Method Three: Quick Profits on Many Small Technical Trades
No – don’t go out and make a bunch of small trades. This method is very straight forward. You are looking at the chart for a company. You are looking for what some call “channeling patterns” in the chart. You are trying to catch relative lows and ride a particular stock up for a quick gain.
Sounds easy. It is easy… to lose very fast. Remember, everyone can see the same charts you see.
You have to add a couple of elements from above. These include, make sure it is an operating company. Make sure the Company itself has a real product or service it can sell immediately. Make sure there is no short term risk of a reverse split. While you can get away with a stock that has preferred stock, just make sure this is not the week the hammer comes down and the company makes that terrible announcement of a 10,000 to 1 reverse split.
You use small amounts of money. You never double down. Once you buy the stock, your next step is to put in a sell order that has a limit about 20% to 25% of where you purchased the shares. Make it a GTC order. If the stock is thinly traded, make it all or none so you don’t get a tiny sell order that only costs you commission. Never play a stock that trades less than about $150k per week in dollar volume. You can do two or three of these at a time. Don’t fall in love.
Yes – this is high risk. Do it only with money you can lose.
One more thing, don’t go and buy books or programs on channeling or technical analysis in trading. Those systems never work.