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مشاهدة النسخة كاملة : I Found This Stratigy In Esignal Site



saabeer
27-12-2001, Thu 12:28 PM
by R. Scales, an eSignal user

I set my scan to look for % losers that have a minimum average volume of 200k/day and a daily volume of at least 250k. I have chosen not to look at anything above $3.00 a share, but, depending on the trader, this could be any amount. I wait for the market to open, and I have the Power Scan set to update automatically every 2 minutes. I am looking for a big loser to catch my attention early in the day, usually before 10:15 a.m. ET. (By big loser, I mean greater than a 30 percent loss for that morning.)

Once something catches my eye, I look at it on a daily chart. I want to make sure that the chart looks as bad as it can. The steeper the slide, the better. I then look for news. I want to make sure that there is news that has affected the price and that it is not just beaten down because insiders are dumping it. Once I know it's a stock I want to purchase, I follow four steps.

Step 1: If all looks bad, but it also looks as though the stock won't be delisted for a while, I pick an entry point and place an order. Almost always, this is in the area of 50 percent loss for the day. So, for example, if a stock closed at $1.00 the prior day, I will place an order to buy 3,000 shares at $.50. My first order is always $1,500.

Step 2: As soon as it is filled, I put in 2 more orders, one to buy 7,500 shares at $.40 ($3,000) and the other to sell 3,000 shares at $.60 (20 percent or $300).

Step 3: Depending on which one gets filled first, I cancel the other. If the $.40 order gets filled first, I place an order to sell 10,500 at $.50 (a profit of $750) and an order to buy 20,000 shares at $.30 ($6,000).

Step 4: If the $.30 order gets filled (which is very rare), I will sell it all at $.40 a share (a $1,700 profit).

I have hit the fourth step only one time since I've been using this strategy, and I considered it a rescue mission, so to speak, at the time. Two reasons make it a rescue mission for me:

The stock has fallen more than 70 percent in one day, indicating to me that there are many more troubles than what has been released.
Probably, most importantly, it is getting beyond my personal risk-tolerance level. I would rather break even or make a small profit than risk $10,500 for a long period of time.
Another thing, whenever I am out, I don't look back and kick myself because a stock's price went to $1.00 or higher. There are too many fish out there and I just wait for them.

A recent example would be ATHM. On August 17, 2001, it closed at $.87. It gapped lower on the morning of the 18th, so I put in an order for $.45. It never hit the next level, and I sold it at $.54.

I know that this style will not be for everyone, but it is perfect for me. I'm in cash most of the time, and I don't get emotional about a stock that I am holding. Plus, if nothing is moving on a particular day, I am out the door by 10:30 a.m. or so with the rest of the day to myself.

In terms of income, I am able to draw approximately $5,000 a month out of my account using the above posted dollar amounts. That might not sound like much to a big city dweller, but I live in a very rural area where the cost of living is pretty low. Also, the account I draw from is $50,000.