not necessarily be a better investment, it may be drawing shares to pay dividends and let the share price drop eventually. One still needs to look at the potential of the company before deciding to buy the stock.
Next would be the qualitative analysis where news plays their part. Many companies offered Wall Street some sort of guide on future earnings and it is important to decide how the masses would react to the news. Often, the company's guidance for the next quarter may be better or worse than analysts expectation and these would move the stock price up or down, at least short-term. These external factors, such as an industry-wide downturn, shortage of parts etc. might affect the company. These considerations can be as important as the fundamentals and technical indicators.
Next is when a company uses its cash to buy back its own stock, it should mean a good sign that management believed that the stock is presently undervalued. It can also mean that the company wants to reduce the total share count in the public domain in order to improve financial ratios or boost earnings, thus making the company more attractive to the analyst community. It may be a public relations ploy to get investors to think the stock is worth more. Generally, share repurchase programs should be a sign that there are better times ahead for the company.
On the other hand, split shares or giving rights often drop the prices of stocks to the announcement. Splitting shares normally allowed more investors to enter the company and raise cash inflow for company but not necessarily means the company is performing well. One should be ready to give up or sell the stock then. Giving rights upfront is to drop the value of the current stock price to the stated rights price. Hence this is the time to trade at that stated price instead.
In essence, the total number of outstanding shares falling, perhaps as a result of a repurchase program, which means future earnings are spread across fewer shares, making earnings per share higher. Conversely, as shares outstanding increases, earnings are divided among a larger pool of investors and become diluted, decreasing your potential for profit. One should decide when to trade with these information.
Another area of belief is that it is perceived that the best hours to buy stocks are between 9:30 am and 11:30 am and best day of the week to buy stocks is on Monday or middle of the month is considered the best time to buy stocks. The best month to buy stock is in September. This is because based on historical data; major stock market indices have seen more losses on average compared to other periods. I take this as a food for thought but not my guiding principle.
Ultimately, it is never easy to time the market. Instead of waiting for the plunge, one should accept the Dollar-cost averaging (DCA) process. This is a process of breaking a bulk purchase into smaller units and buying the stock periodically. One need not have to buy more when the price has fallen beyond a certain percentage but buying on the same date every week or month consistently. The idea behind it is to buy in small units instead of making a single purchase all at once. Every "red" day is an opportunity to buy at a discount and not as a day to panic. DCA should only be adopted with proven companies, which have a healthy track record and would last for a long time.
My final thoughts are that no one really knows when is the perfect time to click trade. The perfect time is as clear as only on hindsight. Citing Warren Buffet’s quote for us to learn is that "The sooner you get in, the better. Don't wait to buy stocks. Buy stocks and wait." Time in the market beats timing the market. One would miss 100% of the chances one does not take but to wait on the sidelines, this may not always be the best option in the long run commonly know as opportunity cost. $Sembcorp Marine(S51.SG$ $Tesla(TSLA.US$ $Twilio(TWLO.US$ $MicroStrategy(MSTR.US$ $Riot Platforms(RIOT.US$
Let’s look at some quantitative guides. The Relative Strength Index (RSI). This is a momentum oscillator that measures the stock's price to determine if it is reaching a point of reversal. The RSI oscillates between zero and 100 and generally considered overbought when above 70 and oversold when below 30. In the RSI, it is also believed that one can observe for support or resistance lines. In a bullish trend, the RSI tends to remain in the 40 to 90 range with the 40-50 zone acting as support and conversely during a bear trend, the RSI tends to stay between the 10 to 60 range with the 50-60 zone acting as resistance. The time spent is those ranges will determine if one should trade that stock then.
Next, one could look for any trend of increasing sales. If it is increasing, verify if the sales growth is sustainable. This can normally be seen in the company’s press release where the management would say something about the sales per quarter. The numbers plus the comments given can guide one to understand if the company is experiencing growth or just a sudden sales spike. If increases in sales, naturally, revenue and profit will rise and so does the stock price. However the quarterly reports always made my heart missed a beat whether it was for good or bad outcomes. In general, smaller companies in the $100 million to $1 billion sales range, should grow around 10% annually. Larger companies should be growing by at least 3% a year to determine a good buy with a good trend.
Next one should go through analysts’ reports and consensus price targets, which average out all the other analysts’ opinions. It is sometimes helpful to start learning with stock which one is familiar with. Knowing about the company first can help to put the earnings reports into context. For my rule, from top peak to bottom peak over past 2 years and stock price at less than 50%, then it is worth me even considering. After which one should be looking at the price-earnings ratio (or P/E), which takes the price per share and divides it by earnings per share. Generally for U.S. companies, a P/E below 15 is considered a good value and a P/E over 20 is considered a bad value. P/E can also be compared against other stocks in the same industry.
Subsequently, the discounted cash flow (DCF) analysis, which brings projected cash values and discounts back to the present day should be considered. This will give the investor a theoretical price target; if the actual price is below the target, then it is a good buy.
Thereafter, I would look at the dividends. Dividends have played a notable role for the investor to make decisions. The dividends, if reinvest, can give a hefty compounding interest in the long run. Sizeable dividends compared to those companies in the same industry will make one buy the stock. However, a stock that distributes profits in the form of dividends to shareholders may not necessarily be a better investment, it may be drawing shares to pay dividends and let the share price drop eventually. One still needs to look at the potential of the company before deciding to buy the stock.
Next would be the qualitative analysis where news plays their part. Many companies offered Wall Street some sort of guide on future earnings and it is important to decide how the masses would react to the news. Often, the company's guidance for the next quarter may be better or worse than analysts expectation and these would move the stock price up or down, at least short-term. These external factors, such as an industry-wide downturn, shortage of parts etc. might affect the company. These considerations can be as important as the fundamentals and technical indicators.
Next is when a company uses its cash to buy back its own stock, it should mean a good sign that management believed that the stock is presently undervalued. It can also mean that the company wants to reduce the total share count in the public domain in order to improve financial ratios or boost earnings, thus making the company more attractive to the analyst community. It may be a public relations ploy to get investors to think the stock is worth more. Generally, share repurchase programs should be a sign that there are better times ahead for the company.
On the other hand, split shares or giving rights often drop the prices of stocks to the announcement. Splitting shares normally allowed more investors to enter the company and raise cash inflow for company but not necessarily means the company is performing well. One should be ready to give up or sell the stock then. Giving rights upfront is to drop the value of the current stock price to the stated rights price. Hence this is the time to trade at that stated price instead.
In essence, the total number of outstanding shares falling, perhaps as a result of a repurchase program, which means future earnings are spread across fewer shares, making earnings per share higher. Conversely, as shares outstanding increases, earnings are divided among a larger pool of investors and become diluted, decreasing your potential for profit. One should decide when to trade with these information.
Another area of belief is that it is perceived that the best hours to buy stocks are between 9:30 am and 11:30 am and best day of the week to buy stocks is on Monday or middle of the month is considered the best time to buy stocks. The best month to buy stock is in September. This is because based on historical data; major stock market indices have seen more losses on average compared to other periods. I take this as a food for thought but not my guiding principle.
Ultimately, it is never easy to time the market. Instead of waiting for the plunge, one should accept the Dollar-cost averaging (DCA) process. This is a process of breaking a bulk purchase into smaller units and buying the stock periodically. One need not have to buy more when the price has fallen beyond a certain percentage but buying on the same date every week or month consistently. The idea behind it is to buy in small units instead of making a single purchase all at once. Every "red" day is an opportunity to buy at a discount and not as a day to panic. DCA should only be adopted with proven companies, which have a healthy track record and would last for a long time.
My final thoughts are that no one really knows when is the perfect time to click trade. The perfect time is as clear as only on hindsight. Citing Warren Buffet’s quote for us to learn is that "The sooner you get in, the better. Don't wait to buy stocks. Buy stocks and wait." Time in the market beats timing the market. One would miss 100% of the chances one does not take but to wait on the sidelines, this may not always be the best option in the long run commonly know as opportunity cost. $Sembcorp Marine(S51.SG$ $Tesla(TSLA.US$ $Twilio(TWLO.US$ $MicroStrategy(MSTR.US$ $Riot Platforms(RIOT.US$
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NANA123 : Thank you for your sharing![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
earning_s : thank you for your sharing! So about the best time to sell, can you analyze it?
Alfred Heng : Great