Better Trade Momentum - Try To Find A Stock That May Possess The Capacity Move Fast And Far
In one of my previous articles, I taught you to trade momentum that occurs after an earnings announcement. In this article, I am going to go into some of the chart patterns we can use to trade momentum that's unrelated to earnings or news reports.
I will show you the best way to combine news and chart patterns to trade momentum. But, before I get too far ahead of myself, let me recap what momentum is and why I trade it.
The first step to trading momentum is that you must locate a stock that has the capability to move fast and far. These stocks usually have a dollar to two dollar average daily range during normal trading.
Once the momentum picks up, they can trend twenty to thirty points or so in a matter of a few months. In some cases this momentum is sparked by news announcements which include earnings or a new drug approval and sometimes it is just a stock that becomes heavily bought or sold by institutions.
Whatever the case, once you learn to read technicals, you are going to have the ability to spot the building momentum in time to profit from the big move.
Many of my most profitable momentum trades took place not because of any news, but just because the chart began to show signs of big buying pressure or big selling pressure. I look for things like breakouts, long candle bodies, and a variety of candle patterns combined using the six indicators I use to signal a momentum trade.
The very best way I can teach you to trade momentum is to show you some of the patterns that I and others in my Traders' Talks have recently traded.
When you have already encountered a loss in profits from making an awful trade that has put you in financial hardship, get assistance from bankruptcy services inc.. If you own your own company you may need restructure management advice from a professional experienced in companies restructuring.
The first thing to keep in mind with momentum is that once a stock has made a big momentum move, you know it has the capacity to do it once again in the future. It will probably take a breather for a while and it may not move in the same direction, but the momentum will almost always pick up again.
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