For my wife and I, everyday is Love day. Sappy I know, but that doesn’t mean we don’t celebrate the great Hallmark holiday that is Valentine’s Day.
What I can’t ever figure out is why so many of us wait til the last minute to grab our gifts.
That goes for any holiday. Without fail there will be lines out the door at all the stores. Maybe we are delaying the stress, or maybe we are just that busy.
Whatever it is, it’s a gamble. At that point your decisions are fast and your mind is foggy. Not to mention, you are stuck with what’s left.
That’s why I plan ahead. (get access to my nightly video watchlist)
Maybe it’s the trader in me. I would never go into a trading day without a plan.
And given how much money I am pulling in from trading, you can bet your bottom dollar that I’ll be ready for the day.
Now while I can’t help you get ahead of Valentine’s, Christmas, or Birthday gifting… I can teach you to trade and prepare you for each day.
For a special Valentine’s Day treat, I’m going to walk you through a detailed lesson on how easy it is to pull profits from the market.
After you read this, you will have a clear picture of how to trade with less risk and more reward.
This is one of the simple patterns I use every day, the stair step. I put a clear visual of this pattern in the chart below so you can really get to know it.
Basically this is a pattern of higher highs and higher lows… the stock is “stepping” up.
With a stair step trade, it’s key that the pattern exists first. Seems simple enough, but look at the chart.
There’s a leg up, then a leg down… at that point we don’t have a stair step pattern yet. We need a second leg up to complete the pattern (pattern rule: the leg down is a higher low).
Now that you can recognize it, I’ll show you how to trade it.
I bought ADXS on the second leg up when the stock broke above the previous swing high. At that point it is now trading in a stair step formation.
Two key points here. There must be a higher low on the step down, and the pattern isn’t complete until it breaks above the high of the previous step up.
Look at the chart below and I’ll explain more clearly.
If you were looking at this chart, what would you do with it?
I hope nothing… There is no pattern here. The stock moved up and then moved down, that’s it.
To complete the formation, we need to get a move back up above that black line (previous high).
At that point the stock has formed a stair step pattern (as seen in the first chart above).
So how do we trade this chart?
Wait for the stock to break above the black line.
Which is exactly what we did.
Now you probably want to know how to find a target.
There’s a trick to trading penny stocks – You don’t want to hold it too long.
After all, it’s just a penny stock, not an investment.
What we do in my trading chat room is look for the next levels of resistance to find good target ranges.
In the case of ADXS, you will notice the 200 day MA is sitting at 1.15, just above the breakout, so my plan is to target that area.
And as you can see in the chart… the stock went right to the 200 day and hit a wall.
Lucky for us, that was our target and we made a good profit.
You see, it’s not all about a home run. Constantly making base hits will get you home without the stress from all the strike outs.
This was a trade I took on Monday afternoon and profited Tuesday morning.
But that’s not it for this lesson, let’s look at what would have happened if we were looking for a home run here.
Right after we sold, the stock pulled back. This is exactly why we target resistance.
We are able to take on less risk by grabbing our profits at key levels.
And while that trade is over… for a nice quick profit… it doesn’t mean we are done with the stock.
We hit singles to round the bases home. For example, this stock may keep going up. You might look back in a week and think, he should have gone for a homer.
But this is the trick. If it does continue up, the next “step” up will present another low risk trading opportunity for another base hit. Stacking up your account in no time.
Penny stocks aren’t generally “going to the moon.”
To stay in the game, you have to take your profits while you have them.
And if you think about it, a double digit return overnight would be considered a home run in any Dow Jones stock.
So don’t get greedy, or you’ll be out of the game before it begins.
For more lessons… check out my blog: Lessons From A PennyPro.
And if you are ready to grow your account fast…