Following 5 key elements allow you to find those elite candidates in the thousands of Indian stocks that have the potential to become superperformers. The objective of this process to take all the pertinent information available and pinpoint the precise spot at which to enter a high-probability trade in terms of risk versus reward. It also combines corporate fundamentals with the technical behavior of a stock.
These underlying criteria’s are derived from rigorous research, decades of application in the real world, and observed facts, not personal opinions or academic theories. So read the following points carefully & apply these with your trading decisions & enjoy the huge profit from stock market….
1. Trend. Virtually every superperformance phase in big, winning stocks occurred while the stock price was in a definite price uptrend. In almost every case, the trend was identifiable early in the superperformance advance.
2. Fundamentals. Most superperformance phases are driven by an improvement in earnings, revenue, and margins. This typically materializes before the start of the super-performance phase. In most cases, earnings and sales are on the table and measurable early on. During a stock’s superperformance phase, a material improvement almost always occurs in the fundamental picture with regard to sales, margins, and, ultimately, earnings.
3. Catalyst. Every stock that makes a huge gain has a catalyst behind it. 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 with superperformance potential. A new hot-selling product that accounts for a meaningful portion of a company’s sales may provide the spark to ignite a superperformance phase in that company’s stock price. Approval by the Government, a newly awarded contract, or even a new CEO can bring life to a previously dormant stock. In dealing with small, lesser-known names, it often takes some event to attract attention to a stock. I like to see something that gets investors excited. Whatever the reason, behind all superperformance there is always a catalyst driving institutional interest.
4. Entry points. Most superperformance stocks give you at least one opportunity and sometimes multiple opportunities to catch a meteoric rise at a low-risk entry point. Timing the entry point is critical. Time your entry incorrectly and you will be stopped out
unnecessarily or lose big if the stock turns around and you fail to sell. Time the entry correctly during a bull market and you could be at a profit right away and on your way to a big gain.
5. Exit points. Not all stocks that display superperformance characteristics will result in gains. Many will not work out even if you place your buys at the correct point. This is why you must establish stop-loss points to force you out of losing positions
to protect your account. Conversely, at some point, your stock must be sold to realize a profit. The end of what once was a superperformance phase needs to be identified to keep what you’ve made.
