A simple and effective trading method

[Charles_Darwin]

Hello all! If you're a seasoned trader you probably have no need to read this, but I'm writing this to share with less experienced traders the method I use for making the big bucks... well, big enough to not need to work. Good enough I suppose.

First off, I NEVER buy a penny stock because of its "fundamentals". I'm strictly a chart guy. The chart tells you everything you need to know. If the chart is really bearish, does the company's balance sheet really matter at all? The answer is no. Over at HSM there is a group of posters who constantly try and pump SFIO because of it's "fundamentals" and "bright future". However, the stock keeps making new lows. They've been at it for over a year now. Don't listen to people like that. They're either an idiot, or they're full of BS, whether they're trying to get their stock back up, or they're a paid poster. After so long you learn to smell BS a mile away. Anyway, I digress.

My method is to scan intraday charts for stocks that have had a move up, followed by healthy consolidation. I like finding ascending triangles on a 10 or 15 minute chart, but it doesn't have to be an ascending triangle. It can just be a sideways channel. I use EMA's 5, 10, and 20. After the initial pop, I want to see the price consolidating and holding it's new level. Then I want to see the EMA's catch up with the price, and volume come in. That is my buy signal. This is usually followed by the stock breaking above intraday resistance, moving up a few ticks or more, and then consolidating higher. I will sell or hold, depending on how the chart looks after the pop. If it looks weak I will whack the bid, and take my money and run. If it looks healthy I will hold out for more. If at anytime the trade looks like it wants to go the other way, I GTFO (Get the *&$# Out), and quick. I also use Stochastics (5,3,3) to identify overbought and oversold conditions. That's the parameter I've found that works best for me, intraday.

Below is an example of my kind of trade. If you have questions, ask away! Remember, "The trend is your friend until the end."

[billwatsonn]

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