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Trend Trade

2/4/2009 10:04:05 PM

Here's a Trend Trade for Thursday morning...

There's a very simple methodology for trading trends. You wait for a stock to base out, test its lows and then when it recaptures the 10 week moving average, you go long.

How long do you hold? As long as it remains above the 10 week moving average.

Where do you apply your stop? At the 10 week moving average.

The nice thing about this type of trade is that it's slow motion. You can follow it on weekends. Don't need to stress about it during the work week. And if you are stressing about it, then you've invested too much in that one position. That's called the sleep test - it's a good way to tell if you're trading too much money.

Trading is a dangerous game. You can lose large sums of money rather quickly. Even the following stock can get a 50% haircut over night if something negative were to happen to it. You need to consider that in your trading plan. Too risky for you? Lower the initial amount you go in with. Still too risky, then divide your position in half and leg into it. You'll find what works best for you. It just takes time.

Here's the stock I'm recommending:

It's something I've been watching for a while. There are a lot of beaten up stocks out there and as they base and come up out of their base, they make great opportunities.

I know we've been a little slow of late - but that's more a function of the market. If things improve, this service will heat up... So stay tuned.

Regards,

 

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