2/01/2007

How to find a stock which makes 1500% move in a year


Here is a stock which has gone up around 1500% in last 260 days.That is a significant move.
FRPT,Force Protection Inc (Google Yahoo Earnings Chart)

What is a significant move in a stock. Assuming you are not a high frequency day trader, then you would define significant move as 5% in a day for individual stock. If you add say another criteria of saying the 5% move should be accompanied by volume increase over yesterday. So lets say 5% move on higher volume is significant. The real reason for this is to find out how many stocks make that kind of a move in a day. Supposing 5% of the total universe of stock on a given day has 5% move, is that significant.Does a one day significant move indicate future returns.

Many of the things which I look at on daily basis and monitor is basically a variation of significant moves on various time frames. A 5% move on individual stock on higher volume with a cut off off 100000 plus volume to me is significant move based on past studies of stock price moves. Similarly a move of 2% on any of the Index is significant. Or a move of 2% on a sector is significant. It is more significant if it happens on higher volume.

Taking the same logic further a 50% move in a stock in a month is extremely significant move. It indicates an aberration. A 25% move in a month in a stock is on a significance scale also very significant.A 25% move in a quarter is significant in a market where the average long term drift is less than two digits. Similarly a move of 100% in a year on a stock is a significant move.

Now if you constantly study significant moves and build an iterative model over a period of time you will probably learn a lot about such moves. A brute force backtesting might give you even greater understanding in to such moves. A combination of backtesting and continuous iteration gives you a live model of what makes a stock make a significant move.

Largely my study of significant moves supplemented by additional insights has helped me understand what kind of stocks are likely to make a significant move for a given time frame. There are factors one can isolate which increase probability of a stock making a significant move. That gives you a significant edge in avoiding the bad or low probability trades.

When a stock doubles in a year it is a significant move. You can say as of this particular time this stock is moving at 100% per annum. You might call it is trending but then you will get in to never ending debate about what is trend and why trends do not exist. So to keep it simple let us say a stock when it makes a 100% move it is significant. And before many of you object saying a low price stock doubling is no big deal, OK use your own cutoff of price you like.

So if you do not want to miss a significant move here is a wicked concept. Some of you who might be interested in making significant return might be interested in studying this concept in detail.

How to find a stock which makes 1500% move in a year

Difficulty: Easy
If you want to beat the market by significant percent track and trade the significant moves in the market.

Instructions:

  1. Use any of your favorite stock investing software. This example assumes excel based system.
  2. Calculate the lowest close for a stock in last 260 days. If a stock has less than 260 days data calculate lowest close for those many days.
  3. Calculate percent change from lowest close and select stocks which had 100% plus growth
  4. Find the highest price in the 100% move and only take stocks which are within 25% of that highest price.
  5. So this is your trading universe of stock which have made significant move of 100% or more and are as of today within 25% of the high during the move
  6. Use a significant one day move scan on these stocks. e.g. say a 5% move ( 100 * (C - C1) / C1) >= 5 AND V >= 1000 AND V > V1)
  7. Buy next day with 1% risk and stop below the low of previous two days bar
  8. Trail with a stop
  9. If you get stopped buy again on next breakout
  10. Enjoy your profits

Tips & Warnings:







  • When you have a choice of candidates to enter, enter the newest member to the list first











  • If you want to follow technical analysis you will find several cup and handles, double bottom at top of range, W formations, triangles, bull flag, flat bases and all other esoteric patterns.











  • If you play around with entry techniques you will get better results











  • You can play around with position sizing and holding a portfolio of around 50 positions with a 2% position each.






  • All major winners in a year appear on this list. If you follow the approach religiously you will never miss a 1500% move, you will miss the first 100 but you can still capture the 1400%. Unless a stock gaps up 1500% in a day!
    There is a catch in this, that is why most people would never trade it.

    Bonus:
    Everyday I will put up the raw data for significant movers in this list, you can pick your stocks from it. Look under "Double Trouble" heading everyday end of day or by next day morning.

    Earlier Post: What are significant moves

    Coming next:
    Many ways to trade the significant move concept





    Are you serious about your trading?

    If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and detailed methods to swing and position trade.

    It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is service for you to build your own scans and trading method to have your own daily pick based on your method.

    Be warned it will take you time to learn to trade. Learning to trade is difficult art and unless you are willing to spend months or years to perfect your strategy and also develop your mental edge you are unlikely to succeed in this game. Unless you understand that no site, no service, and no mentoring is going to work.

    Why traders come to stockbee?

    The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers to promote the site, no constant twits self promoting the site, no free trial  and no tall claims of making you instantly wealthy, and yet the site attracts new  members everyday. Members come from all walks of life and all kinds of trading size and trading styles.

    You will see that many trading bloggers have been using my market timing methods, scans , stock ranking lists and chart templates. They have developed their own methods based on my methods. Many paid newsletter site recommend my site to their subscriber for learning about trading and market.

    Over the years thousands of traders have been members and those who benefited from the learning talk about the site to others or talk about the methods used and that is how new members learn about the site.




    What will I learn in the members site?

    The members site will give you in depth understanding to develop your own trading method. The emphasis is on making you self sufficient and confident of your own trading method and style.

    As a member you will learn the basics of swing trading, momentum investing, growth investing and risk management.

    You will learn about Stockbee Trend Intensity Breakouts method that uses momentum based swing trading to find 3 to 5 day swing trades for 8 to 40% profit.

    You will learn about Stockbee Episodic Pivots Breakout method which uses Post Earnings Announcement Drift (PEAD) to find stocks that had a game changing earnings and that are likely to rally for 3 months to 12 months.

    You will learn about  Stockbee Dollar Breakout method that uses momentum, range expansion and swing trading approach to find 5 to 40 dollar moves in high priced stocks.

    You will learn about  Stockbee Lemonade Strategy for 401k which uses market timing and momentum to invest in 401k. You will get weekly update on how I am using the strategy on our 401k to do allocation decision.

    You will learn about Stockbee Market Monitor method for market timing using breadth. It allows you to avoid risky periods in market and allows you to identify market turns. It is used for 401k allocation decisions.

    You will learn about Stockbee Double Trouble method to find stock with confirmed upside momentum using anchored momentum and that are likely to continue their up move.

    You will learn about Stockbee Night Time is Right Time method to find news catalyst based trade ideas for short term day trade and swing trade.

    You will learn about Investor's Business Daily’s IBD 200 list and how it can be used to find swing trading candidates for explosive moves.

    You will learn about Telechart 2000 and how to use it effectively to scan for swing and position trade ideas and to set up your 401k strategy.

    You will learn about Jesse Livermore Range Breakout, Darvas Box setup, and many other member shared methods.

    You will learn how to set up your own scans, select right kind of stocks, how to set up stops, when to enter , when to exit, how much to risk, how to track your trades and all other details about trading. You will learn about developing your own methods and not relying on others for trade ideas.

    The site has hundreds of videos and trading methods and variation of methods. Members help each other in developing the methods and share actively their research and finding. A collaborative spirit allows you to get input from others on your trading ideas or problems.

    The site gives you opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different background and experience willing to help each other. The emphasis is on continuous learning and up gradation of market knowledge and setup knowledge. The members range from hedge fund employees, financial advisers, active swing traders, investors and new traders.

    If you are looking to develop your own trading strategy the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on members site. Every method, every scan, every nuance is detailed and all possible help is offered to design your own method.

    Do you have a trial?

    If you are just looking for trial you are better off trying thousands of other trading site that offer free trail or one month trial and offer you promise of riches.

    It is for those who are ready beyond the trial phase and ready to put serious months or years  of efforts to learn to trade on their own. It is for those who want to learn to find their own fish.

    The free blog has all the details about the methods I trade and if you go through the posts highlighted in the sidebar you will learn about them.


    How can I become a member?

    To sign up go to www.stockbee.biz and follow the sign up process. The site uses Paypal for payment processing.


    POPULAR POSTS

      Post a Comment