Strategies
The following are some basic concepts of investing strategies that I use in my everyday trading. This section is to serve as a basic guide when understanding the reasoning for certain plays. I’m currently working on several detailed books that will go over my strategies in great detail. These books will be available on this site once released. My goal is to help guide you in learning this great investment game and achieve your investment goals.
Entering a position: I may enter a position using multiple entries and will only enter a position with full risk in certain situations. I usually allow myself 3-5 entries but may make adjustments depending on the setup. What type of entry will be explained on every play I post.
Exiting a position: I may exit positions at multiple prices instead of exiting the entire position at one price. This allows me more flexibility when trying to maximize trades. What type of exit will be explained on every play I post.
I recommend my strategies are done at discount brokers with low commissions in order to maximize returns. Many strategies I use generate multiple entries which may increase commissions. The brokers I recommend are Interactive Brokers, light speed and Ameritrade.
Penny Stock Strategies ( Small Cap/ Micro Cap Stock )
Many on wall street compare penny stock investing to gambling and say that investing in penny stocks is extremely risky. Why is most of wall street so negative on penny stocks? Because it is so much easier to favor blue chip companies. By actively promoting their blue chip clients they are able to keep them happy and continue to bring in their investment banking and advisory revenue. On the retail brokerage side it easy for Wall Street to create explanations for underperformance. How can you fault a money manager for losing money on Microsoft or Mc Donalds after all right.
Penny stocks offer investors great opportunities to produce above average returns. The trick of course is trying to find the right ones to invest in. I approach penny stocks differently than other investment strategies by analyzing potential plays from a more fundamental approach. Evaluating penny stocks from a technical point of view is very difficult for most plays due to the low trading volume that is associated with most penny stocks. This low volume could cause extreme volatility at times which causes false moves when entering penny stock positions.
Sector Rotation
This is one of my favorite strategies because it is very simple to implement and is able to take advantage of large shifts in capital as the economy moves through different cycles. Many funds implement this strategy due to the ability to allocate a large amount of capital that could invested without making a material impact to the market as well as the invest to mature over many months and years. This allows funds to slowly move in and out of positions as well as minimizes trading expenses. This type of strategy is suitable for long term investments like 401k’s, IRA’s and pensions.
Swing Trading
These trades take advantage of opportunities in the market based off technical analysis. I use basic support and resistance levels tied in with three simple moving averages. I look for setups where stocks may have reached an extreme point which will cause a momentum move in a particular direction. The basic understanding of technical analysis is that the charts represent the emotions of all market participants within a given market. I believe these market participants have certain patterns that occur on a consistent basis in the market due to their beliefs which cause a market to move a certain way. I have found which patterns make the most consistent profits in the markets.