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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Michael Rich who wrote (6905)	2/23/1999 9:32:00 AM
From: donald sew	Respond to of 99985

Michael, 3-5 point moves are common for $50 stocks if the entry point is good. Yes I do use stop losses, but they are not based on randon numbers. They are also based on time. If I get a CLASS 1 signal and it doesnt move or flatten out immediately, Im out. seeya

To: Michael Rich who wrote (6905)	2/23/1999 11:28:00 AM
From: Robert Graham	Read Replies (1) \| Respond to of 99985

I have done this playing options on Wallmart in the past with great success. The stock that provided trades that were among the easiest money that I took home. This is not to say there was not risk involved, but some of these "dinosaur" type of stocks are unusually predictable when they are trending, unlike those "grasshopper" stocks that "zing" off of the page when they move. ;) Also stocks like Wallmart provided some of the best (not inflated) premiums on its options for this type of trading of options. It has been my experience that stocks that are moving in an established long-standing uptrend tend to have this option pricing behavior. But timing is important here. It all depends on your entry which determines both the potential profit and helps determine the risk associated with the trade. I entered when the stock validated support and started its move up. If the stock did not continue its move up in a few days, I was out of the option. I also took my profits when it hit a resistance that it was not able to break through in a timely manner, supported by my analysis of the tape. The exit determines you actual profits and your actual exposure to risk in the market through your money management strategy. For the type of short term trades I make, I have found the entry is important. If I made a mistake on the entry, it makes it much more difficult to procure a profit out of the trade in a timely manner, or at least break even. But the timing of my exit is still the most important to me. I guess it depends how good of a trader you are and how well you know option behavior with respect to the underlying stock. Breakouts are another play that can net a few points in the underlying stock in short order. The best way to approach this with options is to enter a position on an anticipated breakout, and be ready to exit to either cut your losses short or when the stock does not go anywhere in an alloted time. By looking at the price action within the congestion area, you can more accurately time your entry. Bob Graham