Unorthodox Trading Techniques that Can Help Ensure Success
Most traders know how to use moving averages and other common technical indicators to select potentially profitable stocks. But are you aware of some of the more unorthodox methods for making informed choices among hundreds of securities? Every day, many experienced investors, speculators, and trading enthusiasts use non-mainstream strategies for picking winners. In addition to volume-based techniques, there are approaches based on premarket activity, personal preferences, quarterly dividend payouts, and earnings reports. Here's a short review of how some of the more popular, yet unorthodox styles of investing work.
For those who follow a certain school of thought, all the important information about securities potential price movement is revealed by volume. In other words, these folks pay more attention to the number of shares traded than overall prices. If there's a spike in volume, they read the increased interest as a relatively positive sign, regardless of dollar values. It's entirely possible to combine both value and volume to come up with good indicators of the future movement of a given company's shares. Volume enthusiasts rarely use quantity alone as their only tool. Most incorporate other factors into the mix for a more reliable way of making predictions.
For a short amount of time each day, about 90 minutes, the major securities markets are open for premarket transactions. It's not a time when millions of deals take place. In fact, spreads are large and it might take a while for you to find someone to be the second party to your transaction. However, many active traders who don't take part in the premarket sessions look to the data as a guide for the upcoming day. For instance, if your favorite security, XYZ Corp., suffers a massive decline in price before the opening bell, chances are that a bad day is in store. The opposite might be true if premarket prices rise a great deal. Serious investors cull data from premarket stock trading to calibrate their early morning buying and selling.
Making It Personal
Non-professional investors often rely on their personal experience to lead their buying and selling activity. This is especially true for long-term investors who use every day personal products like toothpaste, foods, and clothing as a way to make decisions. This real-world style of investing became popular in the 1970s and has maintained a core of adherents. Simply put, you identify the items you already use in your household and purchase a stake in the companies that manufacture them. It's easy enough to extend the method and include the bank you use, the manufacturer of your car, and the company where you work (if they are listed on an exchange).
Dividends and Earnings
Those who like numbers and hard data often gravitate to dividend payout histories and quarterly earnings reports. For example, if a corporation has increased its dividend for the past five years in a row, that could be interpreted as a reliable sign that they're doing well. Additionally, a string of positive earnings reports, in which all financial targets are hit or exceeded, can portend good things about the future of a company's share prices.