On a daily basis, I go through 500-1000 charts, I run four different scans and then look at the top 200-500 stocks with the highest momentum. All this takes me about 30 minutes; I know exactly the type of set-up I’m looking for to take advantage of some of the short-term moves that happen on a consistent basis.
I narrow down the universe of stocks to a handful of names; then the market will narrow down the list further by getting me in or keeping me out of the names that make my list. The market gets me into the names if and only if they are able to get through the previous day’s high plus ten-cents, for example, if the previous day high is $40.00 then my buy stop will be at $40.10. If the stock does not go through the previous day’s high, then I don’t get involved (99% of the time). This criterion is how the market gets me in or keeps me out and doesn’t allow me to play favorites. On any given day you might have an idea or feeling of which name on your list will be the standout performer, but in the end, it will be just an educated guess. Yesterday I had 7-names on my list only two when through yesterday’s high. This is what works for me, I look at charts a little different, and I believe certain things that you may not believe or agree with.
“How you trade is shaped by your beliefs. You do not trade the markets. Instead, you trade your beliefs about the market.” Van K. Tharp.
These are the steps I take before the market opens;
- PUT NAMES ON A WATCHLIST.
- SET ALERTS.
- FIGURE OUT WHERE MY STOP LOSS WILL BE FOR EVERY NAME.
- FIGURE OUT HOW MANY SHARES I AM GOING TO BUY (BUY STOP-SELL STOP)/RISK AMOUNT.
- YOU CAN ENTER THE ORDERS MANUALLY AS THEY TRIGGER OR YOU CAN PLACE YOUR BUY STOP ORDERS PRE-MARKET MAYBE WITH A STARTING TIME OF 9:45 am TO AVOID GAP-UPS, AND LARGE SPREADS.
- THE ABOVE STEPS ARE THE ONLY THINGS YOU CAN CONTROL FOR THE MOST PART.
- ONCE YOUR BUY STOP IS HIT, THE MARKET IS GOING TO DO WHATEVER IT IS GOING TO DO REGARDLESS OF HOW MUCH YOU WATCH OR CHEER THE STOCK ON.
- RINSE AND REPEAT.
Here’s my watchlist; I only have an interest in getting involved IF AND ONLY IF they can get through yesterday’s high plus .10cents.
This is part of a strategy that consists of passive core holdings in SPY, QQQ, DIA, IWM, VO, FFTY.
STOCK OF THE WEEK RECAP