Welcome Traders
You have found the Easter Egg of Fcreative
Momentum investing is a trading strategy in which investors buy securities that are rising and sell them when they look to have peaked. The goal is to work with volatility by finding buying opportunities in short-term uptrends and then sell when the securities start to lose momentum.
Criteria #1: Float of under 100mil shares
Criteria #2: Strong Daily Charts (above the Moving Averages and with no nearby resistance).
Criteria #3: High Relative Volume of at least 2x above average. (This compares the current volume for today to the average volume for this time of day. These all refer to the standard volume numbers, which are reset every night at midnight.)
Criteria #4: A fundamental catalyst such as a PR, Earnings, FDA Announcement, Activist Investors or some other kind of breaking news. Stocks can also experience momentum without a fundamental catalyst. When this happens, it’s called a technical breakout.
Exit Indicators
Exit Indicator #1: I will sell 1/2 when I hit my first profit target. If I’m risking $100 to make $200, once I’m up $200 I’ll sell 1/2. I then adjust my stop to my entry price on the balance of my position
Exit Indicator #2: If I haven’t already sold 1/2, the first candle to close red is an exit indicator. If I’ve already sold 1/2, I’ll hold through red candles as long as my breakeven stop doesn’t hit.
Exit Indicator #3: Extension bar forces me to begin locking in my profits before the inevitable reversal begins. An extension bar is a candle that spikes up and instantly put me up $2-400 or even more. When I’m lucky enough to have a stock spike up while I’m holding, I sell into the spike.
Suppose that a day trader buys 1 share of Company A at $20.
The day trader expects the price of the shares to rise to $30 per share, and sets a limit sell order at $30. The day trader then sets a stop-loss sell order at $15 in case the price of the shares unexpectedly drops.
On this trade the day traders is risking a $5 loss for a potential $10 gain. This would lead to a 1:2 risk reward profile on this particular trade, as 5:10 can be reduced to 1:2.
Once I have found the stocks already moving I search for a catalyst. I use StockTwits, Market Watch, and Benzinga to hunt for news.
