|
The contents on this page are a small sample of StockTradersHQ's member resources (FREE Trial!)
1.
Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock picks with the greatest potential for explosive gains.
2. These stockpicks are traded with our real-time portfolio. Email alerts are sent for every entry and exit. Through the member-only website, you will have our support every step of the way.
3. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses.
SEE OUR TOP PICKS FOR 2006...
|
|
Thursday, March 04, 2004
Good evening friends,
Market Recap
It seems everyone is waiting for tomorrow's release of the jobs data before the market opens. The Dow and NASDAQ closed mixed again, with the Dow closing flat while the NASDAQ advanced 1%. The NASDAQ closed at the high of the day, but the volume was anemic with fewer than 1.8 billion shares traded. Short term momentum indicators remain bearish but could turn positive with further rally. Tonight the NASDAQ sits just below the 50 DMA and it is running up to touch a significant down-trend line. (See chart). Both of these areas are big resistance so the jobs data tomorrow will have to be very positive to get enough steam behind the NASDAQ to push it through this area of strong resistance.
Buying on Pull Backs
Dip or pull back buying with limit orders are working very well. Please pay attention to the limit orders in the Bulletin comments. Many limit orders have been right on the money and may have been very profitable trading in the last couple of weeks. For example, I mentioned last night that support on PMTC and WIND were 4.50 and 9.50 respectively. Checking the chart of these two stocks, you'll see that were the exactly the lows of the day for both of these stocks, and they had significant bounces from the lows, closing near the highs of the day. It literally pays to pay attention to the support levels in the Bulletin. There are many more examples of these calls in the last few weeks since I've been listing support areas and limit orders.
Don't Put All Your Eggs in One Basket
We talk very frequently about the need to diversify. The old saying goes “don't put all your eggs in one basket”. How very true that is for trading. If you put too much into any one stock and that stock breaks down, you stand to loose a large portion of your portfolio very quickly. It's true that you also stand to make a killing, but the downside risks are too great to ignore. It always pays to diversify your portfolio and limit your down side. It can be tough if you're not starting with much, but even in a smaller portfolio the risks are still there.
You may not be able to put 5% or even 10% into a trade and have it be profitable enough to make a difference. In cases like that, you need to weigh your risk tolerance, pick the very best chart you possibly can find, and then be prepared to get out quickly if it does not turn out as predicted.
Why do we use 5% as a good investment level for each position? There are several reasons.
- 5% allows us to be very diversified, and take many positions in stocks.
- It also allows us the freedom to double down without risking any more than 10% of our overall portfolio. There are situation when doubling down is very helpful. We've made use of that very recently in some trades that initially went south on us. Doubling down when the chart was set to bounce allowed us to exit those stocks much easier and quicker than waiting for our original buy point to come back up.
- By only risking 5% in any position our overall risk is quite minimal. We can stand to be wrong on occasion and not have to worry about a complete melt down of our portfolio.
It all comes down to your own risk tolerance in the end. Using a strategy to reduce your risk, while not sacrificing your ability to make a decent return is the best approach. Think about it the next time you're tempted to put too many eggs in one basket. You may end up with egg on your face, rather than money in the bank.
Remember, no matter what the jobs data is tomorrow; do not react with the sheep. Instead react to their reaction. Also, remember that how the market closes is more important than how it opens. It's been pretty boring trading this week but tomorrow? The party should liven up for sure. This number being released should rock our world one way or another.
As always, thank-you for your support past, present and future! Have a great night everyone; we'll see you all Sunday evening.
|
|
|
|
|
|
|
