Most of the trades I take are swing or position trades. I use fundamentals to determine if I have a trade candidate and then charts to find a good place to get in
What I am looking for are deep value stocks. These are normally companies that have been in business for five years or more and have been heavily beaten down in price in the last year or two. These companies are often down from their highs by 70 percent or more. There is always something wrong with the company. It could be management, competition, poor execution or any number of other variables. At this point in time it is also the falling DOW, S&P and other index’s combined with some other company specific problem.
When I find a trade early I will write it up in Possible Trade Targets. These you will have the luxury of ample time to look over and determine if the trade is a candidate for your account. If you think you could be in this trade for more than three months consider what you expect the overall market will be doing during this time frame since it will most likely be dragging your stock with it.
I use the Dow Jones and S&P as a market gauge. If the DOW trades within a 100 to 150 point range for the day your stocks will usually continue on their present trajectory. If it trades in a 250 to 400 or more range your stocks will follow the Dow Jones averages. No matter how good a trade you’re in it can’t overcome a market that is dropping like a rock. Good news and / or a strong support or resistance level can stop a stock no matter what the market is doing. Depending on the magnitude of the news this can be overcome for a few days but will dissipate fairly quickly.
Some stocks are so oversold that once I’m in them I am there to stay. If they fall further my most likely reaction is to add to the trade at the next support level. All others I will post a price stop level for. That should get you out with a minimal loss.
I do occasionally take a price action trade, usually around news events. If I can get it into the site in a timely manner I will post those also.
I wanted to explain a little of what I am doing so you could decide whether you wanted to spend your time on this blog. This intro could become a book but take a look at my trades and other sections of the blog and see if this helps you in any way.
Best of Luck.