Friday, February 29, 2008
MANAGING A TRENDING TRADE
When you are in a trend trade, it is important to protect the money you have made on that trade. One of your daily routines should be to reevaluate where your stock is based on technical analysis, and adjust your stops accordingly. What this means is, if the stock is trending up, you want to move your stops up as the stock moves up. You may want to put it 50c to $1.00 below where the stock is, depending on how volatile the stock is. If the stock is trending down, you would do just the opposite. You may be using a 10 day or 20 day moving average. Be aware of where those moving averages are.
Tuesday, February 19, 2008
STOCK TRADING STRATEGIES
I am going to discuss 3 strategies for individual stock trading that have proven to be profitable for me. First, let me say that I am NOT a professional broker and I am not telling anyone to buy or sell any specific stocks. I have been studying the market for about two years and I like to read charts.
1. Be aware of trending stocks-that is a stock that is trending consistently for at least 10-14 days in the same direction, either up or down. If the stock has proven fundamentals, and is in an upward trend, you can safely consider buying call options 2-3 months out and making money. Same goes for the downside, if it is trending consistently down, you can buy put options 2-3 months out and make money.
2. A guideline for understanding the trending stock is to understand moving averages. The 10-day moving average is a really good indicator when you are looking at a chart. If the stock is staying right above that indicator, it is in a good, steady upward trend. However, if it is staying consistently under the indicator, it is confirmation that it is in a strong downward trend.
3. Another criteria for confirming a trend is volume and cashflow. If the volume of an uptrend is high on the days the stock moves up, it is a strong indicator along with large amounts of cash flowing into that stock, that there is a strong trend. Same goes for the downtrend, if the volume is high on days the stock moves down and cash flowing out of the stock, it is a strong downtrend. The pullbacks on either side, up or down, should be light volume.
These are just a few tips on beginning to understand trends of a stock. On a sidenote, stocks will typically trend in the direction of the market as a whole.
1. Be aware of trending stocks-that is a stock that is trending consistently for at least 10-14 days in the same direction, either up or down. If the stock has proven fundamentals, and is in an upward trend, you can safely consider buying call options 2-3 months out and making money. Same goes for the downside, if it is trending consistently down, you can buy put options 2-3 months out and make money.
2. A guideline for understanding the trending stock is to understand moving averages. The 10-day moving average is a really good indicator when you are looking at a chart. If the stock is staying right above that indicator, it is in a good, steady upward trend. However, if it is staying consistently under the indicator, it is confirmation that it is in a strong downward trend.
3. Another criteria for confirming a trend is volume and cashflow. If the volume of an uptrend is high on the days the stock moves up, it is a strong indicator along with large amounts of cash flowing into that stock, that there is a strong trend. Same goes for the downtrend, if the volume is high on days the stock moves down and cash flowing out of the stock, it is a strong downtrend. The pullbacks on either side, up or down, should be light volume.
These are just a few tips on beginning to understand trends of a stock. On a sidenote, stocks will typically trend in the direction of the market as a whole.
Subscribe to:
Posts (Atom)