Adopted from the Members Only site
One of the key challenge in trading a method like Episodic Pivots(EP) is, you have to base your decision on a very limited information. Plus you need to make that decision fast. Given 5 days, you can research every single thing about stock and make a decision. The problem is by that time the opportunity for low risk entry is gone.
Having access to lots of information is also not much of use unless you can form a judgment from it. If information access was everything,those with Bloomberg terminal would have minted money, but that is not the case.
Lets look at two recent stocks which were in IBD New America section last week.The articles explained the reason and factors behind the stocks recent earnings trend and future prospect.
Now both these stocks had Episodic Pivots in July/August time frames, much before these articles appeared , where they were good buys. But there was little information readily available to take the decision at that time for average investor. After reading the two articles on ANW and JRJC you know why it went up, but that information is not much of use now.
As an individual investor you are constrained by lack of resources and yet you must form a judgment based on limited information. That is the essential skill to build if you want to make lots of money in the long term. While it is difficult at first, more you do it, the better you get at it. Plus bulk of the data to make such decision is readily available on various free and paid sites. Translating the data to information and making decision is the difficult task.
The key to do this is to practice and look at all winners and see what made them winners.In second part we will look at what information helps in making the quick decision and how to develop judgment and sequential steps to follow to arrive at which EP candidate to pick and which to reject quickly. That is the key to trading the highly profitable Episodic Pivots strategy where if you get it right per trade profit can be very high, plus these stocks make these move in a very short time frames, as all of you have seen in recent weeks.
Next week on members site: Decision making with limited information Part2