In one of my previous articles, I taught you to trade momentum that happens immediately after an earnings announcement. In this short article, I am going to go into some of the chart patterns we can easily use to trade momentum that's unrelated to earnings or news.
I will show you the best way to combine information and chart patterns to trade momentum. But, just before I get too far ahead of myself, let me reiterate what momentum is and why I trade it.
The very first step to trading momentum is the fact that you have to find a stock that has the capability to move fast and far. These stocks usually have a dollar to two dollar average daily range throughout regular trading.
As soon as the momentum picks up, they can trend twenty to thirty points or so in a matter of a couple of months. From time to time this momentum is sparked by news announcements such as earnings or a new drug approval and at times it can be just a stock that becomes heavily bought or sold by institutions.
Whatever the case, as soon as you discover to read technicals, you'll be able to spot the building momentum in time to profit from the big move.
Many of my most lucrative momentum trades took place not due to any news, but just because the chart began to show signs of big buying pressure or big selling pressure. I look for details like breakouts, long candle bodies, and a variety of candle patterns combined with the six indicators I use to signal a momentum trade.
The very best way I can show you how to trade momentum would be to show you a few of the patterns that I and others in my Traders' Talks have recently traded.
When you have already experienced a loss in profits from making an awful trade that has put you in financial distress, get assistance from bankruptcy services inc.. If you own your own company you might require restructure management advice from a professional experienced in companies restructuring.
The first thing to keep in mind with momentum is that when a stock has made a big momentum move, you know it has the capability to do it again in the future. It will probably take a breather for a while and it might not move in the exact same direction, but the momentum will almost always pick up again.
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