How to Maximize Your Return In Up or Down Markets

By Kin Talk on Friday, September 20, 2013 with 0 comments

How to Maximize Your Return
In Up or Down Markets

Remember at the beginning of this report when we said we’d show you the Three Simple Steps to Stock Profits?
We already learned about step one: picking profitable stock patterns. We’ve also covered step two: minimizing your risk. Now we’ve come to the final step that makes the ChartAdvior system so unique: how to profit from stocks, even when the stock goes down.
It’s a common misconception that traders can only make money when the price of a stock rises.
Investors can make money anytime they can predict a stock’s future movement – up or down.

It’s time to learn about short selling.

Short selling is the secret to making cash in a down market. Here’s how it works:
  1. Identify a stock pattern that suggests a stock is headed down.
    Example: The Cleveland Cliffs descending triangle pattern in April of 2005 was perfect for short selling.
  2. Borrow shares of the soon-to-decline stock from your brokerage.
    Example: Let’s say, right before the Cleveland Cliffs pattern (above) breaks out and moves downwards, you borrow 100 shares of the stock.
  3. Immediately sell these borrowed shares.
    Example: You immediately sell these borrowed shares of Cleveland Cliffs at the price just below the support line: $70 per share, 100 shares = $7,000. You are now sitting on $7,000. But, of course, you still owe the brokerage 100 shares, which you don’t currently have anymore.
  4. Wait for the stock to drop to your target price.
    Example: You wait for the stock to reach the target price, which in this example, is $63 per share.
  5. Buy the shares at the target price.
    Example: You use the $7,000 you made earlier to purchase 100 shares at $63 per share. That costs you $6,300 dollars and leaves you with an extra $700 in your account.
  6. You return the shares to your brokerage.
    Example: Return the 100 shares of Cleveland Cliffs to your brokerage.
  7. Enjoy your profits.
    Example: You earned $700, a 10% profit on $7,000. And even better, you made $700 when the price of CLF declined and all other investors were losing money!

Category: Technicals



Post a Comment