Better Trades Momentum - One Effortless Strategy To Boost Investment Portfolio

I love to trade options on stocks with a lot of momentum. This simply means that I want to trade stocks, Exchange Traded Funds or Indexes that are moving fast and far. The way I see it, if I'm going to put my money in the market, I want to place it exactly where it will work as hard as possible for me.

You may have attended my free web shop on Monster Momentum plays during which I introduce a couple of the technical tools that I use to locate and trade this strategy. Let me show you some other parts to this strategy, and how this may be a boost to your trading account.

The initial step to trading momentum is that you need to find a stock that has the capability to move fast and far. These stocks typically have a dollar to two dollar average daily range during normal trading.

Once the momentum picks up they are able to trend twenty to thirty points or so in a matter of a couple of months. Sometimes this momentum is sparked by news announcements such as earnings or a new drug approval, and sometimes it's just a stock that becomes heavily bought or sold by institutions.

Whatever the case, once you discover to read technical's, you'll have the ability to spot the building momentum in time to profit from the big move. As we are heading into the thick of earnings season, this article will show you some ways to trade the post earnings momentum.

Holding a directional trade over earnings could be risky, but after the release the uncertainty of what direction the stock will move is gone. I like to trade right after earnings because we generally have an unusually large amount of trading activity that moves many stocks faster and further than they would usually go.

It may be that earnings numbers were a big surprise, (they may be much stronger or weaker than expected) or it might be that traders were waiting to see what the quarter was like before they put more money into or took funds out of the stock.

It truly does not matter what the actual numbers are, mind you, simply because we are not trading the numbers, we're trading the reaction to the numbers. Checking a chart the evening after a company announces will show us if we have tradable momentum. If there is a great amount of purchasing pressure, I trade it up and if I see a lot of selling pressure, I trade it down.

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Better Trades Momentum - One Effortless Strategy To Boost Investment Portfolio

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