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I am essentially trying to predict demand. Since I am mostly only going long. Demand for the stock "now" not in 1 year, etc. So my criteria is that it is breaking out or is near the highs. I am willing to risk quite a bit. usually the previous low or even the secondary low. That is usually why I chase. I expect buying to happen now and if that doesn't happen well I should get out. In the previous journal I think I never really understood the time aspect. I always swung for the fences but demand always stopped or was brought to a hault. Okay so let us go back to the topic and actually answer your question so I can really try to develop my plan as I think you are trying to help me. I appreciate it if you are. (1) The price of the stock must be in a "trend" in this case I define it as making higher highs and higher lows. In many cases people have drawn lines showing such. But I will also get into stocks that show buying after a strong down trend has happened(catching the knife but only after it dropped and bounced, really betting on the start of a new trend). (2) It must have demand now(time aspect). The stock must move now or in the very close future. This is usually followed after volatility(volatility begets volitility). Thats really it. Those are the two criterias. direction and speed. Direction so I can make a profit. Speed so I can make it now. I guess another thing that you mentioned that could help me is when to exit. As you said "money is made on selling" in my previous journal I always hit supply and let it reverse but also if I did that I would never get the 70 point swings. So thanks again if you are helping me @themickey I will have more things to think about.
That is correct thinking. All time highs I assume? Ok, that sounds fine, in actual fact that it is a good strategy. A stock making all time highs will automatically fit into the category of being in an uptrend. That is good, speed is important but a bit tricky as if a stock has already broken out on speed and distance then it may stall for a bit. How about using this idea...... Select stocks near ATH (all time highs) Ignore daily bar noise for the meantime, but think Fridays and Mondays are the most important days of the week. On any stock which is rising there will be a red bar week, a red bar week is one where Friday Close is below Monday Open, ie a first falling weekly bar in an uptrend. The Friday Close level of the first weekly red bar is your resistance level . Buy any stock which breaks above that key resistance level, you want to see a market reaction, ie a pop ideally. Because a pullback can go on for some weeks in some instances, ie several weekly red bars, take a buy position above the prior 2 weekly bars. For criteria, you want to concentrate on those stocks which are hot movers, ie not utility companies which only move 20% a year. Select hot companies in hot sectors for your swings
Avoid small - micro caps. These guys don't have enough money to operate effectively (cash strapped), most likely for bad surprises. Avoid stocks with low turnover, price x volume. Avoid stocks with huge numbers of shares trading. (Depends on stock price, low priced stocks can afford higher numbers of shares)
Thank you for the pointers and ideas. I will have to think about them more and do a bit of research for some before I can see if I can adapt them into my idea of the market. I think you make a good point in your idea though. I shouldn't focus on things that don't move a lot(utilities) and should focus on movers, but still will have to think about it for a while before I can make my own plan on it. I also see what you mean about a red week. It implies that the selling is over(at least we can hope) and that the chance for a breakout occurring is most likely(have not done the stats to know) higher because the stock is now breaking out of last weeks range, but I need to do some statistics on that and see if the sample shows that is true. Edit: Hmm I see I misread, you are stating the close is the resistance and to buy when it breaks the weekly close. Very interesting.
My mind is really in overdrive once I had skin in the game. The human mind is truly a beautiful thing once it has a goal it wants to achieve.
Here's an example, weekly bars, MSTR. Magenta horizontal line sitting under Close of 1st red bar. It also coincidently sits on the HHV (highest high value) of the prior two weeks. So this is the S/R level for an entry. MSTR meets the other criteria for a swing trade candidate, close by ATH, hot stock, hot sector, not small cap etc etc. KISS, no indicators, keep it simple stupid. Zoom into last Friday to see the pop.
Lol, appreciate it. I think the biggest part is focusing on these stocks. Look at this stuff it's crazy. Edit: Oops, the first image the first red week is not correct.
Hmm, I know very little about these stocks and honestly do not have data to be able to see the statistics to make a informed decision I am probably going to go small on size for these while the majority of my trades will still be in the SP500 stocks. I guess since I am only going long on the SP500 stocks I really am just betting on the SP500. I will probably do a 90/10 split for these large cap vs movers. Which begs the question if I will be profitable compared to the SP500 or even profitable in general. But this is a game, so I will bet on myself . Once I become more informed on these movers I will start moving towards a greater split or reduce the split even further. For now I see them as quite a risky asset in my uninformed eyes. I am sure these movers have positive skew as well. So I will have to eat a lot of losses and make my runners really run which I am fine with .