10 September 2013

Buy When Volume is Low; Sell When Volume is High

Most of the time, I always think that low volume indicates there are not many serious sellers in the market, and most of the investors apply "wait and see" attitude. With low volume, normally it will not attract institutional investors who require huge liquidity for them to enter and exit quick enough. But as a small investor, I do believe that we could be able to find out hidden gems that suffered from low transaction volume for, maybe 6 months time.

Normally low volume indicates low price movement, and it is actually a good time for us to accumulate good counters, and wait for it to return to the normal value. We can then sell it when the transaction volume is higher or the share price exceeds the intrinsic value.

Nonetheless, we must ensure that the counters that we buy are in good quality and only suffered from temporary bad news.

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