Monday, February 2, 2009

Making Money on the Way Down

Several stocks have a very tradable pattern. This hold true whether in an upward bias or downward bias. For example, look at the attached chart for DO. This was a Stock Assault pick from a few weeks back, the pick that I rode for a 20 percent gain. Notice the price channel is downward, but the price bounces up and down along the way in a very tradable manner.

There are many stocks with the exact same pattern. I prefer the up-channel myself, but I'll trade either way as long as I win. On another note, I was looking at the picks generated today and the one that stood out to me was UN. After a large drop, and trading near its 52-week low, I thought this to be an excellent entry point.

I got it early while it was negative at 21.62, so we'll see how it rides out. People sometimes ask me what a good profit is, and I believe if you can net 2 percent on any trade then you've done well, especially on a swing trade. Let's hope for a good week with no devastating news to de-rail us along the way. Remember to screen your picks, and set your stops. The longer you trade the better you will get, and no matter how long you've been trading you will always learn something new with each trade.




Have a good one,
Roger

6 comments:

  1. I have not yet brought UN. It still has not closed above it's 13 period EMA on a 60-minute chart with about 30 minutes left till the market closes.

    Of the 23 buy signals for today, I have only 2 that have closed above their 60 minute, 13 period EMA. ANF which is down a little and SYY which is up a little. All the others have failed to close above their 13 EMA. I have not decided how on how long to keep waiting for the 13 EMA crossover. Should I just wait the one day that the buy signal was given on and then discard? There is a good chance of new buy signals tomorrow. If there are no new signals tomorrow then maybe I will continue to monitor today's signals. I do not have the funds to buy every signal.

    I am using a 10 period Average True Range on the daily chart, plus an allowance for commissions, as a profit target.

    scJohn

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  2. Roger,
    I so appreciate your posts - I learn a ton and thanks for letting me follow your trade on UN - cramer said UN was a no brainier the other day- thank you.
    Jennifer

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  3. hi, I bought Stock Assault regular version and I am pretty much new to stock trading. Right now I am testing it out before I jump with two feet into the stock market. I have been impressed by the results. What things would you recommended to do? what to learn? How to evaluate those picks that software suggests?

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  4. @scJohn
    There are many instances that one days signal may prove more viable the following day, so still watch them. I believe UN will move today. Also, I don't trade every batch of signals either. I try not to have more than five open trades at any time, and I won't look at signals until I have freed up a spot on my roster.

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  5. @Jennifer
    Thanks so much. It worries me when cramer agrees with me. He's entertaining, but usually his recommendations for a stock is its "kiss of death" , LOL. UN will move today. It's already trading higher in pre-market.

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  6. @Grigoriy
    Just read my prior posts, and you'll get a good idea. Just remember to start slowly, and always place a stop loss order as soon as you buy. We are here to make money, but we want to protect our capital at the same time. I would recommend that you study technical aspects of chart readings and invest in a good charting program like amibroker, or stockshare V2.

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