The worst nightmare for every investor is entering at the high price & holding on to the losses. If you have started investing in 2020, you could have experienced these horrible investment moments. Listening to others on what to buy & end up getting trapped at the high price & almost 50% of your money wipe out in the last 2 years. 

We understand that it is difficult to change investors' habits to make easy money in the stock market by following stock picks. Therefore, we decided to share one of our analyses here to help retail investors stay away from some high risk stocks that could trap them at the high price.

You just need to put in some effort to analyse the stocks you read from somewhere else before your entry. We have been using this method to avoid market crashes & taking profits at the price peak. You don’t need to be financially literate or an expert in technical analysis to learn this. The key point is very simple, knowing how the big boys operate in the stock market & identifying at which stage they are in. Then, you can maximise your profits in every trade & know when to exit with the lowest losses possible. 

Big boys operating stage

Big boys operating stages can be categorised based on the numbers of shares they are holding. Every operation or business starts with accumulating stocks at the lower price. Then sell the shares at the mark up price to make profits from the price difference. When you have lesser stocks in hand, you want to clear your warehouse quickly to cash out for the next new “products”. 

This is the same goes to the stock market. Where big boys accumulate shares at the low price where no one notices about it. Retail investors with technical background will not be interested at this stage, because the traded volume is low & not actively traded. Technical analysis never teaches us how to read the price & volume of non-active stocks. This stock will also not appear in Fundamentalist radar, because the financial health is not really outstanding “yet”. 

After the big boys accumulated the shares, the “marketing” will kick in with price markup, creating active trading volume, & positive announcement to attract all retail investors attention. 

The big boys will try to sell as many shares as possible in the markup stage to secure their profits. They can either mark the price up to a certain high price or, markup gradually & sell fractions of shares on the way up. 

Why would retail investors buy this kind of stock? We always hear others telling us to avoid big boys (can be institutional & non-institutional big boys), but why are there many investors still investing into stocks like these? First reason is because the big boys are creating signals we are looking for, such as chart patterns, good news, good hidden value in the company, & so on. We are investing into it without knowing we are being manipulated.

In the markup stage, you will find all sorts of technical signals you can find in the text-book. Now you have noticed about this stock & want to invest into it but don’t want to buy at the price up. So you park your buy orders at the lower price & wait for “someone” to sell at your desired buy price, that someone is the big boy. That’s why there are many price retracements when the stock price is in the uptrend. This is the after effect of big boys taking partial profit by selling their shares to buyers parking at the lower buy orders. 

When they have sold majority of their shares at the markup stage, it is time to attract more buyers in to sell their remaining shares by creating chart pattern breakout & indicators signals to attract more investors in to buy the shares. In this case, retail investors will jump into this about-to-sink-ship because of the triangle breakout. Again, the big boys sold a portion of their shares at this stage. 

Throw Everything & Jump Ship

When the big boys have very little shareholdings, they will stop marking the price higher & start selling their shares on the way down. Now you might think they won’t make profit if they sell the shares at the lower price right? Look back to the paragraph about the accumulation stage of the big boys, you can see the cost price is lower. Even if they sold their shares on the way down, they still have the margin of profits. Also, the majority of their shares are sold on the way up, basically they have made profit when the stock price is at the peak. 

How can this help you to achieve better returns?

After knowing the big boys operation stage, when the stock prices have reached the mark up stage, that means it is dangerous for us to invest in. You don’t want to invest at the high price & watch your portfolio value going down in the next few months. 

From now onwards, always look into the chart of the stocks you see or hear from. Check whether it is too high up for you to invest in. If it is still in the markup stage & doesn’t have any chart pattern formed at that time, then there is still margin for the big boys to mark the price higher.

With this you can save yourself from entering into stocks at the high price & avoid the same incident happening in 2020 glove stocks again. Your returns can be improved when you have lesser big losses in your portfolio. 

You can even achieve higher returns by knowing the best entry timing & lower price when you practise this analysis. Capturing the every rebound like the examples in our tradingview : 

https://www.tradingview.com/u/ROUNDnSURGE89/

Learn more in our upcoming webinars & ask our speaker how to improve your investment returns : 

Better Entry Timing for your 2023 Top Picks 

If you are preparing to trade in the stock market for secondary income or retirement, you will need to know the true ways to follow the big boys in the stock market. We can’t avoid big boys in the stock market, so we learn how they operate & take advantage of their price movement. At the same time, knowing this can save us from getting trapped by the big boys. 

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Disclaimer :

This blog is for sharing our point of view about the market movement and stocks only. The opinions and information herein are based on available data believed to be reliable and shall not be construed as an offer, invitation or solicitation to buy or sell any securities. Round & Surge and/or its associated persons do not warrant, represent, and/or guarantee the accuracy of any opinions and information herein in any manner whatsoever. No reliance upon any parts thereof by anyone shall give rise to any claim whatsoever against Round & Surge. It is not advice or recommendation to buy or sell any financial instrument. Viewers and readers are responsible for their own trading decisions. The author of this blog is not liable for any losses incurred from any investment or trading.