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Never Buy a Stock Because it Has a low Price

Never Buy a Stock Because it Has a low Price 
               - invest Buying a Stock just because the price is low is often a risky strategy for day trading or Stock trading, because it's like you buying cheap car and expecting run like a new brand car. Same principle apply in Stock also. The price you pay that quality you can get so invest only in good quality Stock and for Stock trading also consider good quality securities.

An "oversold" or "undervalued" situation can be an ideal time to buy any Stock, but it is important to know more than just the price of the Stock, need to find out why Stock come down? and price is suitable to that reason or not? and its current price to earning ratio.

Once Stock price start to drop it brings even more sellers to the market, which causes the price to drop even further.

Will the bad news of lower earning lead to more bad news of employee layoffs and further restricted production capabilities? Have the institutional traders dumped their positions in the Stock and moved somewhere else?

Many Stocks with low price are actually expensive in relation to earnings.

Day trading Related reading

Sell the losers and let the winners Stock run
Protect your Capital and Profit
Heavy Volume, the Price Rises; Light Volume, the price falls; Volume work as a driver;
Winners Keep On Winning
Diversification is the Key to Stock portfolio management
Watch Out for Block Trades
Never Short in Dull Stock Market
Never Buy a Stock Because it Has a low Price
Avoid Over trading - control trade
Better to average Up Stocks Than to Average Down


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