Buy On Weakness, Sell On Strength

Buying on weakness - when a stock's price is declining - should only take place after it has been determined that the company in question is still fundamentally sound.

The price of a good stock in a relatively stable market will tend to move up in surges and then hesitate, sometimes even falling back slightly. It will often drift lower, looking for support from new buyers. When it finds support - the price where buyers enter the market - it will rise again.

Buying on weakness and selling on strength should be a matter of finesse rather than a total strategy. The finesse enables the investor to be more in control of the situation. It is taking action rather than reacting to a market situation, which separates the great investors from the mediocre kind.

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