Technical Temptations Explained - Part V - Management

In this final installment, I will talk how I used to manage the picks that I post and how I picked trades.

1. I loaded the list into a watchlist and got rid of the ones that did not meet my price or exchange requirements. I would also get rid of some of the bearish candidates or the volume explosion candidates.

2. Then I would check the charts for each and get rid of the ones that did not look promising or the risk reward ratio was not favourable.

3. The ones that looked most promising, I used to note the buy price and stop price. Sometimes I even prepared the orders so that I could just execute them once the stock broke the trend line and volume looked good. Before buying I would check yahoo and msn stock page for news, earnings announcements, and also make sure they are not reporting earnings in a couple of days, if they are, then sell before earnings announcement. If the bull flag is a post earnings pattern and they reported stellar earnings, I trade bigger size. Post earnings Bull Flags are really Bullish (Dan Zanger agrees too!)

4. Every night before loading the new stocks I would remove the ones that I have already traded. For the rest I will again check the charts and if they do not look good anymore, get rid of them. Then I would load the new list and repeat the process.

5. As some of them take time to form a base and finally make a move, I would leave the ones with really good patterns for about 10-15 days.

6. I would decide trade size based on % of portfolio at risk in terms of trade risk. (I used an excel to derive the number of shares)

7. If some pattern looked too promising, I would bet more.

8. Every night I would reset my stops and check news on the open positions.

I think that's all. If you have any questions, do let me know.

Cheers!
Lazy