How I Find Possible Trades

Hello everyone and thanks for stopping by. I hope you are all having a good weekend and enjoying some rest away from work. Today I want to start going over in detail the key points of my trading plan. Hopefully by doing this we can all gain a little more insight in how to better pick stocks.

First up is how do I find prospective stocks that I would like to put into my watch list. You may recall from my last post on "My New Trading Plan" that I like to pick possible trades out of the top daily percentage gainers or losers for the day. The reason I do this is only the strongest stocks or weakest stocks are going to make the biggest moves. Now we could just follow any group of stocks and find some trades but most likely the breakouts would not be very strong and without any conviction. Now by reviewing the top gainers and top losers we find stocks that are most likely moving because of some sorta of catalyst, such as earnings or revised guidance or even news regarding the industry that they are in. Also stocks can make very strong moves because the sector they are in happens to be the flavor of the week. The commodities sector is a good examples of this.

One key point to make is you have to make sure you have a solid idea on why a stock is moving before you consider it for a trade. If you don't know whats going on then you will have no idea when a stock might reverse and leave you holding the bag.

So thats it for now on that subject, as always please don't hesitate to send any comments or suggestions my way at uttrader@gmail.com or its always good to leave a comment.