Re: RNO ... Yes Jim, I play low priced stocks. I prefer that low priced stocks trade an average of at least 1 million shares per day though.
You made a nice entry. Good job.
For others looking in, I noticed Jim used an indicator I refer to as Momentum Bands on his chart. This is a great indicator to keep you in a trade that has shown some short term explosive price movement.
People need to be careful how they use this indicator so they don't get chased out of a stock prematurely.
I apply the momentum band indicator to a stock that has jumped 15% to 20% in under two weeks. Price has to move up that far, that fast, before applying the momentum indicator, after all, it measures momentum.
Next, you must use the correct chart for the time frame in which you wish to hold the position. If looking intermediate to longer term, one should get their buy and sell signals of the longer term chart.
So, in looking at Jim's entry, he made a nice entry off the weekly chart.
Once the stock is underway, and price should show an explosive move to the upside, then you can back down to a daily chart and apply the Momentum Band indicator. This is the Bollinger Band indicator with a 20,1 setting instead of a 20,2 setting.
To capture most of the upside momentum, and still stay in the trade, you would sell part of your position once price closed below the upper or middle band, depending on the amount of profit you have. Then sell the remaining position once priced closed below either the middle or lower band, depending on whether you want to stay with the trade or close it out and capture the windfall profits.
Regardless of how you take the profits, the trade should be closed once price closes below the lower band as it would be confirming you no longer have the momentum to the upside.
Here is an example of what I am talking about.
BTJ broke out nicely with a high volume, wide range bar back in February. This is a screaming buy signal. If one didn't wait for price to rise 20% before applying the momentum band indicator, price closed below the upper band a week later, followed by a close below the middle band the following day. Part, or all of the position, would have closed out prematurely. By waiting to apply the indicator until you had a 20% profit, price has continued higher, up 57%, and you would still be in the trade with a full position.
Pretty neat indicator, huh? Just don't fight it when it doesn't do what you want it to do. It tells you when you have momentum and when you don't. |
