The key is to do your analysis and buy at the right time. Do not let what others are doing influence you. When an asset/investment is considered cheap and its growth is steady, many investors tend to avoid it as they don’t think that they will make money. Yet, when the price starts to surge suddenly people will flock to it. So instead of buying when the stock was good value, people end up paying over the odds for the same stock. They then may make a profit quickly, but they are also at risk of losing money as the price could adjust suddenly. Also, when you buy a stock at a high price, you limit your profit.
So what should we do? If you have a friend working for a Big Shot and can have reliable insider news, congratulations! But most of us are not lucky enough to have this inside information. If however, you can spend more time on chart analysis, you can track and trace the movements of market Big Shots to discover whether they are collecting (bulk buying) or distributing (bulk selling); therefore, there is no need to worry about the effects of insider, or “smoke” news.
However, even then it’s still possible to make mistakes and lose money. Perhaps the price will drop unexpectedly, or a “black swan” event will occur that could affect the investment’s value. This can happen to the best of investors. How can these situations be avoided? Not by luck or by chance, but taking a deep study of Wave Theory, Chart Patterns, Technical Indicators and Candlesticks can help you to track market patterns and try and avoid the dips.