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On Wednesday we discussed how to properly enter ETF positions. Today we'll look at how to properly find and enter a stock position.
Ideally you want to enter your stock positions on the long side as follows:
The stock is above the 200-day ma
The stock has a strong pullback. This pullback can be defined a number of ways and you want to make sure this pullback has had a quantified historical edge.
At this point you want to then wait for the stock to pullback even further intraday. This means that yesterday's (or the past few days) pullback is then followed up with today the stock pulling back even further intraday. Ideally you'd like to enter this stock at least 3%-7% below yesterday's close. The further this pullback entry is, the fewer trades that will trigger but historically the average gains per trade have been higher.
Your exits can be any one of a number of quantified exits we've published and the stock closing above its 5-day moving average is one of the better ones for you to use.
If you are looking for these types of stocks each day, you can find them with PowerRatings. Our PowerRatings ranks stocks 1-10 each day with the 9's and 10's being the top stocks to focus on, especially using the entry described above.
If you'd like a free trial to PowerRatings call 1-888-484-8220 ext. 1 or click here. You'll receive a list of the top stocks that qualify for the next two weeks of trading.
This is from Larry Connors Daily Battle Plan which he publishes each morning. If you'd like to take a free trial click here, or call 1-888-484-8220 ext. 1 to start your free trial today.
Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.
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