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Explosive Stock Trading Strategies PDF

374 Pages·2011·20.08 MB·English
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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

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