The point of trading is to turn a profit, so why put money in a stock that is not moving? doing so would mean risk without reward. Furthermore, an open position showing a loss should be cut immediately because small losses are the Key. Our obecticve is to expect profits that outweigh expected losses by at least a 3:1 ratio. Losses are a part of the game, so you must respect them and keep them small. Therefore, only get in stocks on the move with the intention to ride them into profits and exti upon the loss of momentum. It is at this point in the trade that we Take the Money and Run!!
This strategy is best achieved by buying stocks that are breaking out of tight consolidations on an expansion in volume. This Type of move in a stock tells us theat the previous area of indecision ( Consolidation or trading range) has been resolved to the upsideand money is flowing into the stock (Volume expansion ). Volum is the fuel that pushes the stock upward onec it begins to move. A lack of volume is a lack of fuel, and the move amy be short-lived. Be wary of breakout(or breakdown) moves on light volume as they are prone to failure.
Be in no hurry to put on trades. Trades placed out of boredom lead to bad habits and poor results in the long run. This leads to a loss of trading confidence , which is even more damaging than losing dollars!
Over time ( weeks,months, years ) , be absolutely sure to keep your down days and weeks as small as possible. Growing your account happens when you stary in winners while thay run, adn cut losers at the first sign of negativity. Big winners are not for off setting big losers. Wealth comes from big winners, so keep the losers small.
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