List of Criteria to Identify Best Stock Picks
Yesterday
TechniTrader held the Open Forum Training Event as we do once a year.
This is totally different than my webinar presentations to non-students. It was
as always, a massive surprise to the attendees who were blown away by the
training.
What I do is let a
“By Invitation Only” group of registered website guests which are non-students
see how I analyze stocks and the market. I do it live, using real charts.
Attendees may submit a stock for analysis to see how I analyze their stock
picks. I had far more requests than could be analyzed in one hour, but it
was an eye-opener for me.
I was struck by one
compelling common denominator in that list of stocks. There was not a single
good stock chart pattern for short-term trading among all of the stocks
submitted for analysis by the attendees. This was a stunning revelation because
it means that all of the attendees need what I consider “basic chart training,”
and clearly none of them had been taught. The attendees ranged from brand new
traders to veterans of 30 years. This means it was not about what you have
learned thus far, but what you have not yet been taught. There was a gigantic
gaping hole in their ability to select strong charts to trade.
That is probably
something really tough for veterans to accept but if a trader cannot read
the trends and find the EASIEST and BEST stocks to trade, then they are just
spending an enormous amount of time, money, and effort that does not result in
good profits and monthly income.
If you are a “do it
yourselfer” which the Securties and Exchange Commission SEC calls a “Hobby
Trader” then it really does not matter if you make a profit or not, since you
are trading for fun. I am not really the teacher for Hobby Traders as I work
solely with Students who are serious about making consistent profits from
trading stocks. So if you are just doing this for fun, then this lesson
will not interest you.
AAPL is a very
popular stock in retail chatrooms right now. Let’s use it as an example, see
chart below.
Use this chart to
learn how to analyze stock charts with AAPL example in order to determine the
following:
1. Where are the
support levels in this chart?
2. Is there momentum
potential action, and Is run gain potential down or up?
3. Can you identify
weaker versus stronger previous price candlestick patterns and trendline
patterns in this chart?
4. Is this good stock
for Day, Swing, Momentum, or Position Trading?
5. What are the indicators
telling you?
6. Do you know where
to put a PROPER stop loss? If you think stop losses do not work, then you are
not placing them properly.
7. What Trading Style
would work best, and which strategy should you use for that trading style?
8. Which Market
Participant Group is in control of price right now?
Print off the chart.
Draw on it. Study the overall trend. Look at different time frames. Do not have
so many indicators on the price chart that you cannot read the pure price
action. You should not be using more than 5 indicators and most of those need
to be quantity based indicators. If you don’t have a good set of
indicators, study the chart provided with this lesson.
Let’s see how you do.
I will provide my analysis of the Price and Volume action for AAPL next week.
The goal is for you to be able to pull up any stock chart and quickly decide if
it is a good pick for your Trading Style, as well as knowing which strategy to
use at the time based on current Market Conditions.
Your ultimate goal in
understanding how to analyze stock charts with AAPL example should be to have
the ability to know what style and which strategy for that style to use, the
risk versus reward profit potential, the hold time, the run gain, and the stop
loss placement. My goal in my retirement years is to teach Retail Traders to
trade profitably all the time, not just once in a blue moon. If you do not
learn how to do this kind analysis on your own, you will forever be dependent
upon vendors, High Frequency Traders HFTs, and Professionals who will always
take advantage of you.
Next week’s article
will be my analysis of the AAPL chart, which you can use to compare and check
against what you have determined.
Followers of this
blog may request a specific article topic by emailing: info@technitrader.com
Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDs with every course.
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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.