A list of stocks will be posted here daily, for PAPER TRADING, for fun.
Criteria:
a. Strong long-term up-trend, usually 52 weeks high was made in the last 4 weeks.
b. Pull back enough with better entry point.
c. Small day range on the last day so that stops can be placed without risking high percentage of your portfolio.
d. Reasonable average daily volume, providing enough liquidity.
Strategy:
a. Place a BUY STOP order one tick above previous day high. If gaps up at the opening, place a LIMIT order to buy on pull back if price/volume pattern behaves well in the following 15 to 30 minutes. If pulls back below previous day high, do NOT buy.
b. Upon entry, immediately place a SELL STOP order one tick below the low of the trade day or the previous day, whichever is lower.
c. Move SELL STOP order to a break-even point as soon as the price moves higher. Move SELL STOP higher to lock part of your profit afterwards.
d. Take profit on at least part of your position when stock price hits 52 weeks high. Get out the entire position when the stock losses momentum.
e. Money management: if your portfolio is relatively small, use at least 50% of it to buy any one stock. You can also use margin-buying power as long as you risk no more than 5-7% of your portfolio. The fact that I select only stocks with small day range on the last day makes money management easier.
f. Have fun!
David
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