There are many analytical tools that can be used to decide whether to buy/trade a particular stock. Basic knowledge such as support level, resistance level, moving averages, fundamental, price/earnings (P/E) Ratio, oversold or undervalued scenarios must be considered at all time. Investors tend to trade “hot” stocks because it is among the Top 10 actively traded stocks of the day without actually knowing the reason behind it. Some investors may end up buying Top 10 biggest loser of the day, expecting it to rebound the next day. All irrational trades eventually lead to huge losses.