I am an active investor in the market and have made huge profits and losses. However I have always wanted to figure out what is a safe investment strategy, how do i time the market, is it the right time to buy? I am sure these thoughts do cross your mind, look no further as I am making an attempt to answer some of these questions in this post.
While you can be at the short and long side, I don’t prefer a short sell strategy as I feel it’s really risky, so in this article we are going to talk about the Long trade.
The first trade pattern I want to talk about is Imperva (Ticker IMPV). Please note that we are talking huge profits here, our aim is to protect the investment and make a safe profit strategy. Now coming to this trade, Imperva is in the cyber security space and the company makes enterprise security software. It’s a good company, has been around and did provide opportunity at least three times in the last years, if you see below, someone who was watching the charts could have made an easy profit if they bought the stock in the 35-37 dollar range. I again say that you don’t need to make a trade everyday but need to decide on a price point where you are comfortable to initiate a trade looking at historical trade patterns of the stock and making a purchase at the support.
The second trade pattern is the volatility trade, which typically presents itself during quarterly earnings season. This can be a good risk reward strategy if you understand the fundamentals of the company and understand their business model. The trade is simple, short sellers will push the prices down immediately after the results, market will then recover and think that this was an over-reaction and the stock will reach the pre-earnings price point. The key here is to pick the right stock. See some examples for yourself. (Netflix and Apple as an example)
Netflix Stock fell earlier last year as it missed the analyst estimates, however the stock fundamentals did not change and it has more than doubled since then. Another stock which also followed the similar pattern was Apple which was trading in the low 90’s in 2016 before Buffet made the purchase and since then has continued it's upward journey. People who believed that the company was going down were too short sighted and again someone who had the patience and the belief in the company have been richly rewarded.
I will be back with more trade patterns and more ways to make money so stay tuned and thanks for reading this post. Please do share your comments.