fuqi

You can't really see that the blue bar is blue, yesterday's trading, but you can see that it is short, and nestled low against a longer bar from the previous day, and that all this is happening as we approach an earlier spike low, after a wave which was steep on the up side, and which has been gradual and orderly on the down side ... nice! It's really tempting to place an order above yesterday's high. I also think it's a little premature ... but just a little. (I'm glad it's premature because I'm locked out of my account and can't place a trade until I get down to the Scottrade office ... but these trades often give you several chances to get in, which is just one of the nice things about them.) ... ... Based on the long term pattern, which mirrors this ultra short term pattern TWICE!, this trade should be ready to go. What I expect is a little jump up - which would trigger our buy stop, and then, at some point (in the next few days) another short bar, which would be another trading moment. Of course, a couple of weeks back I was predicting lower prices, but now I'm not. But it doesn't matter, really .... this stock is going to do something, and we're going to get in with very limited risk, so even that last prediction doesn't "need" to be accurate.

You have to understand the trade, and in order to do that you have to start with you're account. Let's say you have $500 in your account, available for trading, and just that. You could have more, or a lot more, but $500 is an amount almost anyone can swing. (Or, you could start with less, even just $100.) The point is, this money is at risk. It's not your retirement money, it's not your kids' college money, it's not your reserve funds, it's your trading account. And you don't need a lot, because you intend to make it grow fast. But, you also could loose ALL of it. You're preparing to take that kind of chance. You plan to minimize the chance of that, but you can't eliminate it. Now think about this: we're planning to buy stocks that have been making huge swings in price ... on the DOWN side. These are panic situations, and the market is being excessively, even wildly, conservative, refusing to buy even at the lowest prices, with no real reason to be that extreme ... but there is a reason ... it's hard to tell what's going to happen in the kinds of situations these COMPANIES are in.

The upshot is this: we're going to look at these situations very, very carefully, and we're going to use every bit of strategy we know to buy EXACTLY WHEN A DECISION IS BEING MADE. But we won't actually know the decision has been made, when we're buying. So, after we buy, we're going to continue to watch the situation very closely, and, if there's a question about whether a decision was actually made, we're going to sell.

The thing is, we're going to sell, in those latter situations, at a price just below the price we bought at ... or that's our plan. (That's the plan that could fail and cause our losses to increase, but I think you will agree, as you study these trades, that that is fairly improbable.) It's very easy, actually, for us to tell that a decision wasn't reached, because, if prices reach our stop loss level, we'll sell. We are counting here on one thing alone: that, with a decision having been made, and our purchase made at the decision price, prices will now go up and only up. And they'll go up a lot, because of the panic nature of these low prices.

And then, we're going to go all in, when we go in. If we have $500 in the account, we'll place our BUY STOP to buy $500 worth of shares, or, maybe, $400, or $450, because we don't actually know what we're going to pay, with a STOP ORDER. But, if our stop is triggered, we'll buy somewhere around $500 worth. (What happens if the price jumps? We could end up owing money. Would it be possible to end up owing tens of thousands of dollars? There could be situations in which that WOULD be possible. We can make some assessment about it, and if we were to get into such trouble, we could probably reach an accord with our creditors, but, actually, we can also do something to ELIMINATE THE RISK (of a buy stop). That would be watching the market during the day, and using a LIMIT ORDER to place our trade when there's an actual intraday buy signal. THE THING IS, THIS SYSTEM MAKES IT REALLY EASY TO WATCH THE MARKET DURING THE DAY. WHY? BECAUSE YOU'RE ONLY WATCHING ONE STOCK. YOU'VE PICKED SOMETHING FANTASTIC, NOW GIVE IT ALL YOU'VE GOT. HA HA. ALL OUR EGGS IN ONE BASKET. BUT WE PICKED A VERY GOOD BASKET, AND WE'RE GOING TO WATCH IT VERY CAREFULLY. AND ONE BASKET IS EFFICIENT.