Our Philosophy = Breakout Trading:
When it comes to stocks, we are looking for stocks that are positioned to breakout of a consolidtion pattern. When it happens on volume, moves tend to carry significantly.
If it's going up, has good volume, and is breaking
out of a downward channel, then buy it because it is
likely going higher.
Some folks want to buy XYZ at 10 and sell it down the road
when it hits 20. That would be great, but if it takes six
months or six years for the stock to get from 10 to 20, then
it does not do you a whole lot of good. It would be really
awesome if we could buy it at 10 and sell it at 12 in a
week or two. That is what we are after, and we try to do it
time and time again. There is much less risk this way.
We monitor a large numbers of stocks so you don't have to.
Every day we present a list of the best candidates to follow
through on a breakout move, should it occur. We have a lot
of stock ideas that never go anywhere, even if they have
been identified as a trading candidate. The key is that they
simply remain ideas, and we don't waste time and resources
trading them. We wait until a stock is actually on the move.
Know your target ahead of time
We want to buy stocks that are going up. We also want to
sell them when they either stop going up, or fall back down
to a protective stop point, or best of all reach a target
price. That's right, a target price.
Our targets are not aggressive. Most of the time, our target
price is 20% above the entry price. Why only 20%? Because we
have studied the price movement of 5,000 stocks over a 10-year
period and found that when a good move occurs it only
travels about 25% from a reasonable breakout point over the
course of a few weeks. With a target of 20% we are highly
likely to get an exit when the gains are there.
We have protective stops to keep us out of trouble. Some
people think you have to be invested all the time. We think
that it is better to be invested at the right time and out
at the wrong time.
Don't fight the tide
Which stocks should you have traded on the long side in the
first two months of 2002? We could look at the charts and
find the ones that went up the most and then say, "here is the
list of stocks you should have traded." But let's be
reasonable; the market went down in the first two months of
2002. The answer is that you should not have traded any
stocks on the long side in the first two months of the year,
because the trend was down and stocks were going down. You
might have gotten a few good ones in there but you were
fighting an outgoing tide.
The old adage is true: A rising tide lifts all boats. If we
buy the strongest stocks that are breaking out when the
market is going up then the odds are stacked in our favor.
Tactical Trading Outlook will keep you
synchronized with the direction of the market. Once you know the
tide is coming in, then you know it's time to buy. We all know
there are no guarantees, but if we buy strong stocks breaking
out of strong formations on substantial volume -- in a rising
market -- we will make a lot of good trades.
Index trading
We also have index trading for the Nasdaq 100 (NDX) and the
S&P 500. You can trade the QQQs based on the NDX System, and
trade the Spiders (SPY) based on the S&P 500 System.
The trading systems for both are similar, which makes sense
since 65 of the stocks in the NDX 100 are also in the S&P
500. With these systems, we identify a "short point" and a
"buy point." These points are recalculated every day. When
an index moves up and through a buy point, we go long. If
an index trades down and through a short point, we go short.
We have specific instructions for each trade on a daily
basis, and trades generally last just a few days. Again; the
time frame is based on the best window of opportunity. We
could hold the trades longer, but then instead of making 3%
or 4% in a few days you might make 3-6% in a few weeks. Our
philosophy and experience holds that being in a trade is
inherently risky, so only be in a trade when circumstances
are most in your favor.
What you get as a subscriber
Our market calls will keep you in sync with the market. Our
index trading is quick, easy, and profitable. Our stock
trading is dynamic and opportunistic. Whether you want to
trade every day, or just time your mutual fund purchases
better, we will keep you on track with the market.
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