Stock Trading Strategy

The point of trading is to turn a profit, so why put money in a stock that is not moving?  Doing so would mean risk without reward.  Furthermore, an open position showing a loss should be cut immediately because small losses are the KEY.  At TheStockBandit.com, our objective is to expect profits that outweigh expected losses by at least a 3:1 ratio.  Losses are a part of the game, so you must respect them and keep them small.  Therefore, only get in stocks on the move with the intention to ride them into profits and exit upon the loss of momentum.  It is at this point in the trade that we TAKE THE MONEY AND RUN!!

This strategy is best achieved by buying stocks that are breaking out of tight consolidations on an expansion in volume.  This type of move in a stock tells us that the previous area of indecision (consolidation or trading range) has been resolved to the upside and money is flowing into the stock (volume expansion).  Volume is the fuel that pushes the stock upward once it begins to move.  A lack of volume is a lack of fuel, and the move may be short-lived.  Be wary of breakout (or breakdown) moves on light volume as they are prone to failure.

Be in no hurry to put on trades.  Trades placed out of boredom lead to bad habits and poor results in the long run.  This leads to a loss of trading confidence, which is even more damaging than losing dollars! 

Over time (weeks, months, years), be absolutely sure to keep your down days and weeks as small as possible. Growing your account happens when you stay in winners while they run, and cut losers at the first sign of negativity.  Big winners are not for offsetting big losers.  Wealth comes from big winners, so keep the losers small.

First of all, decide your timeframe for trading.  This is important because it not only determines position sizing, but also where to get out of a trade.  Stock picks from the Bandit Broadcast are selected because they are set up for initial moves which are ideal for day trading, as well as longer term moves which are ideal for swing trading.  Deciding which approach works for you will help you to determine which exit strategy fits your trading plan best.

Regardless of which timeframe you trade, the key is to keep your risk profile for every trade in check.  The stocks listed in the Bandit Broadcast stock newsletter are poised for at least an initial move which is ideal for day trading, as well as for an extended move for swing trading.

The following links will take you to the pages which will outline a specific Stock Trading Strategy to fit your timeframe.

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