To formulate a trading plan, you should first go through all your charts to get an overview of the markets. An excellent way to do this is to review the chart section and the charts of each stock on our bulletin. During that time, you should be looking for stocks that are trending higher and stocks that are setting up nice base/consolidation patterns to breakout of. For pullback entries, look for some "against the grain" moves; those intermediate trends that go against the longer term trend. This can alert you to stocks that might be nearing a support level and may soon bounce and resume the primary trend.
Try to select the stocks that appear to have the greatest potential to move in the desired direction and place your order entry about 30 minutes into the trading day. Do not trade with stop or limit orders in the first 30 minutes. Doing so will result in many whipsaws due to the opening volatility. Let the markets or stocks settle down and determine direction before rushing your entries.
How will you know which stocks have the greatest potential? Our bulletin is chock full of the potential movers you are looking for. Of course we realize each individual can't trade every stock on the bulletin but there are many choices depending on each individuals trading style. There are breakout plays, there are pullback plays, there are good day trading stocks on the bulletin as well as swing trading stocks. There are even stocks that would be great long term buy and hold investments.
Whatever your style is, the bulletin is a great place to start when looking for stocks to trade as you formulate your trading plan. For example, I use the bulletin not only for stocks to swing trade, but also use it for stocks I want to day trade. I select those stocks that have the strongest chart patterns and greatest potential to make a quick move.
Besides the good chart patterns, I'm looking for momentum stocks that may be news driven or perhaps stocks in a hot group where momentum is taking the whole group higher. I will also look at stocks that have the most consistent daily price ranges, a range sufficient enough for me to take my piece of the action out of the market and profit.
Beware that we are not looking for stocks that have too steep a rise. When a stock has gone up in a parabolic curve, this too steep of a rise often signals that the end of a move is near. Prices that break out too fast and go straight up rarely give us a 2nd chance to get in. If we missed it, we missed it and there is no sense in chasing.
If prices have been going up steadily, and suddenly that angle steepens and goes parabolic, the stock is giving us a warning that the move may soon be over. When shorting stocks in down markets, you can allow a steeper angle, because often a stock will move down a lot faster than it moved up. The most conservative entries are those in nicely trending stocks that are making a retracement (pullback from the highs to a support level on decreased volume) These are the best entries as far as risk/reward.
It is important to note that trading must be done by formulating a plan the night before. Do your homework every day once the new bulletin is updated to the website. The only way to know when an important breakout or beginning/continuation of a trend might occur is to perform your daily analysis. We do most of the work for you if you use the bulletin, but ultimately, the decision to buy and sell will be yours based on your style of trading/investing.
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