1. Buy UPTREND stocks and avoid trading against the trend.
2. Make TREND your friend.
Generally, look into the trends of MARKETS : S&P, DOW, HSI and/or KLCI.
How to see UPTREND-ing stocks?
Click on charts : IF the charts showing that it is going HIGHER, it is said to be in UPTREND. Draw a MA(20) line, and it should show a UPTREND line.
Also, we will see Higher Highs(HH) and Higher Lows (HL).
That is an easy exercise : See big brothers like DOW and HSI first. Then KLCI. If the markets are going higher and higher, it is UPTRENDING. Generally, the index-stocks will move in tandem(logical-la, right?). And most of other stocks should be in similar trend.
TEH : At the moment, we are in DOWNTREND. KLCI brokedown MA(20) in the mid of May, down the MA(200) one week ago. At the moment, after two BULL DAYS in KLCI, up 20 points + up 15 points today, KLCI rebounded above MA(200) today. But, it has NOT confirm that the trend is reversing. Technically, it rebounded due to most of stocks are OVERSOLD, and MA(200) is the support now. This rebound may be SHORT-live.
Terms : MA(20) is a short-term trend and MA(200) is a long term trend.