As we have established, discovering and qualifying tradable stocks is the cardinal first steps in making a trade, yet it's just that—a first step. You're not going to earn your day's pay by just finding tradable stocks; you're going to make your day's pay by trading them.
In essence, it's simple—you make money as a trader by buying low and selling high. As you track a tradable stock, the following questions remain: How do you know when to buy and when to sell? How do you know when the stock has reached a low (where you can buy it) and when it has reached a high (where you can sell it)? Needless to say, there is an abundance of theories about how to do just that. In fact, the number of books on this very subject could probably fill an entire wing of your local library. Interestingly enough, most of these theories are completely contradictory; one expert will tell you to do one thing and the next expert will tell you to do just the opposite!
So with all of these conflicting theories, how do you choose one on which to base your trading? The answer is simple: you don't. As I stated in the introduction to this book, the key to successful active trading isn't in being a financial genius.
It took me many years to accept that fundamental truth. For the longest time, I thought I knew how to pick winning stocks. After all, I worked in the financial capital of the world, New York. I have professional relationships with many of the largest and most revered ...