6. Short term stock trading & Short term Investing
We Recommend 2 different styles of short term stock Trading. The first style is swing trading: holding a trade from 1 to 10 days. The second style of trading is called Position trading: holding a position from a couple of days to several weeks. Short term investing is what we call when the trade is very successful and you can let the trade ride the wave and sit back and collect the profits over a course of at least a few months. You must choose a style that suits you best, depending on how often you wish to trade. A swing trader must dedicate more time to his trading since he is seeking quick and smaller profits he spends a lot of time researching stocks to trade. When we recommend our ADR gold picks, you can decide whether you would like lots of quick profits from every trade say a 0.50-$1.00 move per share from each trade in 1-10 days, or stay in the trade longer,trade less,and ride the stock all the way to our recommended target price for a larger point move of say $2.00-$8.00 per share profit in a longer time frame from a few days to even several months.
7. When and How to enter a Trade
When we send you our stock picks (ADR GOLD subscription service), we will provide you with exact buy or sell signals. Buy signals or sell signals are the trigger price you should buy or sell the stock at. The ADR, stock must go through the trigger price in order to be executed and to be successful. Not all trades will be executed because they never reach, and pass through the trigger price. When the trade is not executed because it never reached our recommended buy or sell signal, it's because the ADR, stock is not ready yet to go the direction we anticipated. This way of trading protects ourselves from risk, since we cannot lose money if the trade was never executed. When the trade is executed there is a high probability that the trade will go the direction we want it to go. This is because we do not recommend an ADR stock if we haven't carefully analyzed it and screened it first. Our picks are valid for the whole week we recommend them.
Once the ADR, stock we recommend can charge through the buy or sell signal most chances are it will continue to go up short term or down short term, as we anticipated. We suggest waiting for the market to breath a little first, wait a minute or two after the stock market officially opens, and only then place your order with your online broker. This also prevents you from faulty prices before that specific stock starts trading, and also lets you make sure there is no gap up or gap down. When a gap up or gap down happen you must enter the trade differently.
8. Gap Up/ Gap Down Rule
There is a gap up and gap down rule in trading which you must always
adhere to.
When going long (buying a stock)
A stock gaps up $0.50 or more, which means when the market opens the stock's price opens with a 50 cents or more increase in its stock price from the previous day's closing price, When the stock gaps down $0.50 or more , this means the stock price opened with a $0.50 or more decrease in it's stock price from the previous day's closing price.In both cases you must then trade the stock differently. Our recommended buy signal or sell signal is no longer valid.
For the gap up-You must wait a half an hour and then check the stock's price, the stock's high of that very same day, and it's low. Then place a buy stop order 10 cents above it's new high of the day. Remember this is after 10:00 A.M. .If you are using stop losses, The stop loss must be a new stop loss placed 10 cents below the same day's new low price. If the stock gaps down 50 cents or more wait only 5 minutes and then place a buy stop order and stop loss just like we explained with the gap up.
When going short (sell short stock)
Same rules apply as going long except for a gap up wait 5 minutes and for a gap down wait 30 minutes.
9. What to do after the trade is executed?
You have placed your order already. After you have seen your buy stop order has been executed, you now own the shares in the underlying security. Decide if to place a stop loss order or a mental stop . A mental stop is used because the markets have been so volatile lately that you might get stopped out of a trade, even when the trade might end up working out well. If you decide to place a stop loss order at the stop loss we give you to minimize your risk ( you may want to enter a bracketed sell order, includes target and stop loss). Whether you use a mental stop or place a stop loss order, they both are important in order to prevent you from severe losses. The day after your trade has been executed you must decide what style of trading you would like to use. Will you swing trade or hold onto your position longer. If you are a swing trader or have decided that you would like many quick smaller profits, then place your stop loss now at 20 cents less than the previous day's low when going long. For example if the previous day's low of the stock was $16.80. You will now place a stop loss at $16.60. Which is 20 cents lower than yesterday's low. If you shorted a stock place the stop loss 20 cents above the previous day's high. You will do this everyday until your quick profit target is reached or if you have been stopped out. If you have decided to position trade our stock picks (ADR picks), and would like to ride them all the way up or down to our suggested target price, then your stop loss should not be changed daily. We suggest in this case that you use a more complex order like a bracketed sell where you state the stop loss price and the short term target price. This makes it possible, if your target is reached, you will automatically sell the stock and reap all the profits even if your not around.
