Join        Login             Stock Quote

How To Make A Winning Trade Off Of One Of Bill Gates' Top Holdings

 May 10, 2012 01:19 PM

(By Dave Goodboy) I'm a stock screening maniac. All day, every day the market is open, I am running my various stock screening programs in real time. I search across time frames, sectors, indexes, and exchange-traded funds (ETFs) in an effort to locate companies prepped to continue trending in the same direction or about to bounce/fall. In other words, I'm looking for solid trading set-ups that can be exploited for profit

I utilize a variety of traditional technical indicators mixed with several proprietary ones to locate these opportunities. I like to short-term day trade as well as longer-term swing trade. The criterion used to identify tradable stocks depends on the time frame used. 

[Related -Waste Management (WM): Trash To Cash]

My bread and butter trading method is swing trading with a holding time of seven days or more. I have  discovered that buying weakness in solid, up-trending stocks is much better than simply buying on upward momentum. It's not only my experience that indicates this fact, it's extensive studies done by market researchers continually indicate that the edge lies in buying weakness -- not strength -- in the stock market, so what I look for is a stock that has fallen off its highs for 5 to 8 days in a row. 

[Related -Waste Management, Inc. (WM) Dividend Stock Analysis]

The major caveat is that it has to be above its 200 day moving average, despite falling sharply. In most cases, the 200 day moving average will become my stop level, and I'll average in two to three times with my purchases, as it's impossible to tell exactly when the bounce will occur. If it hasn't happened in seven days after the first entry, my trading system closes the trade and starts looking for other opportunities. If the trade does become profitable by the 3rd third entry, then I'll hold it with trailing stops for as long as possible and capture profits. Although many trading axioms are wrong, holding winners and cutting losers is one that remains extremely relevant.

While this trading method makes perfect sense as a pure technical entry tool, I tweak it by looking at the fundamentals of the stock prior to deciding to buy. Just like only buying above the 200 day moving average acts to prevent catching a falling knife, knowing why a stock is falling can prevent unwanted losses.

Next Page >>12


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageBogle Says Indexing Destined To Win The Battle Of The Quants

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out read on...

article imageVMAX and VMIN Poised to Be Most Important VIX ETP Launch in Years

REX Shares is launching two new VIX exchange-traded products on Tuesday in what is likely to be the most read on...

article imageThe April 29 Gold Triangle Breakout Update

If you’re just watching stocks, you may be missing this powerful Triangle Breakout surge in read on...

article imageSell In May, But It Is A Presidential Election Year

With May just around the corner, articles covering the "Sell in May' phenomenon are not in short supply and read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.