Question from a member:
Nice software!
Two questions, do you ever buy high power ranked stocks showing positive trend signals that are not listed as a buy on DreamTai?
Dear Sir/Madam,
Thanks for your kind words.
If there is a high power ranked stock showing positive trend signals but showing as red, I would wait till it turns green.
Here is the reason. First of all, no one can predict where the stock price will go..Not even the $20 million per year salary Wall Street Analysts.
Our aim is to maximise the probability of winning and minimise the risk of losing.
Here is how we do it.
1. The stock is above the blue moving average means it is in an uptrend.
2. The stock has high power ranking means there is a lot of buying volume.
3. The stock price bars are green means the stock upward momentum is turning positive.
4. We set the stop loss so if the stock goes down below a certain point, we are out.
This will give you better odds of winning and low risk of losing. The maximum risk to us is only 2 percent while the upward gains can be a lot.
So, it is safer to wait for a buy signal and then buy.
Question:
Also, every buy recommendation assumes I have $10,000, if I have $5,000 I divide the recommendation by two and fill up my portfolio with enough stocks to spread the risk?
Yes, you can do that. Our aim is to risk maximum 2 percent in any trade. If you want, you can risk one percent or 0.5 percent of your equity. As long as it is less than 2 percent, you are OK.
By the way, did I tell you about Edison's nephew and his investment style ? Oh..I love telling about him !!
Here is the link:
http://dreamtai.blogspot.com/2006/09/how-edisons-nephew-and-his-fellow.html
