ne of the most difficult things to do and often trading systems do not hold the correct answers to the question of when to sell your stock. This is where the modification comes in to play. If you followed this system you would sell when your stock declined by ten percent. This is a good time to sell if something fundamentally went wrong with the company, but if your stock was over sold it would have been a bad time to sell. For example, if you bought into Digital Equipment just before Compaq announced they were going to buy them out, you would have lost about ten percent. If you followed the trading system you would have sold and accepted a loss of ten percent. If you had realized that this particular stock was being over sold because this announcement was really nothing to worry about you would have held on to the stock. Well as a result of being over sold the stock shot up almost 100 percent in the next month, alone (Shimo 44).To find these sold great companies you have to know what to look for in a stock. I believe that good companies will buy their own stock, so I like to look at the percentage of institutional shareholders of a company before I buy"(Sheimo 26). When a company announces a stock buy back plan it often gives the stock a boost because it attracts other Morgan 4buyers as well as the employees of the company. A low PE ratio is always nice to see when looking for a stock to buy because it can mean that this particular stock has more room to the upside than a stock with a high PE ratio. When a stock has good earnings it will typically perform well through out the positive earning announcements. If you stay with the stocks that have good earnings it will lower your risk of loosing your capital and increase your chances of expanding your gains. If a stock has had a real nice performance in the last few quarters there is a chance that the stock might split. When a stock splits 2-for-1 the price is cut in half a...
