Explosive Stock Trading Strategies

374 Pages·2011·20.08 MB·English

by  Samir Elias

EXPLOSIVE
STOCK TRADING
STRATEGIES
EXPLOSIVE
STOCK TRADING
STRATEGIES

BY
DR. SAMIR ELIAS
Publeshed June 2011
Campsnight & 2811 by Sanir Blas. AI tights reserved

Fxecpt as permitted under the Unita $eares enpstightaccat 1926, na

ar of this publication may be reproduc or distributed in aug frm

foc by any wreans or stored in a dats hase or retrioval system wihont
the prioe write peruission wC the publishee

Priced in the United Stares

ISDN 13: 978-0-9846367-0.3
ISBN 10: 0.9546387-0.9,

Published by- Lorne Group ine
BO ox 12974
Wichita KS 67277
TABLE OF CONTENTS

Introduetion.

Chaptor +
Expoelve volume based broaruts
“Technical reeulrmerss
Practical applctions
Emry Statoay, :
Exit strategy using technical ndleator
Exit strategy usng band infest

Chaptor2
Exylsive consoldation safer brewsouts x
“Twatnioainoates 2
Pracioal applications 22
Momenium driven aeakoute a
oistiry van brawouts 2

Chapter
Erulosive profte using diverganteigrale a
Frarlal tau eivergenoee 38
CComplieuiverganvee eo
Guidetirs to trading ivargoncos. 18
Fraclcal soplewions. 46

Diverysnoss us-mgboih aca and vl. me inciator. 49

Chapter 4
Explosive chart patter: 5a
Felling racangle pstam 53
V reversal patter, 2
PV and PUP reverazle 7
Falling edges. 4
tiple fang wages cs
Faveza oe)
Penta! suback ascending Wargle « os
‘Camaressed 49081 Betom. wnancn st

chapter §
Exp sah profte racing momenture ahs or
Trade omy Viggo: 98
Bangles 1 & 3: Isloes dey 28
Baarplee 3&4: Slocks dey 303

Exavple 5: Hiookly imoframes. 07
Chapter 6
Expleslis prot lasing sigr al price bore.
omanta perv aoeuisst tANTA) entry pois,
Sovorwary sel signal pro ars.

Choisca “herazeurion (CH7PY
Ve uma considerations

“Tree Bar Gaunt rand reversals
Traaing Thiae Gast signal hare
Scraps E.W.22 (SSF)

Final Wore

haptor7
Bcoiotve profits om smal ice hrs
Inacaion sande
Expiocia move froma! oats
PFSWeD (PSF),
Final or

Chapter &
Expbel proflis racing vee eps,
Consolidation patiom rine spk,
Zaprarm: Onovlogy ‘Z10F).

{Groor Plains Ranevahle Faemny «GPHE).
Tend rovoreel price eps,

Bollngcr oane ith

At Tanspor! Group [ATG

vor Tower CO. (FTV

Chapter
Expio2.ve prafts acing verse price sings
Tiauing rascals us npr eng
Cite Natural esn reeniC#F), Hovoree sings
Luatemon Aten 1112
“Toad ravarsae sing eed pico eninge.

(Cts Nalural Resarmes(CLI}. (raed reverse axing)

Cchaptoc 10
Explciva pretistecirg price bar plane,
Four se Uptend.

Phol shaker “678

arian cange har arnt pallor
‘Seoord lay shakeout atta

(Out of ange tive bar versal.
Grerlapring wide renge bas

Price panera pllbaces
Tipo bar nigh reversal.
Bul:sh ana becrigh ravarcal zona
Ta dey bar ners!

Tight range sar eort auton pattern
Examples ding pros ber patern?
omnstar CSTR

Poor One (PWIER},

FS Networks :FFIV)

(Crocs re {CROX

Nateans Corp Iz)

‘rica pattarn closstioaions

Fall Syste (BENT wn
Allaros CommurinationsiATHRI..
ia ora
Chapter 11

Exolosva prot trading fing krives
A123 Systome IAN}

Ponor One (PVIER)

Monolithic we’ (MANA

“Traine taling kite soe Using inclpl tno amo
Alheroe Carrmusicatone (ATHRI

Indo ravereala using falieg knife signals

Sow Jens inex (BIR) aman
Sogleignalehakenute

NAEDAG Compes.te (COMPG:

Short tau trac using falling sre signals

UM WARE (Via

Chapter 12
lin era a thle fo oe its
‘Tha myth of soul’ fendarsordal eri i.
Tea RESHE ateckfikoring system
FRESHE farina otra,

Bulish ascring shat pastns

‘ame Packet /APKT, technical uoebout.
‘Acme Packes {APKT} pre eamings shakscut
‘shores Comrunigation: ‘AIH,

Fina Wor! i

Appendix A
Genalesties charting

Appendix B
Cem gence Divergons chars

(Closing thoughts.

280
INTRODUCTION

The question | get asked often is: ean anyone leatn how
to beoome a succassful trader? My answor to this question is
both yes and no. Not everyone has the personally traits w be a
suocesstul short tarm trader but everyone can learn how to make
money trading the marke.

Hi this statement appears contradictory to you, | recom=
mend you read the Markot Wizards baok series by Jack Schwe-
‘ger in which he profiles several highly susvessful traders. The
only common characteristic amongst these traders is their high
level of success. Oiher than shat they are quite afferent in the
markets they trade, the time frames they trade in, and the trading
vehicles they use. Same are fundamental long term traders, othe
ors are shor term scalpers, some trade stocks, others bands anid
some trade futures. tn essence each 118es a stating systern that
fits their personality and styla and has unwavering feith in their
syster' to the point whare they “perccive [tas a sure winner over
8 poriod of time.

The key here is the trader's perception of the system or
approach they use. While no trading sysiem is one hundred per-
Cent profftable, the :tader’s perception that the system is a sure
‘winner is more likely to give therr the confidence to pull the tig
ger rather than hesitate and sit anc! watch,

In my years of leading local trade group, Ihave noticed
‘tat certain traders are able to pick up @ system | present. add
‘their own slight mocitications lo it, trade it and do very well. On,
tho other hand, some traders are, for somo reason, unable to be
Profitabic using the same exact systers, This absorvation oeakad|
‘my interest especially since the ideas wore presented to both at
the same time in a similar manner.

| wondered! whether the successful group had more expe-
fenced, more educated, of mathematically oriented members
but | found out that both groups had experienced and inaxperi-
fenced traders with varying backgrounris and education levels.

| have concluded after working ana on one with sciected
struggling tracers that the reason they are unable to suodeed is:
their desire to be "safe". This is manifested by their purchase
of stocks they perceive te be "sure winners” where the suocess
story is already known to everycne.

‘Their argument is usually as follows "1 want to buy a fun:
damentally strang company s0 that in case | am aang and the
stock goes down. | can hold on since the funcamentals will bring
the stoek bac up".

‘What ! learned is that strong fundamentals mean d ferent
things to diffsrect traders. Some parcoive PLE ratio as the key,
‘thers consider revenue or earnlags growth, others debt ratio
‘among many other factors

"To have the corroct atiude towards te narket you will
ees to develop winning habits. You do thia not by winning avery
trade, but by embracing the risk and realizing that you can capi:
talze on market opportunities by using sound strategies. You
probably heard tha say'ng “Suocess breeds more success". Tha
best way fo beoome a winning trader ie to put yoursalf into a state
‘of mind thet will reward you again and again. The way fo do this
is by makirg money over and over again through rewarding your-
self with taking profits as a stock moves higher. This will mini-
mize the hesitation to take a trade because of the fear of losing,

Flemomber that the psychological faciors are the most im-
portant aspects of trading. Wher you see an opportunity, do you
fee7e and dacide to wach the stock for « period of time, taking
actin after the move has started”: or do yau follow your system
land inctincts and take on the risks that ihe crewd is running away
from? Remember what | said often, “the crowd is wong most of
the tima, expecially at major turns”.

‘Actually thas stalements are not new and (hat is why
many traders buy books on tracing psychology a change thelr
losing ways. However, from my experiance with the struggling
traders | worked with, theso bauks offered lita halp excepl for
the temporary motivational pick me up that diseppeared with the
First loss,

| have experianced this frst hand whe working with trad=
ers vino struggled to achiove profitability using the systerrs I pre-
sented; even though others were able to be highly profitable .s-
ing the same aysem, For examole one trader will not pull the
trigger unless the price to eamings ratta of the stock meets his
teria, For that reason he hesitates and waits since he does nat
oroeiva tha trade as a sure winner unless it meets his criteria of
the right P/E. ip essence a trader Is Hkely to have a perception of
a certain characteristic a winning stack must possess and for that
season, he hesitates to tvade stocks that do not fit these param
ters

This observation prompted me to conduct an experiment
to see if by changing the trading methodology into one that fits
the style of tho struggling group of traders. | can improve their
profitability. Itwas my observation, aller lalking lo the majority of
slruggling traders in my group, that thera is quite a bit of hesitax
tion lo tako a tracle usually because it does not meet all of theit
requirements of what they percalve to be a winner. In addition,
they were hesttant to onter a trade sings they feita high level of
anxiety in determining when lo el. This anxiely is likely to have
been brought 09 by pravious market losses that damaged their
‘onfidence. My conck.sion was thet this group of rade is key
to feel more comfortable with longer holding times and fundae
mentally sound stocks. The longer holding times wil remove the
anxiety of having lo exil quickly and Ure [undernental strength of
the stock will give the trader the perception of having a “eure win-
ef. | thus formed a new group focusing on “technofundarnen
taP trading with a holding period of fow months ané up to a year.
In this group wa implemented a simple combination of techical
and fundamental criteria lo lake sosilions after a stock’s ean=
ings releaso. he fundamental aspacts are based on the RESHE
systerr | introduce in chapter 12, in combination with three chart
patterns that tend to appear near aamings.

s a result of using this system, the chenge in traders level
of confidence was phenomenal. ‘They pulled tha trigger without
hesitation as soon as tha technical signal appeared on the cher,
since they perceived the stack as a "sure winner” duc to its fur=
damental strength and the strict entry criteria, In addition, the

nkiety O° towing when to Get out was removed since thay know
they would not have to exit until few months later in most cases.
Inthe few instances the ade did nat work, they had a clear stop
as well as an exit stratacy included in the eyetem.

Thus, by changing the trading method to one thal fits thesa
‘raciars personallty and style better, the anxiety and hesitation
were replaced by confidence that grawr with each winning trade,
This expariment was so successful that | kept this group going
parallel to the original ane. Usirg the methods in Chapter 12 we
were able to identity Fuge winners sych as FFIV, APKT, CHM,
TSL, GMCR, ISLN, ARUN, and many more.

This book offers a broad spectrum: of trading techniques
that fits the style of almost any type of trader. These methods
ware selected basod on their exceptional rasults, ease of appli=
cation and diversity of approach. Ihave used these methacis in
‘my Inaaf trade groups with great success and was encouraged
to write this book ky group members whose friends wanted to
benefit from these trading systems b.t were unable tools these
groups cue to limitad space.

Your suocess as a trader tigaly depends an you" ability
to develop a system that fits your awn personality and trading
style. If you profer to merge fundamental with technical param=
eters in your trading then Chapters 1 andl 12 are for you. Chapter
1 makes use of simple information such as insider owrership,
share float ctc.. while Chapter 12 uses more efaboraia balance
Shao! information. Thosa fundamental critaria aes then combined
with technica’ ndicators to complete ‘he trading sysrem.

For traders whose abjactive isto sealp in short time frames,
1 have included sovarat chapters that employ price ber sequenc:
3 to determing entry and exit points in and oul ofa trade, These
include: Chapter 6 (signal price bars), Chapter 7 ( Smal price
bars), Chapter 8 (Price Spikes), and Chapter 9 (Reverse price
swings), The focus of these chapters is to use open and close
prices, price bar ranges, and bar soquences to scalp in shart tarm
time frames between few days to a couple of wanks. Price bar
formations are also used to determing stops and extt poin's,

l¥ your preferred trading style is exclusively using techaical
indicators. | have inclurled several chaptars that focus on spacial
‘setups using unique combinations of technical signals that can