Hope to help new comers in the stock market. I have paid enough tuition to get what I have now
so they could pay less. But you still need to pay.
The following system has patent right protection so do not copy.
IMHO, price and volume are all you need to survive in the stock market.
Eight states are defined in my model:
TP1 : Turning Point, the stock maybe start a uptrend from its bottom. If volume is heavy then buy only
10% to test the water. If it's right, then keep it. You will catch the fish tail( hope to eat all
the way up to the head). If fails then sell it right way, you have minimum loss.
FTDW2: Follow Through Day One, the trend is a little bit clear so add 20% more.
FTDT0: Follow Through Day Two, stock continues going up but the risk of going down also picking up so do
nothing at this time.
RS2: Stock approaches major resistance but still could not break out. You could add 20% more
if it looks like it will break out from here some day.
BK5: This is the time to build your position if the stock finally breaks out with heavy volume. Don't hesitate to get in.
Otherwise you will miss a fast moving train. But if it is a fake breakout you must sell it right way.
PB2: After breakout, some stock will have a light volume pull back. This is the best time to add more to your position
BKFS: Breakout Failure Sell All. If the stock could not follow through in the following days and it break down with
very heavy volume then sell them all at once.
BS0: Basing Zero. The stock is trading flat between the support and resistant zone. No action should be taken during
this state. Otherwise you'll lose money.
I have developed my own system to track stocks in the above movement and it proves working very good so far. All the stocks are divided automatically by my system and I only focus TP1 and BK5 to buy stocks and BKFS to sell stocks. This saves me a lot of time and I could focus on Buy and Sell. The above mentioned reverse pyramid method to build up position is copied from an Econ professor in Berkley University who quit his job and trading full time later.
