Better Trade Momentum - Find A Stock That May Possess The Ability Move Fast And Far
In one of my earlier articles, I taught you to trade momentum that happens right after an earnings announcement. In this short article, I'm going to go into some of the chart patterns we can certainly use to trade momentum that is unrelated to earnings or news.
I am going to show you tips on how to combine current information and chart patterns to trade momentum. But, before I get too ahead of myself, let me go over what momentum is and why I trade it.
The first step to trading momentum is the fact that you need to find a stock that has the capability to move rapidly and far. These stocks typically have a dollar to two dollar average daily range throughout regular trading.
As soon as the momentum picks up, they are able to trend twenty to thirty points or so in a matter of a couple of months. Occasionally this momentum is sparked by news announcements like earnings or perhaps a brand new drug approval and in some cases it's just a stock that becomes heavily purchased or sold by institutions.
At any rate, once you discover to read technicals, you will be able to spot the building momentum in time to benefit from the big move.
Several of my most lucrative momentum trades took place not due to any news, but just because the chart started to show signs of big purchasing pressure or big selling pressure. I look for important things like breakouts, long candle bodies, and various candle patterns combined with the 6 indicators I use to signal a momentum trade.
The most effective way I can show you how to trade momentum is to show you a number of the patterns that I and other people in my Traders' Talks have recently traded.
If you have already suffered a loss in profits from making a bad trade that has put you in financial distress, get help from bankruptcy services inc.. If you own your own business you might need restructure management advice from a specialist experienced in companies restructuring.
The initial thing to keep in mind with momentum is that when a stock has made a big momentum move, you know it has the ability to do it once more in the future. It's going to most likely take a breather for a while and it might not move in the same direction, but the momentum will more often than not pick up once more.
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