“The stock market is the anticipator of the economy.” That is right, but it is not how to succeed with stock investing. “If the balance sheet of a company is sound its stock will rise either sooner or later.” Doesn’t this sound plausible? Well, even if the whole stock market contained good and rock-solid companies, it wouldn’t mean that their stocks will rise.

Well, one of the oddities of stock investing is that stocks do not necessarily behave according to the company’s condition. Everybody remembers the years 1998-2000. The internet stocks appeared in the markets and there were plenty of these stocks. And they rose like brokers never dreamed of before. But their fundamentals were unbeaten when it came to making huge losses!

The rule to that booming time is still valid today. Buy stocks when they make strong upward movements accompanied with a huge trading volume. So the upward movement should come together with a lot of buys and sells. That is one of the stock investing principles. Buy when the stock market begins to roll and sell when the stock market makes a big break. One strategy is to buy stocks which have newly surpassed their all-time-high. This is done because it is often seen that those stocks begin to soar even more after having significantly broken the all-time-high-resistance line. This way of stock investing or trading is called the Darvas strategy.

Naturally, the mere buying of rising stocks doesn’t mean stock investing work is finished. The real hard work begins just after purchase. Now the phase of managing stocks has begun. What must the investor do, if they begin to fall and what when they soar? This is the most crucial point of stock investing. Generally, whenever stocks are bought, the maximum pain level must be set up. This is also called the stop loss. This must be done in order to cut losses to a level, which doesn’t bother the investor too much. But even if stocks go vertically upwards after purchase it is very important to adjust the stop loss level that means this level has to be increased in order to lock in some profits.

Doing it that way, increases the probability of stock investing to be profitable. But the main problem is to do all this with discipline and this exactly is the point where the most investors or traders fail.