Tuesday, January 10, 2006

Trading is not that complicated


No matter what the stock, once a bullish trend is initiated at moderate growth, you have a high probability that trend will continue. Don't be afraid to jump on board the next day, because most trends perpetuate. You may want to look for the low the next day and make sure the trend is moving in your direction by making sure there are higher highs or higher lows or even best, both. If the stock climbs too fast in one day, like 15+% for small caps, 8+% for mid caps, and 4+% for large caps, you should keep a tighter stop loss and watch for a slow in volume and resistance areas which could trigger the stock to drop drastically away from you.

Trade highly volatile range plays with small percentages of total capital, or trade less volatile range plays with a great deal of equity on the line and use tight stop losses on both trades.

Use case studies to learn from. For example, bird flu hype and the appearence of NVAX CEO on CNBC made the stock go vertical 30+% in one day.

Follow what happens to the stocks Cramer pumps, what happens after the key event or catalyst, and how long does it take for a dump. Cramer can make a stock move 5-10% AH and the stock moves even more the following day. It must be nice to be Cramer, you can pump any stock you want without getting into fundamentals, just blabbering about how its a hot stock and he instantly gets 5-10% on whatever he taughts.

Read the tape, follow the block trades, look for momentum.

Follow crazy percent gainers for the day and how long they take before they return to pre-event levels.

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