Financial results: forget them, only price fluctuations count
Dassault is finally exporting its Rafale, Renault is going up the slope… “Good news, prices will go up”, conclude savvy savers. On the other hand, speculators, those who stay in front of their computer for several hours a day, don’t care. They are followers, not analysts. They are content to identify any price variations recorded in the hours that follow and, if necessary, take advantage of this to make gains by buying and reselling orders more or less closely spaced. It does not matter if the price development is due to the financial results. What matters is to get on the bandwagon as quickly as possible thanks to the signals given by the chart analysis. The meaning of variation? Also irrelevant. With a CFD, for example, the trader can trade up or down. Certainly, when these operations are completed during the week, they yield little: around 3%. But if you manage two or three a month, it can make a lot of money.
Choice of supports: take an interest in the German DAX index and currencies
This is the golden rule of trading on shares or stock market indices (the most common): you have to bet on volatile securities, whose price is yo-yoing. As for indices, the German DAX is very attractive (it is often preferred to the CAC 40, which is less reactive). With equities, it is more difficult: to aim for rapid gains (within a horizon of five to ten days), it is necessary to identify those whose prices have varied by at least 1% per session for a few days. Luck will sometimes be with you, as with Altran Technologies: on March 13, the share price fluctuated between 8.39 and 8.94 euros. Enough to pocket a gain of 6.5% during the day! However, the daily differences are often lower (rarely more than 2%). Reason why many traders prefer the currency market: price spreads are not more explosive, but the trends are longer, which makes it possible to stay in position for several days in a row. So, to waste less energy.
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Beware of this trap into which many beginners fall. You spot a small company with a particularly unstable and therefore volatile stock market price, which gives you hope for comfortable and rapid gains. You then buy a package of shares, then you decide to sell it when your target price is reached. And there, bad surprise: there is no buyer opposite! All you have to do is watch the price drop, or even fall below your purchase price. Morality: unless you have a lot of time in front of you, you must bet on values that are both volatile and liquid, those whose transaction volumes are high. This is the only guarantee of being able to exchange your securities at any time. This liquidity is ensured with the largest stocks listed in Paris, grouped together in the CAC 40 indices, CAC Next 20 and CAC Mid 100. For other companies, if the amount of daily transactions is less than 1 million euros, there is a risk. This is the case with the small values of compartment C of the rating (less than 150 million euros in market capitalization), such as Archos, Avenir Telecom or Signaux Girod.
Graphic figures: know how to detect buy and sell signals in time
Identifying the stock, index or currency that has potential is not enough. This is where chart analysis comes in. Even if it is not an exact science (false signals are not uncommon), we can notice that the curves representing the prices have shapes that recur regularly. So that, by observing them closely, we can anticipate their future evolution. When a known pattern appears, it is a sign that you can place an order with a fairly high probability of winning. There are about fifteen significant figures. To recognize and interpret them correctly, immerse yourself in one of the many books devoted to this subject or, more simply, consult a specialized website, such as Abcbourse.com
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The most difficult thing, if you are a beginner, will be to introduce yourself to graphical analysis. But after three or four months of training, you should have mastered this technique well. On the other hand, you will need more time to control your stress and maintain the action plan developed in all circumstances.When you are in front of the screen, you have to fight at the same time against the fear of losing and the desire to win more. Many crack and close their position too soon or too late, when the stock price has gone down (or up if they have been playing down), losing 20-30% of the expected gains. The experts are unanimous on the subject: it is when you move away from your initial objectives that you record more losses than gains at the end of the month.
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To prevent yourself from reselling a value at the wrong time, because you have been too greedy or too fearful, there is a simple method: place, just after the purchase, a “trigger threshold” order. Or rather two: one, to automatically sell the title as soon as the profit target is reached. The other, below the purchase price, to limit the loss in the event of an unexpected fall.