Mark has been trading and investing in the stock market for 30 years. Stock trading is how he made his fortune.
Starting with only a few thousand dollars, he was able to parlay my winnings to become a multimillionaire by age 34. For him, trading isn’t a sport or just a way to make money; Trading is his life.
He didn’t start out successful. In the beginning, he made the same mistakes every new investor and traders make. However, through years of study and practice, he gradually acquired the necessary know-how to achieve the type of performance you generally only read about.
I’m talking about super performance. There’s a big difference between making a decent return in the stock market and achieving super performance, and that difference can be life-changing.
Whether you’re an accountant, a schoolteacher, a doctor, a lawyer, a plumber, or even broke and unemployed as he was when he started, you can attain super performance.
Success requires opportunity. The stock market provides an incredible opportunity on a daily basis. New companies are constantly emerging as market leaders in every field of high-tech medical equipment to retail stores and restaurants.
To spot them and take advantage of their success you must have the know-how and the discipline with proper investment techniques which he has written in his book TRADE LIKE A STOCK MARKET WIZARD.
According to Mark, there are five main elements for Superformance Stocks:
- Trend:- Any trend exists for 200 days. Virtually every super-performance phase in big, winning stocks occurred while the stock price was in a definite price uptrend.
- Fundamentals:-Most super performance phases are driven by an improvement in earnings, revenue, and margins. During a stock’s super performance phase, a material improvement almost always occurs in the fundamental picture with regard to sales, margins, and, ultimately, earnings. Always see the quarterly report of stock before buying it.
- Catalyst:-The catalyst may not always be apparent upon a casual glance, but a little detective work on the company’s story could tip you off to a stock
- Entry Point:-Most super performance stocks give you at least one opportunity and sometimes multiple opportunities to catch a meteoric rise at a low-risk entry point.
- Exit Point:-Not all stocks that display super performance characteristics will result in gains. This is why you must establish stop-loss points to force you out of losing positions to protect your account.
Over the years he has analyzed tens of thousands of publicly traded companies.
What Mark has discovered is that they generally tend to fall into one of six categories for trading:
1. Market leaders:- These companies are able to grow their earnings the fastest. An industry’s strongest players are usually number one, two, or three in sales and earnings and are gaining market share. A company that takes a market share in a slow-growth industry can also grow its earnings quite nicely. A good balance sheet, expanding margins, high return on equity, and reasonable debt are all signs of good management.
2. Institutional favorites:- You’re not likely to get a super performance move. These are mature companies, and they’re certainly no secret. They generally have a good track record of consistent sales and dividend growth, and they often attract conservative institutional capital because of their proven history.
3. Turnaround situations:-Big profits can be made in troubled companies that turn around. In purchasing a turnaround situation, you should look for companies that have very strong results in the most recent two or three quarters and fundamental is strong enough to give the boost.
4. Top competitors: –A top competitor may not be the superior company in an industry group or even have superior products compared with the true market leader; rather, it’s in the right place at the right time. Even though it may be in the same rapidly growing industry as the market leader, the company’s products or stores may be less popular. These “competitor” companies can also produce high rates of earnings growth and enjoy large-scale price advances, albeit inferior to that of the leader. Keep Your Eye on the Competition
5. Cyclical stocks: –A cyclical company is one that is sensitive to the economy or to commodity prices. With cyclical stocks, the trick is to figure out whether the next cycle turn is going to happen earlier or later than usual. Inventories and supply and demand are important variables in analyzing the dynamics of cyclical stocks.
6. Past leaders and laggards: –A laggard is a stock that belongs to the same group as the market leader but has inferior price performance and in most cases inferior earnings and sales growth. Stay Away from the Laggards while trading.
Before Trading or even Investing in the stock market, you must have to do some research about the stock.
And you must considered about the following elements and category of stocks while trading in the stock market.