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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Ken Wolff who wrote (456)2/7/1998 2:39:00 PM
From: Ken Wolff  Read Replies (1) of 2120
 
NEWS STORY STOCKS (Part V)

Here is an outline of the procedures I follow when trading "GOOD" NEWS STORY stocks:

STEP 1:
When a good or great story hits the newswire it should be placed immediately on the quote screen.

STEP 2:
Set up your buy order on your on-line broker software.

STEP 3:
Note the SPREAD and VOLUME. I prefer stocks with spread of 1/8 or less. Watch the Market Maker and do NOT consider the stocks that have WIDE and/or CHANGING spreads. "Spread Changers" are those stocks that start at 1/8 spread and quickly change to 3/8 spread or more. Note the VOLUME. Low volume stocks should be avoided unless the story is a "10" rating.

STEP 4:
If you should see a few buys at a fairly rapid pace (a buy is recognized by a trade occurring at the ASK price and a sell would be a trade occurring at the BID price). CAUTION: Stocks that move at a very fast pace should be avoided. If you do not have the time to place a trade at the initial rally price, you should LET THE TRADE GO until it settles down to a more trackable level. Note the buying price at the start of the rally and place a LIMIT BUY order. If the story is rated 10, then you may want to buy at MARKET.

STEP 5:
Note the time you placed your order. DO NOT CHASE. If a stock moves up too fast and you place a MARKET buy order at the initial rally you may be delayed (funnel effect) because of other buy orders being placed at the same time as yours. The delay may cause your order to be executed at the HIGH of the rally. It takes time to get a confirmation from your broker and you need time to sell.

(continued...)

Ken
mtrader.com
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