AI
Monday, January 01, 2018 2:08:17 PM
Here's a chart of a classic pennystock multi-week play, about 6 weeks in this case. My comments on what the chart shows and how it can be used for trading/flipping are below the chart
The chart is in OHLC bar format. The green line is a 10 day simple moving average (sma)
My thoughts:
Once the uptrend has started is it worth considering a purchase when the price falls back to the sma?
When the price spikes way be above the sma is it worth considering taking profits? I say yes. Should you buy when the price is way above the sma? No
Notice that during the 6 weeks the price did not close below the sma, not once.
Also notice that once it did the run was done.
The longer this pattern goes on the less likely it is to continue. Playing it to bounce off the sma is safest the earlier it is in the run.
Would you have made more money if you bought early and held all the way to the end? Yes. But say buy buying at the sma and selling some on spikes you made $2,000 and you could have made $3,500 by holding to the end. You'd have to be a very, very sharp trader/analyst (which I'm not) to time it in that way.
The downside of the chart shows a different story. If you want to play it on the way down it's somewhat safe if you can get it far enough below the sma but it's essential that you daytrade it or sell the next day. Since the potential upside is only a few ticks the risk is much higher. And the downtrend can continue to 0.
Personally I've learned to take profits on the way up and avoid them on the way down. I'm a big note taker and my history shows that I do significantly better by selling most or all on spikes than just getting my money back and riding "free shares.' "Significantly better" means I made more money and that's what it's about for me. Nothing wrong with banking some money then saying goodbye to these crappy things. Then go look for another :)
The chart is in OHLC bar format. The green line is a 10 day simple moving average (sma)
My thoughts:
Once the uptrend has started is it worth considering a purchase when the price falls back to the sma?
When the price spikes way be above the sma is it worth considering taking profits? I say yes. Should you buy when the price is way above the sma? No
Notice that during the 6 weeks the price did not close below the sma, not once.
Also notice that once it did the run was done.
The longer this pattern goes on the less likely it is to continue. Playing it to bounce off the sma is safest the earlier it is in the run.
Would you have made more money if you bought early and held all the way to the end? Yes. But say buy buying at the sma and selling some on spikes you made $2,000 and you could have made $3,500 by holding to the end. You'd have to be a very, very sharp trader/analyst (which I'm not) to time it in that way.
The downside of the chart shows a different story. If you want to play it on the way down it's somewhat safe if you can get it far enough below the sma but it's essential that you daytrade it or sell the next day. Since the potential upside is only a few ticks the risk is much higher. And the downtrend can continue to 0.
Personally I've learned to take profits on the way up and avoid them on the way down. I'm a big note taker and my history shows that I do significantly better by selling most or all on spikes than just getting my money back and riding "free shares.' "Significantly better" means I made more money and that's what it's about for me. Nothing wrong with banking some money then saying goodbye to these crappy things. Then go look for another :)
My posts are my opinion. Do not be influenced by anything you read on any message board website unless you can confirm it.
Trade Smarter with Thousands
Leverage decades of market experience shared openly.
