Here is a letter from one of our members :
I am somewhat confused as to what sell really means - it seems that I am
making too many transactions which is expensive.
Here is my answer. Please feel free to add your own opinions, views, suggestions, feedback .
Dear Sir,
You said that you are making too many transactions. It appears that your stocks are being whipsawed around and so you have to buy them and then sell them again and then buy them again.
The whip saw happens when the stock is moving in a flat range and is not trending.
Dreamtai works best with strongly trending stocks.
You have to select strongly trending stocks, that is stocks which are in a strong uptrend or downtrend.
How do you detect a strongly trending stocks ?
Just because a stock is there in the New Buy or New Sell does not mean that you have to make a trade.
CHECK THE STOCK TREND
For those stocks, you have to see if it is in a strong upwards trend.
If the DOTTED MOVING AVERAGE LINE is slanting upwards (30 to 45 degrees ) or downwards, then the stock is in a strong trend.
See the sample stock picks here in this blog http://dreamtai.blogspot.com
Also, whipsaw also happens when the market is in a flat zone and is not going anywhere. You just have to wait them out.
It is just like fishing. Some days, you will not catch any fish and some days, you will have a huge catch.
The most important thing to do during this flat period is not to lose lots of money.
Being stopped out is not bad but losing a fortune on your stock positions is bad.
Let me give you a very interesting example:
Have a look at NAVI chart at the following web link
http://finance.yahoo.com/q/bc?s=NAVI&t=3m&l=on&z=l&q=b&c=
In the past 3 months the maximum it has gone is from $1.5 to $4.5
Then have a look at the two year chart
http://finance.yahoo.com/q/bc?s=NAVI&t=2y&l=on&z=l&q=b&c=
Here, the stock has been in the $ 1 to $ 5 range
Wait, now PREPARE YOURSELF for a SURPRISE !!!
OK, are you Ready ??
Now look at the 10 year chart.
http://finance.yahoo.com/q/bc?s=NAVI&t=my&l=on&z=l&q=b&c=
It is SHOCKING. I know you would not believe it if you look at the above chart.
Can you imagine the investor who had just held to this loser stock all these years hoping that one day it will go up again ?
I can assure you that it is much better suffering a tiny loss and getting rid of the stock than being sentimental, believing the analysts on TV and holding on to the stocks.
In th next question, I will address how to buy or sell stocks using Dreamtai.
