Trading Growth Stocks

www.ProfitableTradingTips.com – Trading Growth Stocks The recent dramatic plunge in stock price of Netflex – NFLX – brings to mind the issue of trading growth stocks. Growth stocks can make you rich, if you get in early and sell before a market correction. Trading growth stocks can also be very profitable for traders who successfully anticipate a collapse in stock price and sell short or buy puts on the stock. In trading growth stocks fundamental and technical analysis both come into play. As in all stock trading and stock investing, stock prices eventually land where fundamental analysis would predict. However, the market enthusiasm that occurs when a stock like Netflix goes up becomes contagious and stock price and price to earnings ratio can quickly outrun the fundamentals. Also, when fundamentals change, the market quickly reacts, although there can be a brief but profitable period of market inefficiency as prices adjust. There is profit to be made in trading growth stocks on both the up and down side. Traders use technical analysis to help anticipate changes in market sentiment and trade accordingly. There seems to come a time in every bull market when every stock seems to act like a growth stock. Individuals who never thought about stocks, much less invested in them, open accounts and start buying stock. The same can happen with individual stocks when the overall market is flat or declining. Naïve investors buy stocks because they have heard of them and heard that …