Volatility

The key ingredient is volatility. A stock that fluctuates notably in a short time period will work extremely well with Automatic Investor. There are stock screening tools available on the Internet that can find volatile stocks for you. If you look at a chart, U and V patterns (and their upside down counterparts) visually signal volatile stocks. You can also look at the percentage gain or loss each day. High percentages indicate good candidates.

Cyclical stocks

A cyclical stock usually operates in an industry that runs on cycles. In good times, the price rises, in bad times, the price falls. If you can find a stock with a reasonable period, it should be a good choice for Automatic Investor. Be aware, however, that these stocks generally accumulate returns over a longer period of time - compared with their volatile cousins.

Rolling stocks

Some stocks trade in a very noticeable range. They rise until they meet a certain price, then fall until they reach a lower bound. Then they rise again. These stocks are ideal Automatic Investor candidates because they fluctuate in a very precise manner. This allows you to time your price updates accordingly.

Automatic Investor takes care of the rest

Automatic Investor will use these price fluctuations to generate a profit. The more fluctuations that occur, and the greater the price change, the larger the returns will be. And therein lies the beauty of the technique. You don't have to choose a stock that will continually rise (such as in the buy and hold system), nor do you have to choose one that will go down (as with short selling strategies). Rather you choose a high quality stock and reap rewards whether it goes up or down.

Some additional tips

In addition to fluctuating share prices, here are some other points to consider.

Buy, don't be sold. Do your own due diligence and don't listen to others unless they can back up what they say with facts.

Be a realist. Let your priorities be the sole reason for an investment. If you know you will need your money in 2 months, put it in a guaranteed investment vehicle.

Use margin sparingly. Margin can help you take advantage of unique opportunities. But always remember you are taking out a loan. One that will have to be paid back. In addition, if your holdings go down, you may be required to deposit additional funds - or risk being forced to sell your stocks at a poor price. If you do decide to use margin, buy only high-quality stocks, and pay it off as soon as possible.

Use knowledge. Purchase stocks based on facts, not rumors or tips. Above all, don't try to predict the future, rather concentrate on minimizing risk.

Don't try to get-rich-quick. It doesn't work. Over time, the disciplined investor wins the race every time. Use Automatic Investor and follow its recommendations unless you have a good reason not to. You'll likely do much better and will definitely experience less stress.

Take action. Review your portfolio regularly. If the fundamentals change, and your stock choices need improving or upgrading, do it right away. Delayed action translates into delayed benefits.

Don't doubt. Once you're convinced Automatic Investor is the superior system (and you should convince yourself before using it to manage your money), stick with it through the ups and downs. Don't second guess Automatic Investor's recommendations.