In my article on PowerYourTrade Review many readers suggested alternative solutions to PowerYourTrade service and my answer was pretty much the same for all of other stock tips providers i.e. stock market tips don’t work. Let me share why stock market trading tips don’t work but before going into the details of why stock tips don’t work let us understand the type of stock tips.
Types of Stock tips
There are 3 major types of stock tips floating around.
- Trading (Intra day or buy today sell tomorrow)
Fundamental Tips– Fundamentals stock tips means that fundamentals of the company is improving and so you don’t need to be buying the shares immediately and you can have such stock in the list of buy items and once you think stock is at the right price of good support levels or strong break out levels, you can buy.
Trading Tips – For intra-day trading tips understand one thing which is – Are you acting on the trading tips when everybody else is? When a stock tips is shared to large number of subscriber, everyone would act on it and may inflate the price of the stock. If you also do the same you may be buying the stock in a spike which means you would not be able to make lot of money out of the news and so it is important for you to understand that you not only read the stock tips but also understand how and when you should be buying that stock. The idea of morning spike pattern described in my book pretty much works for such news inflow and you need to understand how to play them.
Positional tips – Positional tips are for the time frame of few weeks to a month and in such positional tips you have to understand the underlying basis of the tips. Is the result of the company expected to be good, or is any board meeting coming up with possible chance of declaration of dividend etc. And once you know the basis of the tips you should understand that you should not wait for the actual event to happen but offload you position in the run-up to the expectation of the event. I have explained in my book and also in how chart pattern repeats by itself where good result of good companies does not mean stock prices go higher on the result days.
These are other types of stock tips floating around as well and they are
Tips from Distant Relatives – How many times I see people are investing in equity market because some of their relative has made a fortune in market. They try to buy the same stock and yet cannot make anything out of it because they don’t understand that it is not only the name of the stock that matters but level at which you trade also matters a lot.
Email Spam tips – There are hundreds of thousands of free email scammers that give stock tips via email. They will send an email to thousands of people to try and push the stock price up and so if you react on those stocks, you will be trapped.
Insider Information Tips – I believe in one thing which is I be the last person to know any insider information of a company because the owners and large players have more chances of knowing that well before time and then possibly the reporters and then it is we the retail investors and so if you know how to play the insider information based on price action, you can be safer in the market or else yet another way to get trapped.
Why stock tips don’t work for you?
When people subscribe to stock tips, they tend to trade blindly based on tips and then end up making no money. Avoid trading blindly believing the stock tips services.
So you can subscribe to those tips and get alerts but trade only based on your availability and if you see a perfect setup.
So the important thing to understand is – How you apply those tips and make them work for you.
Every stock tips should always be coupled with a stop loss and so if you are playing in the market on the tips make sure you also respect the stop loss as well and be ready to take the short term losses as well.
Share your stock tips stories in comments below.