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Stockscores.com Stock Trading Clubs
Share ideas and learn new skills to be a better trader. Everyone is welcome to attend:
Calgary Stock Trading Club
Wednesday, September 24
7:00 - 9:00 pm
University of Calgary
Murray Fraser Hall Room 164
Anyone welcome to attend
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Vancouver Stock Trading Club
Thursday, September 25
6:30 - 8:30 pm
Best Western Abercorn Inn
Richmond
9260 Bridgeport Road
Anyone welcome to attend
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Edmonton Stock Trading Club
Monday, October 6
6:45 - 9:00
French Cultural Center
8627 - 91 Street
Anyone welcome to attend
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Stockscores.com Perspectives
For the week ending September 19, 2003
In this week's issue:
Moses had his Ten Commandments.
Letterman had his Top Ten.
This week, I present my Ten Simple Rules for Trading Stocks:
(in no particular order)
1. Plan to sell the losers - before you buy a stock, plan to lose. Don't think about how much money you are going to make, or what you will do with the winnings you take out of the market. Think about how much you will lose if you are wrong. Identify the point where the market will prove your investment decision wrong, and plan to sell when the stock gets there.
2. Don't plan to sell the winners - so many investors set price targets for their stocks, the point that they will sell the stock to lock in a profit. Rather than do this, only sell the stock when the market shows that the stock is more likely to go lower than higher. If a stock is winning, why let it go? Have patience with the strong stocks, and let them run.
3. Be picky - once you are good at reading stock charts and utilizing the Stockscores.com indicators to separate good from bad, it will be quite easy to find good stocks. Don't buy good stocks, buy GREAT stocks. Be patient and wait for the trading opportunities that have the highest probability of success. Fewer trades can often lead to bigger profits over the long run.
4. Don't believe in the dream - promoters, the media, companies, brokers, analysts, newsletter writers and other players in the financial machine are all telling you what to buy and why it is good to do so. Don't belive anything you read, hear or see. Above all else, don't fall in love with the story. Too often, the stories are told by biased optimists. Trust only what the market tells you.
5. Don't wait for the market to prove you right - if your analysis tells you that a stock is likely to go higher from today, then buy it today. Don't wait a week until the stock has gone higher before entering. To be succesful, you have to be one step ahead of the crowd. Chasing stocks higher with the sheep will lead you to the slaughterhouse.
6. Recognize that the market never lies - market actiivity embodies everything that is known about a stock, both public and private. It indicates not only what people know, but also what people believe. Trust what it is telling you.
7. Don't trade because you have to make money - trading the market to pay the rent will change your psychology, and cause most people to make poor investment decisions. To trade successfully, you have to make decisions based on what the market is saying, and not what your financial needs are telling you to do.
8. Practice patience - selling strong stocks too early or jumping in to stocks before the market indicates they are likely to go higher are common problems that come down to a lack of patience. As humans, we seek out pleasure and often want to feel good now rather than later. Don't be myopic, timing is important when trading stocks.
9. Never get emotional - emotion is the enemy of the rational trader. When money is on the line, it is easy to let your heart get in the way of your head. Work on ways to avoid emotion in the investment decision making process.
10. Be disciplined - the most important rule is to have the discipline to stick to the other 9 rules. Trading is simple, but not easy. What makes it difficult relates to the simple fact that we are human, and we have to fight with the irrational forces that act in our decision making.Back To Top
Upward gaps are a strong indication that demand for a stock is out powering supply, and are often motivated by new and positive fundamentals. We want to see those gaps breaking from periods of market consensus. Strong volume support is also necessary since it indicates enthusiasm, and a close near the high of the day on the gap is technically positive.
While gaps are strong indications of excitement, it is common to see short-term profit taking after the gap. Since this can make the entry point cheaper in the days after the gap, it sometimes pays to wait for a second buy signal. This second buy signal occurs when the stock closes above its open (a Bullish Candle) after the couple of days of profit taking.
However, the short-term pullback does not always happen. As a result, I suggest taking half a position on the gap, and looking for an opportunity to purchase the other half when profit taking does occur. If the market is exceptionally buoyant, do not wait for this profit-taking pullback. If the overall market is weak, patience may provide a lower entry price.
Since upward gaps are such a strong showing of demand, we do not need to be as fussy with the quality of the chart leading in to the gap. We want to look for charts that were in a consolidation before the gap but the presence of overhead resistance is often not as much a hindrance to an upward trend since very high demand causes the gap and can often move the stock through this overhead resistance.
Utilizing the filter criteria, the Stockscores.com Market Scan tool will reveal a filtered list of stocks that are likely to meet the requirements of this strategy. However, you must do a visual assessment of charts to finds stocks that have the best potential. Expect that the majority of stocks returned from this query will not meet your requirements. Look for charts that are showing breaks from periods of some stability, through short-term resistance and with good volume support.Back To Top
1. ADNW
ADNW was found with the Gap Outs market scan on Stockscores.com. It is breaking through resistance with strong volume support, and closed near its high of the day. It looks like the stock has been accumulated over the past month or so as volume has been much heavier lately. The Sentiment Stockscore is above 60 and the Signal is above 80, which combined with the good price pattern are an indication that this stock can go higher in the weeks to come.
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2. EQIX
EQIX has already had a great year, but has spent the past couple of months trending sideways as the market worked to reconcile the gains year to date. Friday brought a break from an ascending triangle pattern, and the stock gapped up on the open and then closed near its high of the day. Good volume support on the breakout and the Stockscores indicators where they are supposed to be combine to make this a good trading candidate.
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3. RHAT
RHAT is a risky play of the Gap Out strategy. It is breaking through resistance with a cup and handle pattern, but the intensity of the move today makes is more likely to see profit taking. However, while risky, this is a name that many traders know and could be a stock that really makes a move as speculators pile on. RHAT is worth considering if you have the time and experience to keep an eye on where it is going.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
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