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Why it pays to be a momentum trader and NOT a fortune teller!

by , 18 February 2013

How many times have you heard that, in order to make money, you only have to follow one simple rule?

Buy low, sell high!

But here's the thing…

This trading myth is busted.

The reality is, this rule works well in theory, but more often than not fails in practice.

And to demonstrate this, I've turned to self-made millionaire Vince Stanzione's three simple principles which fly in the face of the ‘Buy low, Sell high' rule…
“I promise you three separate opportunities to make six times the money your bank will make you this year - in just a few days.”

- Warren Jeffery, Head of Research and Trading, FSP Invest

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Vince Stanzione’s three principles to bust the ‘Buy low, Sell high’ myth and make fortunes on the market

Vince Stanzione is a UK born self-made multi-millionaire.

He's been trading for over 27 years and continues to prosper.


At the moment, he’s currently living in Monaco, trading with his own funds.

He’s been quoted in many media outlets, newspapers and websites including, Yahoo Finance, Market Watch, Reuters.com, The Guardian, New York Times and so on.

His long term friends and commodities gurus include, Jim Rogers and Dr. Marc Faber.

He specialises in Forex, Stocks and Commodities using the principles I’ve outlined in this article.

1.    Everyone wants to buy something at a bargain

Imagine a share that falls over 10% or even more. Now followers of the ‘Buy low, Sell high’ rule would be itching to sink their money into this stock and buy as quickly and as much as they can? After all, you’ll probably hear them saying, “The price can’t go any lower” and “It’s so cheap around these levels, I have to buy here”.

The reality is, there’s only one time a stock can’t go any lower…

When it’s trading at Zero!

So don’t go buying shares just because their price is low.

There are thousands of investors looking for a bargain. And they’ll all be buying on share price pull-backs. This means that even if everyone is scrambling to get in on a low priced share, it doesn’t mean it’s a good investment.

2.    Trade what you see and not what you think

Vince Stanzione tells us to act on price and not on emotions. His quote is “Price tells you the truth and should always be obeyed” If you base your decisions on emotions and media sensationalism, your judgment will be clouded by the hype.
 
This tells you that a share price trades where it should be trading. So if it’s fallen, then there’s probably a good reason why it’s fallen. And if it’s rising, then there’s probably a good reason why it’s rising. So buying a share that’s rising, although it goes against the rule of ‘Buy low’, means you’ll likely be buying a share with reason to keep going up.

3.    Be a momentum trader rather than a fortune-teller

An ideal trading situation is to buy at the bottom and getting out your positions at the top.  Who wouldn’t love to live in a World with zero doubt and full proof predictions?

But let’s come back to reality. There’s always some doubt and risk in the markets. And despite how much we might all believe we can call a top or bottom in the market, most of the time we can’t.

That’s why I’d rather go with Vince Stanzione’s methods and trade with market momentum and the trend. This way, I don’t have to try to predict when a trend will turn around. And this has made me a more confident trader with less worrying about trying to second guess the market.

So, if you think you can predict the future, by all means, trade that way. But if you’re like me and are not a fortune teller, then you should look at trading with the markets momentum.


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Francois Joubert has JUST uncovered 5 little stocks that are sure to be the biggest winners of 2013!

These shares are so hot, Francois believes that EACH and every one of these under-the-radar stocks could earn you at least 80% on your money over the next 18 months.

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Three reasons to buy shares while momentum is up

1. You don’t have to sit while the market moves against you.

2. You follow the shares direction so you don’t have to guess which way to trade.

3. The fact the share price is heading up tells you there’s likely a reason to be buying the share.

So stop trying to predict the market and start trading with the trend!

That way you can take the guess work and the stress out of trading.




Why it pays to be a momentum trader and NOT a fortune teller!
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