Often I get asked the question, where to find profitable trading ideas. There are many public domain trading systems which have very high returns if you are willing to put an effort in making them work. Many of you who read my blog must have seen that I keep recommending Mark Boucher book The Hedge Fund Edge again and again.
The book has lot of discussion on economy based on Ludwig von Mises economic theory, but inside that book is a very valuable momentum based trading system for short term trading.The most important lesson of the book is that there are two types of stocks, Meteors and Fixed Stars
Meteor is the stock that blasts off; reaches extreme overvaluation; and falls back into obscurity. Meteors are the `fad' stocks that explode up 300% or more in a 1 to 3 year period, then collapse. Fixed Star: Starts the same way as a meteor but does not become extremely overvalued. These stocks sustain steady price growth for years, some more than a decade.
So, how does one find such stocks during their initial moves?
He offers a detailed step by step methodology for this using earnings and momentum. At the crux of it is looking at characteristics of the first one third of a move and based on that predict the next 2/3 rd move. He has found stocks exhibiting certain kinds of volume and momentum patterns in first 21 days of their move have very high probability of making the meteoric move. The book offers complete trading system with risk management, entry and exit strategies for this.
Now if you are TC2007 user your task is simple. Go to Yahoo Telechart2000 users group and look at messages 4502-4510. You will find complete set of scans for trading Mark Boucher system. Those series of scans can help you put it together very easily. You should also find a file explaining the system once you sign up with the group. Run a search in the group with "tbblbg" as search term. tbblbg is the short form for Mark Boucher system and it stands for thrust breakout, breakout lap, and breakaway gap.
If you are a day-trader or short term trader and want a very profitable system, this one is one of the easiest and it works. There are no lack of very profitable systems openly available, why because 99% of people will never trade them anyway because there is more comfort in following a guru or a newsletter or they don't want to put the effort involved in making any system work.