Conclusions and Confusions

I got a couple of questions from my friends who follow my blog and also from a comment, so I will try to answer them one by one:

Q. Currently, if I do not trade the candidates that I post daily then, do I not believe in them?
A. The picks I generate are for short term day/swing trades. I believe short term day/swing traders need to watch the markets and their trades quite closely, atleast once an hour. I had that luxury last year for about 4 months and I traded my picks and did quite well. But currenly I do not have that luxury, during market hours I am too busy with my day job and only get about once or twice during the day to check my portfolio and the markets.

Q. If I do not trade them, why do I post them?
A. I figured, even though I cannot trade from these lists, as I have the infrastucture already in place, I might as well post them every night so someone else might benefit from it.

Q. Are these picks based on fundamental or technical analysis?
A. Purely technical. The system looking for candidates is purely technical, and similarly I do not look at fundamentals while cleaning up and posting the list on the blog. But the decision to pick the trades from the list might be fundamental, for example post earnings bullish flag is usually very "bullish".

Q. What technical analysis methods do I follow for selecting these candidates?
A. I try to keep things very simple. I do not go into complex technical methods. I just look for well formed Chart patterns - specifically triangles, flags and penants that have the highest potential of giving +5-20% gain in 1-20 days. (I will go into more details in a separate post)

Q. What are the risks involved?
A. Very risky. Discipline, hard stops and picking trades based on favourable risk rewards ratio is a must.

Q. How are performances effected by market conditions?
A. No doubt market conditions effect the performance, in an uptrending market bullish picks will do better and bearish picks will not perform well and vice-versa. During bearish condtions, the short candidates might do well. But even in a bearish environment, stocks with good patterns do go up, and the small cap speculative ones do quite well. But key is to recognize and accept market conditions and if needed trade smaller sizes and use tighter stops.

Q. If I do not trade these picks, do I trade at all?
A. I do, but I follow a completely different method, I maintain a list of good stocks based on strong eps momentum, profit margins and returns. Decision to buy or sell them is decided by fundamental or techincal changes. We know earnings momentum give good returns but I keep the strategy so basic that I do not have to follow the markets hourly, in the process my returns might suffer, but thats the trade-off I chose. (More about my current trading method in my new blog)

Cheers!
Lazy.