Stock Trading Tips October 21, 2008

The Dow has dropped 20% over the last few months. The S&P 500 is down 20.8% and the NASDAQ is off 21.7%. But the worst isn't over. In fact, it's just beginning. Many experts believe that the Dow could shed another 20% by next spring.

Bottom line: If you're trying to make money using a traditional "Buy and Hold" strategy, you are going to experience a financial bloodletting of severe proportions.
That's because in a falling market, even good stocks drop. Buying stocks and hoping they will go up in a bad market is like trying to swim against a rip tide.

You simply aren't going to make it. Period. At the same time, keeping all your money in cash exposes you to the risks of inflation. You can't stop building wealth just because the market is falling. If you wait for the markets to reverse, you are going to be waiting for a very long time.

Smart stock investors can generate winning picks regardless of market direction as their strategies are ideal for today's market because they make money when stocks fall. In fact, they show big triple-digit gains in a falling market with very limited risk. While the bulk of their portfolio is tucked away in cash, they are still able to seize opportunity and build a nest egg.

Smart investors are able to predict the short-term market movements with an uncanny level of timing and pricing accuracy. More importantly, they generate simple, specific plays individual investors can use to nail massive profits. Here's how it works:

As you know, stocks constantly move up and down. And, as a stock moves, a trend line is established. The trend line shows where the stock has been, and where it is likely to go next.

And here's the thing: The trend line is like a magnet.
In the short-term, a stock can move away from the trend line. But over time, it always moves back to the trend line.

Crisis breeds opportunity. The bigger the crisis, the bigger the opportunity if you know where to look.

To make money in the market in today’s economy you can still keep 95% of your portfolio in cash or other rock-solid safe investments while using the remaining 5% of your portfolio to exploit the ongoing market weakness for big gains.

In a sense, it's liking putting your money in an Iron-Clad mattress out of harm's way and still being able to take advantage of the incredible money making opportunity at hand.

This is important because it allows you to build wealth, even as most people are suffering irreparable financial damage.

As the U.S. financial markets crumble, some smart folks are turning the crisis into a phenomenal wealth-building opportunity.