Small Cap Stock List > Day Trader Stocks – Daily Stock List – Momentum Plays
Small Cap Stock List > Day Trader Stocks – Daily Stock List – Momentum Plays
By.- http://www.StressFreeTraders.com
A beginner usually feels very attracted to the stock market while for example discovering a small cap stock that’s being reported in CNBC or the news program and watching it rise steady fast and make new highs from to in just 2 months.
While learning about this successful news story he’s saying to himself “Oh boy if I was one of those lucky guys who bought that stock back when it was priced at I easily would have tripled my money by now… That means my 10 grand would transformed in to a whooping 70 K! hassle free … I would have been able to grab one of those big HUMMERs on the spot and probably pick up a nice Rolex by the way!”
The stock market news constantly reports of hot small cap stocks that are breaking out and making tremendous gains on the same day or doubling in price in just a few hours. Back in the bull market of the late 90′s you could easily see a good number of hot stocks sprouting out every week.
Those years surely made it look like every body could easily take LONG SHOTS and make a shiny pile of gold every day in the stock market. But today’s market is a different story. A totally different animal.
Some say that the stock market has gotten more realistic. Fantasy land is over and GAMBLING YOUR WAY TO RICHES is not an option anymore. You might get lucky a few times, but your constant loses can wipe you out sooner or later.
The fact that the bull market period has ended for now doesn’t mean that you can’t make a great deal of money in today’s market. A lot folks from many walks of life keep making excellent profits on a daily basis, pocketing hundreds & thousands of dollars by trading stocks online.
Success in stock trading starts by applying a wiser and REALISTIC methodology for choosing hot stocks as well as for getting in and out of them with profits in mind.
You need to look at the stock market more realistically. You got to learn that you can benefit when stocks go up and also when they FALL down.
You got to WORK SMARTER and get more selective about the hot stock trading opportunities that you choose. You need to embrace the nature of day trading and be fully prepared to take advantage of stocks that are poised for a BIG RISE on the same day.
The bottom line is you have to PREPARE YOUR SELF to be successful, just like you would do it in other areas of your life in order to achieve success.
Stress Free Traders helps stock traders and investors take advantage of practical stock trading opportunities every day at http://www.StressFreeTraders.com
Momentum Trading Of Penny Stocks
Day trading of penny stocks is a high-risk venture with a very high potential for earnings and also a very high potential of loss. This risky activity is not recommended to be done habitually, and it is it not even encouraged.
But what do you do if, at a certain point in your stock market practice, you notice that there are particular penny stocks that seem to be appreciating rapidly? By rapidly, you notice that its price moves up quite quickly over the course of hours or even minutes. You also notice that relative high volumes of the stock are being traded.
You can assess the risk of investing in the penny stocks, carefully considering if the potential gain would outweigh the risk of loss of your investment. Your choice if you want to invest or not, but whatever decision you make, don’t dilly-dally make a decision, then stick to it. Changing your mind about that particular rapidly moving penny stock may make you much more susceptible to investment losses later on.
If you decide to invest in the rapidly moving penny stocks, then you are in a position to do momentum trading.
Momentum trading often gets started when penny stocks are mentioned in newsletters as a hot buy and investors rush in to buy that particular penny stock. The rush to buy the stock makes the price of the stock go up. Market makers raise the price of the stock because of the laws of supply and demand there is often not much of the penny stocks they have to begin with, and they are flooded with the demand of the stock.
Investors such as you, who have noticed that the penny stocks prices have been moving up, will be convinced that the prices will still go higher and put orders for the stocks minutes or even seconds apart from the last order of the stock.
Eventually the stock buying frenzy slows down, and successive selling drives the penny stocks prices down. In momentum trading situations, it is not uncommon to have a 10 cent stock move up to 50 cents in a couple of hours, and then go down to 15 cents after half a day. Sometimes, the price changes can be much higher and much more rapid.
Momentum trading seeks to gain profit from these quick price changes. This type of activity can be very profitable for the early buyers of the stock, if they make the right decisions and keep their greed in check.
To profit from momentum trading, you must place your buy order as soon as you make the decision to invest in the penny stocks that you have noticed. Or if you are the lucky enough to receive such a newsletter or tip recommending a buy of the particular stock, and you trust the newsletter or tipster, place the order as soon as your receive the tip.
Remember to keep your greed in check by placing a limit order when buying the penny stocks the stock prices changes so fast in momentum trading. Place that one order and wait for the price movements. Do not be tempted into chasing the price of the stock as it rises. If you do, and catch the penny stocks at the price decline stage, you would incur losses.
Momentum trading is profitable if you are disciplined and you keep your greed in check. You have identified the rapidly moving stock. You placed that one order. You did place only one order at that particular price and didn’t order more as the penny stock has moved up, haven’t you? Good. Now, you decide at what price you would like to sell your stock, and sell it when the penny stocks price has reached that point.
As soon as you receive the confirmation that you have bought the stock, place your next trade, and that should be a limit sell at the price that you have decided to unload your stock. Keep your greed in check. Many investors hold off selling their stock because they see the price going higher and higher. You need to be disciplined enough to buy a rapidly rising penny stock, and then sell it in as little as ten minutes later with a small but satisfying profit. By being disciplined enough to sticking to this method when momentum trading, these small gains that you make will add up over time.
Nir Dotan is a writer and promoter of
Penny Stocks
services, and
Penny Stocks Preferred source for the latest news and information on the best and brightest Small Cap Stocks.
Getting to Know Momentum
Many investors will confuse a trendline with momentum. However, as an event derived from astute technical analysis, Momentum tells investors a lot more than a cursory glance at a security price’s trend line. Using technical analysis and technical events like Momentum, investors are able to determine whether a price is likely to continue its trend or reverse and head the other way.
What Is Momentum Similar to the Moving Average Convergence-Divergence (MACD) oscillator, Momentum measures how much a security’s price has changed over a given time. With a understanding of technical analysis and this particular event, investors will understand whether a slight pull back in price is part of the normal fluctuations of stock prices or if it is indeed a bearish signal for the price.
More specifically, Momentum tells investors about the strength of the underlying price trend. Using this type of technical analysis allows investors to determine overbought and oversold conditions in a security and decide whether opening or closing a position is called for. Such decisions are normally impossible to make based on security prices alone.
Figuring Out Momentum When it comes to completing your own technical analysis, you may encounter difficulty or frustration with the sometimes complicated mathematical formula. Luckily with Momentum, the calculation is rather simple. To obtain a Momentum reading, you take the closing price of a security, divide it into the closing price from ten periods ago, and multiply it by 100. In other words: Close $ /(Close 10 time-periods ago) * 100].
Trading on Momentum When it comes to executing trades based on Momentum, the reading is quite simple to understand. Values above 0 are bullish and values below 0 are bearish. A word of caution however is that extremely higher low values might suggest a continuation of the existing trend. In the case of a sell, investors are urged to trade only if prices peak and then begin to fall and not trade before they begin to fall.
In fact, with most signals derived through technical analysis, investors are advised to use other signals or patterns to confirm or refute a trade opportunity. Momentum is often used to confirm other events or price trends.
Despite Momentum being a fairly simple even to calculate, combining it with a dozen or more other events can become burdensome. Most investors rely on trading software to calculate buying opportunities based on technical analysis. Some trading software will even make simple buy and sell recommendations. While understanding technical analysis is important, completing the work yourself is not.
With more than 16 years of financial services experience, Chris believes that Dividend Funds are instrumental to proper Investment Management Strategies.
