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Strategies & Market Trends : Chart Formations -- Ignore unavailable to you. Want to Upgrade?

To: sean sanders who wrote (827)	7/30/2005 1:16:20 PM
From: Casaubon	Respond to of 967

What's the san-pei formation? This is the "three white soldiers" pattern. See, "Candlestick Charting Explained", by Gregory L. Morris (see page 88). I like this pattern, as I have had good success with it, when interpreted correctly (You must learn to differentiate this pattern from the "advanced block, and the "Stalled" patterns, as they portend reversals to the downside). About Stops: never, never, use hard stops in individual stocks! Only use mental stops! You will likely experience some slippage, but it will save you from being sacrificed by those who know (market makers). Of course, you must know the price at which a breakdown has actually occurred, and you must be watching!. I like to interpret an individual candlestick, or a pattern, and then play "as if I was correct". If I was correct in my interpretation, the stock should behave as expected, fairly quickly (ie. if you thought the candlestick was a hammer, then price should not spend much, if any, time below that candlestick). Don't set mechanical stops on stocks! You will get used and abused. Use mental stops. If the price move is on very low volume, it will often reverse. Watch for volume to tick up, followed quickly by rising price. You will need to be extremely familiar with the volume characteristics of the stock. This is why I focus on a small number of stocks at a time. I don't like randomly screening stocks and trying to jump into the fray. I like to find an interesting company and then follow it very closely until a discernible pattern emerges. I can sit on the sidelines a lot! PS I often place limit buy prices, but will change on the fly intra-day, if the volume action warrants it (ie. if I'm confident that I won't be able to get my initial entry price). On the other hand, I frequently use market sell orders (especially at the end of the day). I do this when I believe I have identified the end of a move. Sometimes a move can last weeks, to months, to years even! It's hard work not acting <ggg>. I also use selling options as a tool because exact price entry and exit is difficult. Selling options smooths out price variability and increases my consistency. I try to set "a draw", as if I was a sales person. In other words, I set a goal each month on how much money I should bring in. This helps to keep focused. If you find you are hitting your goal consistently, then you know you are doing something right. If not, it might be best to modify what you are doing. Different market conditions require different strategies. Recognize, and compile different strategies as your "tool chest". If you find you are not getting anywhere with a particular strategy, for a period of time, then perhaps you are under the wrong assumption about the general market trend. For instance, if you are selling puts and consistently having stock put to you, then perhaps it is a "bear". If you are selling calls and having stock called away, perhaps it is a bull market, and you are acting too conservatively. If you are buying breakouts and losing money consistently, perhaps the market is weakening, etc. PS Always use a percentage of your money to dollar cost average. Over time you will likely be correct.