In order to help our readers to understand how we trade, we created this report to simply demonstrate a recent trade we made on GDX with a gain of 19.8% gain in 34 days.
First of all, we need to understand we are not day trading. We don’t want our readers to stair at computer or chart all day long to watch the price go up and down. This is painful. Instead, we want our readers to trade with confidence. To gain such confidence, we need to know exactly where we should enter, where we should exit.
Step 1: Scan Stock to your watch List
If you follow our website, then you don’t have to do this step, because scanning is what we are good at. You can simply check out our post daily to find out which one to trade.
Basically, we use different rules to scan thousands of stocks, ETF daily to find a good stock to trade. In above Chart, if you look at the very bottom, MACD indicator made a bullish cross and MACD also made a higher low. On Price, it also did not break down the previous low. This is a bullish divergence which indicates this stock is lacking energy to fall further. In another words, it will go either side way or higher. If it breaks previous high which is about $28.60, then it means it wants go higher and a bull trend will be formed.
Hopefully that all make sense. A up trend is defined by higher low and higher high. This is the fundamental concept we must know.
Step 2: Enter on Breakout
On 03/132023, price clearly breaks previous high and good volume. That basically means it wants to go higher. This is the time we will join the trend. Remember, it must have good volume. Lack of volume often results fake break out. We can set a buy stop order on $28.60 level, or buy at the close, or buy on next open. As long as there is no huge gap, it won’t make much difference.
Step 3: Set Stop Loss
Step 3: Set Stop Loss
Set Stop Loss as the low of 03/132023. Remember, we can never 100% sure about the market, so we have to know how to protect our investment. If it breaks down the low, that means the break out is a fake break out. Our set up is no longer valid.
Step 4: Close Trade When Close Below MA(10)
There are many different ways to lock the gain. The simple way is whenever price closes below MA(5), or MA(10) or MACD bear cross.
From above chart, we can clearly see on 04/17/2023, price closes down MA(10) and MACD bears cross at the same time. This is a very simple and straight forward sell. Quite simple, right?
Hopefully this article explain how simple a trade can be done, with nice profit. The only challenge might be the first step for you to find good setups. In order to remove this road block, we launch our website to just do that. We do all the scans and only publish the best candidates daily. All you have to do is to check out post and find the one you like to trade. That is it.
We also provide email list in case you missed our post. Email will normally come faster than our post too. So if you don’t want to miss our trade alerts, simply add you email below and you will be all set.
Hope you like this article and happy trading, happy life.