Any person who has even a rudimentary understanding of economics much less the markets has come to know the phrase ârisk-reward ratio.â But most people do not truly understand the term. And very few day traders even realize what this term mean because when they enter a position that they intend to hold for, say 2-3 minutes, all they see is the pot of gold waiting them rather than the perils of actually doing the trade. There are two basic tenets that I abide by and encourage all traders to use. First, do only trades in which a minimum of 20 cents can be made relatively easily. It is easier to make 20 cents in Dryships (DRYS) if it has been in a tight range for an hour than say General Electric (GE), i.e. pick the issue with the volatility. Second, if you are not sure that something will happen, at best it is a 50-50 shot of working. That sounds obvious, but weâve all said things like âIâm not sure, but Iâve gotta try this.â Thus, focus on trades that you feel have a near 100% shot of working. For instance, if a stock has been down after news that they missed their earnings and warned on forward guidance yet the stock crosses the unchanged marker on the day, it is highly likely that short covering will follow. So, again, by not going for the tiny scalps of the world and doing only the trades that optimal circumstance allow, you put yourself in a much better position to become a profitable day trader. Stocks overnight was mixed...wow...been awhile since I said that. Averages across Asia ranged from down 0.5% to up 1% while European bourses are down 0.5% to up 0.5%. Oil is down a touch again but the dollar is bouncing although bonds are up. Look for a darn near typical mid-December day today (much like yesterday)- it will likely be directionless and choppy. This is why I chose to pick the theme in the first paragraph in today's post- pick your spots. Reiterating-If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern CMED- good earnings LEN- good earnings PAYX- decent earnings DRYS,GNK, SB- drybulk shippers closed relatively strong; if they open down and go toward unch, likely a buy thru unch DVAX- massive rise yesterday on collaboration with Glaxo; it is likely an A-B-A2 to the upside today as well, particularly pre-hours ANW- closed on high of day BFR- closed on high of day AUXL- announced collaboration with PFE Bad-The following stocks have bad news and/or a weak technical pattern NKE- beat earnings slightly, but outlook hazy TTWO- atrocious earnings NDSN- bad earnings ATHR- warned on earnings SGY- cut capital budget CYMI- CFO suddenly resigned FORM- warned on earnings WFR- warned on earnings CEG- crushed yesterday after they spurned Buffettâs deal for another; if it opens higher, looking to short thru 23 and a 2nd trade later in day as A-B-A2 thru 22.62 SIVB- broke to a new trend low; odd. ATU- bad earnings SCHL- bad earnings WBD- bad earnings WGO- bad earnings WOR- bad earnings IR- warned PNR- warned on its outlook Earnings: THURS DEC 18 BEFORE ATU CCL CMED DFS FDX LEN MTL SCHL WBD WGO WOR THURS DEC 18 AFTER A.CN ORCL RIMM ZQK Good luck today. Erik R. Kolodny
Agreed. If you follow his Epiphany Method, you can experience some amazing consistency. I am currently on an 18 day profit streak. I do not make alot each day, 500-1500 but I make, which is what I am here to do. A huge futures trader and fromer NYSE specialist, Frank Delaney, has join this blog and adds volumes and deeper knowledge to the market. www.ErikKolodny.com
Like I said consistency. Compare this to the blog, www.ErikKolodny.com blog. These stocks were also on his Watch List. Enjoy!!!