Stockscores.com Perspectives for the week ending March 21, 2014
In this week’s issue:
Upcoming Events
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Webinar April
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Trade Process
You have a strategy that you believe in, having tested it well and finding that it has a strong expected value. Are you ready to make market beating profits? Unfortunately, without a good process, even the best strategies can fall apart.
What steps will you take to find the trades, manage risk, monitor the trade for an exit and keep your emotions in check? Any one of these steps can suffer a breakdown that causes a winning trade to turn in to a loser. Without a good process for finding the trades, you can miss them or find them too late, hurting your overall performance. Discipline is essential to carrying out your trading plan so that its effectiveness can be similar to what you found when you were developing and testing your strategy.
Your process does not need to be complex; instead, it should be simple. What is important, however, is that you leave no room for error when defining your process. Creating your trading plan should include the step by step process so specific that you could program it in to a computer.
If you are at all vague then you leave room for your emotions to creep in to the process. You increase the potential that you will see what you want to see or ignore the market’s message. In a one page, written plan, you should establish your rules and also the processes you will go through to activate those rules.
Include a schedule. If you are a long term position trader, establish the time of the week when you will do your research process to find trades. Block off time to monitor the trades you are in. Come up with a simple process to define your position size. Most importantly, define the steps you will take to maintain discipline and emotional control through the process.
If you are an active trader, take the time to define what you will do through the trading day. When will you be at your desk looking for trades? What are the processes you will use to find those trades and when will you do them? You should define each step in your trading day so that you have the best chance of being focused and disciplined.
Most of us are busy and have many distractions that can take us away from our trading plan. A good strategy is not enough to be successful; we must also have a clear and well defined process for carrying it out. The hour you spend creating this plan will have a big impact on your returns so get to work on it now!
This week, I ran the process I use to find good weekly charts for longer term position trades. I set up the Market Scan to look for stocks that have gained 5% or more over the past 10 days, Sentiment Stockscore of 50 or higher, and at least 150 trades for the Canadian market and 1000 for US markets. To limit the number of stocks that I have to look at, I also focused my scans on stocks under $15.
Before running the Market Scan, I set my chart up to be a 3 year weekly. To do this, I called up any chart, clicked on the charting tab, set the time frame to weekly and the lookback to 3 years. Once I click on Create Chart, the default is set so that all charts that I view will be weekly.
Here are the three charts that I think are standouts:
1. T.AAV
T.AAV breaks to two year highs this week from an optimistic rising bottom. Lots of ground to recover from the losses the stock incurred in 2011. Support at $4.40.
2. FTR
FTR is breaking out from a rounding bottom pattern, this week moving through $5 resistance to highs not seen since early in 2011. No major resistance until $9, support at $4.95.
3. AKS
AKS had a good run higher late in 2013 but has been in a profit taking slide for 2014. This week, the stock broke its pull back, making a move out of a flag pattern on the weekly chart. Good chance it can move to $10 with support at $5.95.
References
- Get the Stockscore on any of over 20,000 North American stocks.
- Background on the theories used by Stockscores.
- Strategies that can help you find new opportunities.
- Scan the market using extensive filter criteria.
- Build a portfolio of stocks and view a slide show of their charts.
- See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don’t consider buying or selling any stock without conducting your own due diligence.
