Stock Picking: How to Pick Ready-to-Move Stocks

Not all stocks have the potential to move. That's why it'simportant to be able to filter out stocks that aren't likely tomove right away. After all, stock trading is about making moneyand it's difficult to make money investing on stocks that aren'tgoing to move anytime soon. If liquidity is what you're looking for, high priced stocks mayinitially draw your attention. You may appreciate the tradingvolume of pricy stocks. However, such stocks are less likely tohave the kind of price volatility you're looking for. Keep in mind that with penny priced stocks, the price may be toolow to have a trade volume that can support profitability. Ingeneral, keep in mind that the lower the price of the stock, themore difficult it is to trade for profit. The price of thesestocks may be all over the place, which has the consequence ofstressing out most traders as they watch their stock price varyall over the map. Use the Goldilocks rule when trading stock: some are too cheap,some are too expensive, but the stocks that are most likely tomove are just right. Making sure that the stocks you're tradingare in this range will ensure a return on your investment in adecent amount of time. Where does this Goldilocks range hit?Trading is different for everyone and this is true for findingyour ideal range as well. Nevertheless, a good stock picking price range can be as high as 20 dollars or aslow as 5 dollars. If the stock you're interested in is withinthat price range you're on the right track. Another important thing to check for is the trading volume ofthe stock that interests you. The stock trade volume should beat the highest 2 million and at the lowest 100,000. Keep this inmind when searching for stocks that are likely to move. The problem with stocks that are ready to move is that sometimesthey jump around a lot. In order to make sure you still make aprofit with your stock, watch it as it moves in the few minutesafter the market opens. Often, the high of the day will be setearly. If it looks like this applies, you can try having a sell limitjust below the high of the day. Of course, if it looks like theprice is approaching the high of the day with good momentumlater on, you should consider raising that limit price. Youmight also consider setting the stock's buy stop right below aparticularly significant low price. This is a much better technique than simply watching the stockconstantly with your finger on the sell button. Get somepractice finding the Goldilocks sweet spot and you'll soon findyourself trading in highly movable stock!

Stock Trading: How to Place Stops and Limits

Getting into a trade is often the most glamorous part of stocktrading. Knowing which trades are likely to turn a profit anddiving into those trades can make a day trader feel reallyknowledgeable and involved in the market. Being a good trader doesn't only mean knowing when to get into atrade, it also means knowing when to get out. The followingguidelines are meant to get you started, but remember thattrading is a continuing journey of discovery about the tradablenuances of market moves. Make sure you're familiar with historical support and resistancelevels. Also, check out momentum readings as well as BollingerBands to inform you about where to put stop and limit orders. It's also a good idea to use trailing stops. They will allow youto ratchet up a sell stop slowly as your positions change to bein your favor. When getting involved in stock trading,sometimes avoiding mistakes is more important than doing theright thing. Don't place your stops according to how much moneyyou need to make. The market doesn't distribute profits based onthe needs of its investors. Just because you need to make 500dollars this week and you can't afford to lose more than 250,the market doesn't really care. Sometimes the amount of money you need to make will correlatewith how you set your limits and stops. However, these figuresrarely work out to be the same. Thus, you should never use yourneeds as a guide to where to place your stops and your limits. Another important thing to remember is not to invest when youare "on tilt". Being on tilt means that you have just lost somemoney on a trade and you want to make it back quickly. Supposeyou have just lost $300 on your last trade. You shouldn't setyour exit limits to make all that money back on your next trade.After all, the smart limits on this next trade are not dictatedby how well (or how poorly) you did on your last trade. Stock trading "on tilt" is a sure way to lose money. Use thestock trading tips mentioned earlier to guide your trades ratherthan using impulses based on flimsy reasoning and financialneed. Always let the market determine where you should put your stopsand how you should set your limits. Letting go of yourexpectations will help you be an objective trader and willincrease your profits.