markd01
10 posts
msg #94792
- Ignore markd01 |
7/14/2010 11:17:02 PM
Any swing traders using channeling stocks out there? What specific trading rules do you use? Please give me your feedback on the below and suggest more that has worked for you.
SCANNING FOR POTENTIAL PICKS:
1. Channel at least 10-12%
2. 90 day volume > 50,000
3. No earnings (-4 to +30 days)
4. Recent support (previous support less than 3 months)
5. Narrow/quick resistence (channel length is less than 30 days)
6. At least double to triple support
7. No downside spikers calling for more than 6% stop loss
8. Watch for other significant resistence on the way to target
MONEY MANAGEMENT:
7 positions (14% of trading portfolio)
Stop loss at 3-7%, average 5% (one position downside risk is 0.71% of portfolio, at extreme if opens 50% lower then 7.1% of the portfolio is at risk) (protect against one bad trade)
Stop trading rest of the month if down 6-8% (protect against many smaller losses; your trading not in touch with the market)
Take profit at 8 - 30%, average 10-15%
Risk to reward ratio has to be at least 1:2, preferrably 1:3 or higher. If stop is at -4%, profit target has to be 8%-12%+
Move stop losses only in your favor, never make them wider
ENTRANCE POINT:
Confirm direction - has to stop downtrending first - same or higher daily lows for past two days and today's open same or higher than yesterday's lows
GENERAL RULES:
No impulsive trades
No doubling down to break even
Plenty of fish in the sea, after stop loss move on to DIFFERENT stock
Trade well, not often/always in the market
Trendlines (support) gets stronger with number of confirmations (want 3 earlier channels established), length (want channel to exist for at least 90 days)
The greater the volume of trading at support and resistence zone, the stronger it is
Narrow or fast channels preferred over long or wide. Wide channels that get back to old support are not as valid.
Few or weak resistence areas on the way to take profit sell target
Focus on probabilities vs market predictions
Confirm direction, you don't need absolute bottom and top of a trading range
Lower priced stocks have higher percentage movements (I only trade $1 - $20)
Don't enter more than half positions in the same market cycle/time (week) (if market freefalls next day, all positions could break support at same time) (time diversification)
Trend is your friend - if long term/weekly chart is up go long on daily channel pattern, if weekly chart is down, short half or more positions?
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