Buy Signals Sell Signals: Strategic Stock Market Entries and Exits pdfdrive com

Momentum for fast profits
Moving fast in one direction with no sizeable pullbacks is my definition of
momentum. Momentum can cut both ways leading to fast profit or fast losses.
The best momentum is found at the beginning of a bull market as a stock breaks
out to new all-time highs. The old all time high is likely to become the new
support. The stock could go on to increase 20% in price in a month or even
double that year. Momentum works at all-time highs because everyone that is
holding that stock has a profit and has no pressure to sell. There is no pressure
from stop losses or trailing stops, only profit taking pressure, which is usually
light. Resistance levels for a stock making all-time highs tend to be whole
numbers like $50 or $100 because this is where many traders set their profit
targets. Momentum trading works best with new concept stocks that are
innovative and have little competition.

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Candlesticks are for affirmation
Candlesticks are a graphic way of depicting the opening price, closing price, and
trading range on a chart that is more visual than bar charts. While they are not
signals by themselves, they are great for confirmation inside the context of a
chart at key levels. A bullish candle off a key support level has more meaning
than a bullish candle in the middle of a strong downtrend that doesn’t converge
with other bullish technical indicators.

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Sell Signals
When you enter a trade you will either exit with:
- A big profit
- A small profit
- Even
- A small loss
- A big loss
Technical indicators that can be used to build your own sell signals:
- Stop losses
- Price Targets
- Trailing stops
- ATR stops
- Time stops

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Stop losses
The point of stop losses is to make it highly unlikely that you will have big
losses. In contract markets like options, your loss is limited to your position size.
In the stock market, large gaps in price at the open can bypass your stop loss and
give you a bigger loss than expected. Your position size is your first line of
defense against big losses, and your stop loss is the insurance policy that limits
your losses as a trade goes against you.
A stop loss has to be placed outside the normal price action at a key price level
that shows you are wrong, and not at the place that makes you exit out of fear.
Your stop loss has to give your trade enough room and time to be right, not
stopping you out before your trade is invalidated. Key places to set stop losses
are a percentage below key support or resistance levels of price, moving
averages, or key technical indicators like MACD crosses or moving average
crossovers.