Monday, September 27, 2010

Using Leverage and Portfolio management

If ones analysis is good and the stock is behaving and moving in a fast pace one should put more resources into that stock. One should also use more leverage into that stock.

I got CMG at 93 range but did not use much money or leverage. I got a couple of thousand dollar profit but that was a mistake to not put more resources into the stock that is moving wildly. 

Then when the stock cools down one can cut down the leverage and keep half the stock, for a longer slower growth phase. This is an important strategy one needs to use, to make maximum profits. Learn to take more profits, when the stock is moving wildly. Cut back risk when one feels it is too high to half position. That makes the use of leverage wisely. 
This strategy coincides with George Soros strategy of using leverage.

This worked out well for me with JKS and I got good profits. Now I am using the same for CIS. Need to see what will happen. 

One needs to learn to identify stocks that are new breakout and put more resources in these kind of stocks. Not that one that are already in their later stages of stock rally. One has to put more resources at the beginning of the rally. Luckily one can find out what stage a rally is at looking at the charts and the volume. 


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