In one of my previous articles, I taught you to trade momentum that occurs after an earnings announcement. In this brief article, I'm going to go into a few of the chart patterns we can use to trade momentum that is unrelated to earnings or news.
The easy availability of computing power and access to the internet has opened up the common investor's toolkit. Now the individual investor could even the playing field between him or herself and big institutions, and can guide his or her destiny without the continuous assistance of brokers
I am going to show you how to combine news 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.
When it comes to stock performance and choosing a great investment, many have searched for that 'perfect system' to screen out and determine the big opportunities. But exactly what is the best way for the little investor to handle the changeable animal that is the Stock Market?
The very first step to trading momentum is that you need to find a stock that has the capability to move rapidly and far. These stocks usually have a dollar to two dollar average daily range during normal trading.
When the momentum picks up, they are able to trend 20 to 30 points or so in a matter of a few months. Occasionally this momentum is sparked by news announcements such as earnings or perhaps a new drug approval and sometimes it is just a stock that becomes heavily purchased or sold by institutions.
For many people who have asked themselves "how do I invest in a stock", the realization could be that the process is definitely quite daunting but for those with strong hearts and courage, buying your first stock is simpler and quicker than it's ever been before.
At any rate, as soon as you learn to read technicals, you will be able to spot the building momentum in time to benefit from the big move.
Many of my most profitable momentum trades took place not because of any news, but just because the chart started to show signs of big purchasing pressure or major selling pressure. I look for things like breakouts, long candle bodies, and various candle patterns combined with the 6 indicators I use to signal a momentum trade.
When people think of different types of investments they normally think of one or the other, but don't put them up against one another. Currency trading, also known as forex trading.
The best way I can teach you to trade momentum is to show you several of the patterns that I and other people in my Traders' Talks have recently traded.
For those who have already encountered 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 company you may need restructure management advice from a specialist experienced in companies restructuring.
If you are going to play the stock market, you must know what precisely categories of stock are on the market and what it all means!
The initial thing to keep in mind with momentum is the fact that once a stock has made a big momentum move, you know it has the ability to do it again in the future. It is going to probably take a breather for a while and it may not move in the same direction, but the momentum will more often than not pick up once more.
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