How to trade momentum | stockbee

12/18/2009

How to trade momentum

SNIC is a trade I took using the momentum trading method yesterday.


SNIC: Sonic Solutions

It made a approximately 19% move yesterday.

Now if you go back and see my last 3-5 post, I have had this stock in the momentum list. Couple of days ago I also highlighted it as a pullback to watch.

Today morning it started moving and because I was watching it, I entered and rode the trend for rest of the day.

The momentum list gives you a continuous stream of stocks like this for swing trading.

It allows you to anticipate stocks likely to breakout.

Momentum stocks tend to have explosive moves.

Does every breakout works as well as SNIC , no, but if you manage your risk well, it does not matter. Losing trades are part of the swing trading game.

As long as you have more winners than losers and more profit on winners than on losers, it is fine.

So here is the top momentum stock list for today:

AMD
APWR
BEXP
CAAS
CYTX
DAN
DSW
EWBC
FMCN
HEAT
HGSI
HL
HPJ
HTCH
ICOC
IO
IOC
KNDI
MED
MFW
NANO
NLST
NTRI
REV
RINO
ROY
SCSS
SEED
SKX
SNIC
SORL
TAM
THM
TSL
TSTC
UAUA
UFS
WSII
XRA

Out of this I already have a open position in some.

The stocks I would be watching out of the list for possible breakout today are:
  1. uaua
  2. scss
  3. rev
  4. io
  5. ufs
  6. seed
  7. caas
  8. ioc
  9. cytx
If you understand how momentum in the market works, you will find steady stream of swing trading candidates that make explosive moves in short time frame. 


2 comments:

john said...

I am trying to figure out how you got your 39 momentum list. If I scan all stocks for 126 day ROC and then select stocks that are $5 and above I get all your stocks plus about 25-30 more. I have sorted by AvgC10/AvgC50 and C/AvgC126 but they don't work. I am off by a day but I didn't think the list would change that dramatically. What additional restrictions do you apply? Thanks.

Pradeep Bonde said...

1 Calculate 6 month roc.
2 Set it to 98 plus rank
3 Use"common stocks" and not all stocks
4 Use a liquidity condition like say minimum volume in 3 days is higher than 100 k.
5 take price above 5
That should reduce the universe to around 40 stocks