How to profit from short term momentum bursts | stockbee

7/14/2014

How to profit from short term momentum bursts


UAL 10.90% in 3 days

Stocks move in momentum burst of 3 to 5 days. This is a short term phenomenon exhibited by thousands of stocks every year. 

To profit from this you need to enter on any breakout or gap up and exit on 3rd or 5th day.

Some stocks make 8 to 40% move in just a matter of 3 to 5 days. Some time the entire move happens just in one day. Lower priced stocks and  low float stocks tend to have bigger and more explosive moves.

Some of these moves happen due to some short term news as was the case in UAL. To quickly find these kind of stocks you need to scan for stocks up in pre market. 

I scan for stocks up 1% plus on 50000 plus volume in pre market. On that set of 10 to 12 stocks I look for stocks with good setup.

This kind of momentum burst method is relatively easy to learn. As the method produces lot of trades you can quickly learn. The method makes money by catching hundreds of trades like these in a year. Some trades give you just few % gains while some give you big gains.As long as you control the risk well on losing trades it is not a problem. 

This is one of the ways to make money swing trading. I use this kind of method along with other longer term methods. The longer term methods do not frequently produce signal while momentum burst gives you steady stream of trades.

There are hundreds of variations of this  kind of short term swing methods. If you are motivated trader , keen on making money swing trading,  you should study and master the mechanics of these kind of methods. 

No comments: