"Pardon my writing errors as I am not a good writer. This my longest writing since college.
I will make a watch list of 20/30 stocks every weekend for the following week. I’ll enter the alert prices for those stocks on my trading platform. My strategy is to find setups with minimum risk and maximum rewards. I don’t like to risk more that .20/.30c, whether its $2 or $80 stock. That way if your setup is right, you will always make more. If it doesn’t work, loss will be minor. I don’t mind paying extra to get back on again if it starts to work again. I’ll review my watch list ever night to see how they are setting up. I also spent at least 2 hours every night going through charts.
Best setups are tight narrow bars/candles on top/below major “Moving Avarages”(MA). MA’ s should be flat or rising. The stock has tried a particular price point few times before in last few months. For example, ABC is trading at 14 .65 now and sitting on top of 50 MA for few days now. It has a resistance at 15 which it tried twice in last few months. If the ABC crosses 15 tomorrow, chances are good that it will break out to the upside. I don’t like to buy stocks that are too far away from 20/10 MA’s.
If you want play with small cap momentum, timing is everything. You can’t be too be early or too late. Stay ahead of the crowd. Volume and crowd will follow. Small cap, Once they start moving, it has to keep on moving. If it pauses, momentum might be gone. Get out and stay aside. Don’t try to buy the dip. Buy when momentum comes back again.
I don’t like to buy the 1st spike at open. Most of the time 1st spike will fail. However, some 1st spike will keep on going depending of the setups. For example, narrow range, stock gaps up and go. See NXTM chart. I have talked about that name in the chat room in the past. Stock gapped up Friday and kept on going all day.
Best break out happens when it bases below your alert price and then runs higher. Or it will go through your alert slightly, comes back to test it than shoot higher. If you catch this 2nd move, your stop will be right below your alert. I don’t like to give it much more room.
I don’t like it chase stocks. Only time I might chase a stock, if the stock breaks out today with huge volume and a big range (big Candle). Next day above today’s high. That means the stock has enough momentum to propel it higher. For example, I will watch RVBD on Monday.
I am not a big fan of ETF’s given how volatile/choppy the market has been. The best ETF’s traders I know only trade those particular ETF’s, nothing else. Small cap tends to perform better on a sideway market whereas “popular” stocks will do better on a trending market.
Last tip, pay attention to “Failed break out “ setup’s where the stock will break out today and tomorrow it will fail . Place an alert above today’s high. Pay attention if it triggers in next few days, chances are it will go higher this time.
I will recommend following Jef Copper’s books to all short term traders. It has some really neat techniques for catching short term moves.
I am also attaching few charts. CIE and NR , we traded in the chat room last week with good profits."