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Stock Trading Strategies

When trading stocks using technical analysis investors have various stock trading strategies that they will use. Stock trading strategies are in an essence, stock trading systems that are designed for use in the stock market. Your trading strategy should specify the conditions necessary for entering and exiting trades, and should contain risk and money management as well. Through studying market conditions investors can implement a strategy and a trading plan that works for them. Doing this will help the investor to not only make educated trades, but will help the investor to keep emotion out of his or her trades. The trading strategy can be tweaked and fine tuned in order to stay in line with any new market conditions, however, investors must be sure to stick with their trading plan and strategies as much as possible.

The goal when implementing stock trading strategies is to maximize profits while minimizing risks. A part of doing this is determining the risk tolerance level that is acceptable to each investor. Through analyzing risk tolerance, the investor is then able to determine the optimum number of shares to be traded at a given time, as well as again their entry and exit points. When determining this, investors must take into account that fact that the greatest investment risks usually turn the greatest profits while the smallest risks typically turn small but long term profits. Each investor must decide individually what works for them.

Successful traders always have one rule that is a part of their stock trading strategies. That rule is that they have their stock portfolio divided three ways. They divide their portfolio into percentages in which they are seeking a predetermined percentage for high risk, high return stocks, and predetermined percentage for medium risk, medium return stocks, and a predetermined percentage for low risk, and low return stocks. The percentage will vary for each investor however keep in mind that if an investor has the bulk amount of their available funds in high risk stocks, they should seriously reevaluate their portfolio as this is considered very risky.

Another trading strategy to consider is stock screening. This strategy is when the trader screens the entire world of securities for possible favorable stocks to trade. Many traders will use moving averages in their screening method which is a very simple technique that is most suited for markets and stocks which will trend well. Other stock traders will look for stocks that are ready to breakout from a pullback. 

There are many things to take into consideration when building and implementing stock trading strategies that are not addressed in this article. Continue to research and educate yourself on the stock market and also educate yourself on different approaches to trading stocks. There are many tools and resources available and it is just a matter of finding something that works for you. Join online forums and continue to take online classes and tutorials to educate your self on the stock market. You can also look to hire a personal coach or stock trading mentor to assist you as you learn how the stock market works

Market Direction: There are times when the market indicates the best strategy is no strategy at all; sitting in cash is the best approach. That seems to be the market conditions right now. With the pullback today in the NASDAQ, it is trading at approximate of the same level as it was at the beginning of July. The Dow slightly lower than where it was trading at the beginning of July. This has made it very hard to make significant profits. That is not to say that profits were not made over the past 30 days, it has just been harder to project any sustainable trends during that time. The old adage, "sell in May and go away" remains sage advice for this summer's trading activity.

There are sectors that are still producing profits during the sluggish trading time. Obviously, the pickings are slimmer when the markets trade sideways. Because opportunities become less numerous as well as less profitable, any trading during the slow summer months should be done with probably a smaller percentage of a portfolio funds. When the markets are heavily traded and the trends can be easily identified, there is no problem with keeping 10, 12, 14 positions fully employed. However, having the whole portfolio invested during the sluggish sideways trading of summer puts a lot of money at exposure but doesn't necessarily have the profit potential as other times of the year. A trending market, whether bullish or bearish, allows for a higher number of positions to be moving in a specific direction. A sideways moving market, especially a low volume/low volatility sideways market does not make the risk of having many positions exposed worthwhile.


The benefit incorporated into candlestick signals is the identification of very strong price potential moves. There still will be Kicker signals and gaps to take advantage of. The trading strategy should change to one that can be effectively implemented in these market conditions. That may be only exposing funds to only high profit signal potentials. As seen in our recent recommendation, WCG has been moving up after a strong Bullish Harami and a Kicker signal. Despite the fact the markets have pulled back, this chart reveals only a slight consolidation. Today's Inverted Hammer/Doji has the makings of another strong up move. A positive open tomorrow would indicate the strength of the Kicker signal is still in affect.


The candlestick signals allow an investor to pinpoint opportunities more concisely, even when market conditions do not provide a multitude of opportunities. There are places to make money in a sloppy market. The signals will direct you to those areas.

Chat session tonight for members at 8 p.m. ET.

Good investing,

The Candlestick Forum Team

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