Know your self better before trading;
- If you are Daily, Swing or Trend Following trader who is addicted to play big breakouts (On The Run), congrats, you are in the right place.
Simple short term trader concern more with Technical Indicators.
but there is situations that we need to deal with first before jump and buy a stock;
a) What kind of Stocks should we look for?
b) If I'm Daily, Swing or Trend Following trader, does Fundamental matters?
c) How long I can manage to hold tight to this stock?
d) When is the right moment to buy?
- We should look for stocks under $5, with O/S under 20M. (Supply & Demand) plays the main role, in order to get a decent profit up to 25% in one trade you should consider low float companies that can be accumulated fast with a few of big money investors or MMs. i.e. When they buy with $100,000, big difference in PPS will be noticed. Don't go to companies with 100M O/S and more, in-front of each buyer there will be ten sellers ready to sell and happy with 0.5% gain, it will lead you nowhere.
- When you run your stock screener, you should look for stocks that have a Current Ratio > 1. And this is fair enough as fundamental indicator to look for, why?. Current Assists/Current Liabilities >1 means that the company has the ability to meet its current debt with no near time stress that forces the company to issue more convertable notes, which leads to Dilution. Think about it, If you are in debt and this debt is due within the next 6 months or so, and you do not have any source for covering this debt, what is your first choice, right, issuing more shares (Convertable Notes). So this Current Ratio >1 most likely will prevent you being a victim to (Pump & Dumb Cheme).
- The hard part is to discover a real up-trends in its beginning to ride and collect a decent profits, and here we can start to look at Charts and use technical indicators, Charts & indicators will lead us when to check-in and when to check-out.
While working with Charts it is very important not to use indicators that gives same signals, but use as minimum as you can and keep your chart clean and meaningful.
Here, we will use Weekly, Daily & One Hour Charts,
Using Darvas Box & Aroon Indicator only. You should be fine.
With the help of our group members we all agreed to follow this simple rules.
1) Respect each other.
2) Help each other with stock education.
3) PPS from $0.001 to $5.
4) O/S no more than 20M (Supply and demand).
5) Entry signal; On weekly Chart; High of the current bar MUST be higher than the highest high of the last 4 bars, On a Daily Chart; High of the current bar should be break up Darvas Box & Aroon Indicator up plot crossed down plot.
6) Follow the Charts, use Stop Loss, do not swim against the trend.
7) Exit Signal when Aroon Indicator down plot cross the up plot, or price break down Darvas Box.
8) Enjoy the momentum but do not fall in love with your stock, you will sink with it. Remember there are a lot of great companies around not just this one.
NOTE: Their is no guarantee, remember to Do your own DD as always, only play what you can afford to lose.
All the best,