rob rens asked:

Have had a few questions on how I trade. I'll do a run through to the best of my ability on what I do, and how I do it. This may benefit some of the newer traders. Sorry, no visuals on this one!

First off, my most profitable stocks are swing trades. I guess this makes me a swing trader. This means that I mainly trade in 1 – 5 day patterns.

Why swing trade?

(i) Holding a stock long is a good way to make profits, however it doesn't maximize your profits. By following the trend, you can capitalize on all market movement.

(ii) Daytrading only works if you have the capital to move a stock, or are quick enough to lock in small profits during movement. Unless you have honed your trading skills, daytrading is often a quick way to relieve yourself of your savings.

Stock Selection

Here are the things I look for when picking a stock:

1) Volume. Is there enough volume that you can get in and out if you need to? Make sure that the daily volume is at least 20x that of your position.

2) Float. Anything under 50 million shares is a sign that the company is on the right track.

3) Filings. Does the company have a history of reverse splits? Go with your gut on this – if it doesn't feel right, than stay away.

4) Charts. If you want to trade successfully, you HAVE to understand charts. Stockcharts.com has tutorials on understanding trading patterns and indicators. You really can't make money unless you understand the tools that make you money. If you need help with the charts, ask some of the pros on this site.

5) Level II. Take a look at the level II. Is there a lot of resistance? That is usually a bad sign.

6) I am never rushed into buying a stock. Usually when you hear about a stock in the chat room, it is too late. Research using the points above … there are plenty of trains leaving the station and lots of opportunity to make money.

7) Every stock on the otcbb/pink sheets that is under 0.05 is junk. You will not find the next walmart or google in this group of stocks. Traders call this part of the market the 'wild west' – it is full of pumpers, scammers, manipulators, and daytraders. It is a good place to get eaten alive, because there are so many variables working against you. Market makers ***** short sell these stocks, they are often on the verge of bankruptcy, shells are created to funnel monies, etc etc.

If you are new to the game, stay away from otcbb/pink sheet stocks with headquarters or owners in Canada, Las Vegas, San Diego, New Orleans, Florida, or Mexico. An oil company headquarted in Las Vegas? Yeah, right. These stocks are junk, imho.

Don't diversify

If you only have $2000.00 to trade with, don't diversify it. Buy 2 stocks with good potential and keep a close eye on them. Become an expert on your stocks and dump them if they do not perform.

Don't fool yourself

Plan an entry and exit strategy before you trade. Pick your entry and stick with it, don't let your emotions take over because that is when you make a mistake. Let the stock come to you, if it doesn't … forget about it. Rushed money is lost money.

Stick with your exit strategy. When the stock gets to your exit strategy, sell. Don't fool yourself into thinking that "it's going to a buck". Because it isn't. You have to sell to make money

Don't go against the market. You can't change the direction of the indicators, so just go with the flow. Otherwise, it is like trying to bail out a sinking ship with a teacup.

Don't hold a dog. Every 50% loss started as a 5% loss.

Don't try and make up the previous loss on the next trade.

Mantra: "Bulls and Bears make money, pigs get slaughtered." aka. Don't be too greedy.

My entrance and exit strategy

I buy a stock just above the support levels. If the stock is not performing, I can dump it into the support. I do not let my losses exceed 10%

I sell a stock after gaining 11%. This allows for 30% gains every week, which really is pretty good. The only time I break this rule is if a stock is moving with a lot of momentum and strength. This being the case, sell when you see momentum slowing. Often, this will come as a "pop". A pop comes when a stock runs itself into a big bid/ask gap. You have to be on top of the action to see this, but this is a big sell sign. The top comes at the pop.

Buy low

Buy when things are looking most dismal. Natural gas and oil stocks getting pounded? Are the naysayers forecasting $30 oil? Huge oversupplies of nat. gas? Sounds like a time to buy.

Look at the charts

Take a look at weekly charts on stockcharts.com and get a feel for cycles that a stock may go through.

Okay, so I hope this helps a little. I will keep posting my picks for everyone. If you have any questions or concerns, about anything, ask them here! no question is too ridiculous. It is better to know, than trade blind

Canestsal of stockhideout.com Hot Penny Stocks and Penny Stock Picks

Day Trading Techniques asked:

BY.-  http://www.ChatHotStocks.com  

The stock market should present us with a wide variety of NEW hot stocks in 2009. Many of them are going to be new technology stocks that come from the nanotech, biotech, financial, energy, healthcare & communications sectors.

Most of them might seem promising, but the truth is that a good number of these trading & investing opportunities could be extremely risky, while others are simply not as good as they look. That's why it's very important to know how to choose among the best especially if you want to day trade them.

When you know how to pick and approach the best hot stock trading opportunities, you are able to generate a consistent and respectable amount of money in a very short period of time.

Experienced day traders recognize that trading hot stocks on momentum can be the fastest way to make money in the stock market, especially on uncertain times like these.

You don't necessarily have to trade momentum hot stocks all the time. But you can learn how to take advantage of them when you encounter the best opportunities for going long or for shorting them to make money when they are poised to fall down.

If You decide to day trade stocks just keep always in mind that for a trader to survive and be consistently profitable, its necessary to keep things as simple as possible. To much confusion and technical indicators will most of the time make you slow in your decisions and froze you up when a good opportunity is right in front of your screen.

In the end, stock market day trading is all about picking the best daily stock opportunities and following your buy and sell signals with ease and simplicity. Once you learn to master your trading decisions, you can aspire to produce consistent profitable results.

Peter Leeds asked:

Any experienced trader, whether dealing in penny stocks or otherwise, will

tell you that the majority of stock gains are produced in short time

frames.

At Leeds Penny Stock, we've found that the big 50% and 200% price climbs (and collapses for that matter) often happen in a matter of days or weeks, while the same stock may trade within a narrow range for months at a time, before and after the move.

This is especially true when a penny stock is reacting to significant news. Even the most volatile shares may have a trading range that varies 40% to 100% from high to low, but when that news breaks, the price of the shares also break out of the range and soar higher (or lower) within a matter of days… or hours!

To make the most of your money, you should try to anticipate the gains that these windows provide, rather than holding the shares over the longer term.

There are four ways that we’ve identified to increase your chances of holding shares just before they make their moves.

1. Technical Analysis Indicators for Penny Stock

As detailed in the section in Leeds Analysis on Technical Analysis, some trading patterns help you anticipate a break-out or strong upside price move. Penny stocks often bounce off of Support Levels, reverse their trends, explode out of Consolidation Patterns, or Bottom Out. Each of these technical analysis patterns can potentially identify an upcoming penny stock price move.

2. Type of Penny Stock Company

Different penny stocks are prone to different trading activity based on the industry or sector they’re involved in, or the type of business they operate.

For example, retail stores have a certain predictability of earnings and revenues which doesn’t allow for sudden explosions of price. Instead, they are more susceptible to longer, less dramatic price trends.

Meanwhile, a biotechnology company can see its share price suddenly double or cut in half based on news, rumors, or even rampant speculation. FDA approval? Law-suit from side-effects of their primary drug? Even small sparks can ignite (or kill) a biotech penny stock.

Other penny stocks that are subject to spiking higher include:

• research and development corporations

• companies with inventions that require patent approvals

• businesses that operate on a contract basis, where one major client or job could represent a significant portion of their total revenues (for example, defense industry suppliers often see their share price thrown around suddenly, based on government contracts won or lost)

• latest “in-the-media” hot stocks (some past examples of such industries include nanotech, dot com and internet, blue tooth, uranium mining, and any business poised to conquer the Chinese market)

• resource exploration companies (not producers)

Some examples of companies that aren’t necessarily subject to the same sudden price moves include:

• restaurants

• retail

• entertainment

• mining and resource producers (not exploration companies)

• furniture makers

Most companies, however, fall somewhere in between the examples given above. Such stocks are subject to price moves if the driving forces of their industries suddenly factor in. For example, a war in the Middle East will affect oil production stocks, or a company making clean energy technology suddenly benefits from a new government policy.

3. Volatility

Some stocks are naturally more volatile than others, for any of a number of reasons. You can get a feel for the propensity the shares have to move, simply by looking at a trading chart. What’s the difference between the year high price and year low price? How many times did the shares change direction, and how quickly did the price ramp up or fall off? How long did major price moves last?

There is a numerical indicator known as “beta,” which is simply a calculation of a stock’s volatility. You can see the beta for any stock on various financial sites, such as Yahoo Finance. A company with a beta of 1.0 will be no more or less volatile than the overall market. A beta of 3.0 means the company is three times more volatile, while 0.5 would mean that the company is half as volatile. Using beta, you can quickly see what to expect from the activity of the underlying shares.

To get the most out of these volatile penny stocks, try to accumulate at the bottom of the volatility as detailed in the section on Support Levels in Leeds Analysis. Then the price swings can become your friend, as they send shares higher, and quickly.

4. Anticipation

It is possible to predict the approximate time when most companies will release their financials (or you could just e-mail their public relations contact and ask). If you expect the details to surprise the street and you get involved before the release, you may be in for a good price ride.

If you can anticipate other types of releases, you may be able to benefit even further. For example, many biotechs will delineate their time line for product development, FDA applications, expected approvals, and product sales. Sometimes it’s just a matter of reviewing their previous annual report.

By having this information ahead of time, you could locate key buying opportunities just before the company has several upcoming landmark dates. If the price is right, load up on shares several weeks before they are expected to finish the development of their latest product. Certainly a news release can be anticipated, and in many cases it will probably affect the stock price, even when it doesn’t include any material changes or surprises from the company.

From another perspective, anticipating the biotech’s time line can help you develop exit opportunities if you are hoping to sell shares, and want to liquidate into a potential price pop to get a better profit.

The same concepts can be applied to stocks from different industries. Just be aware of the timelines, potential effect of releases, and expected results.