Don't try to catch a falling knife

One of the oldest sayings in the stock market is 'don't try to catch a falling knife'. This is one of the most common mistakes that I see people making all the time. 'If the stock is down it must be cheap, right?' Wrong! A stock can be down but it can have much further to go. You need to look at the technicals and fundamentals combined as I always say to make an informed decision. There is absolutely no reason to be going long on a stock like the one shown in this example. This is ASX:WOW. One look at the fundamentals will tell you why this is not a good buy.

I use the site 4-traders.com daily for looking at ASX and U.S. stocks. See the numbers for WOW here. You don't need to be an expert on finances and company reports. You can see at a glance why this stock is not a long trade by looking at the EPS. I have been short this stock and done very well shorting it. Why try to fight the trend. Simply just - trade the bias. It's a no brainier.