Rules of Trading Penny Stocks


by Rob rens - Date: 2007-01-30 - Word Count: 402 Share This!

A stock in a strong uptrend that has a large pullback of 8-15 percent almost always comes back to its previous spot and then some. Especially if you can find stocks that have regular pullbacks at least once a month. I've noticed that usually the day after or for the next few days after a large pullback a stock goes back up very strong. I simply use the anticipated upward momentum that came from a pullback. I also think with many of the stocks on IBD you could just hold them and make a lot of money. They are the best companies out there and the ones doing the best. Also I agree that the edge is going were the money is going. Right now its energy stocks for the most part. When to exit I think is the hardest and I don't know when. I wish I would've held on to some longer. Sometimes I may just exit for another stock that has better potential momentum.
I do look for in a stock are technical indicators that match the price movement of a stock. Look at all the indicators and see if any correlate directly with the stock price. RSI is a very good indicator that I use more than most because it correlates more than most. The use of indicators is my primary means of finding an entry point along with candlesticks. It matters not which indicator/indicators correlate. As long one indicator matches well with the history of the stock price.

RULES FOR TRADING STOCKS BASED OFF NEWS
1. THE HIGHER THE PRICE THE STOCK IS, THE GREATER THE NEWS MUST BE TO MOVE IT.
2. LOWER PRICED STOCKS TEND TO GIVE GREATER PERCENTAGE GAINS THAN HIGHER
3. THE ELEMENT OF SURPRISE IS IMPORTANT. DON'T TRADE BASED OFF NEWS THAT IS ALREADY LIKELY KNOWN.
4. CHECK CHART TO SEE IF THE STOCK HAS ALREADY RAN UP. THIS COULD BE AN INDICATION THAT WORD HAS ALREADY GONE OUT THAT THE NEWS WAS FORTHCOMING.
5. CHECK THE SPREAD. 5 PERCENT OR LOWER IS BEST.
6. IF THE OPENING SPREAD IS TO WIDE, WAIT AND SEE IF IT NARROWS. AS LONG AS THE STOCK DOESN'T GO BELOW ITS OPENING PRICE THE STOCK IS STILL A POTENTIAL PLAY. THE FLUCTUATIONS IN THE SPREAD ARE NOT THAT IMPORTANT FOR DETERMINING THE DAYS POTENTIAL OUTCOME AT THE MARKETS OPEN.



Article Written by Dave Hot Penny Stocks

Dave of Penny Stocks, and stock message board

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