How do you pick stocks with an emerging trend?

CrazynWild · 10 May 2009

Hi Wonderful People

I am a newbie and have been surfing on this forum for some months to educate myself.

First of all I would like to thank some really good people here who really make time to post some valuable stuff to assist people like myself.

In today's world when most of the time things are going wrong, I decided that may be its a time to put Plan B in place for my income stream instead just relying on the day job, so I started to look into investing some money in shares.

After my research I soon realised I have 2 options in share investing i.e. Long term investing or Share trading.

I decided to go for Share trading than Long term investing.

I have read few books on Share trading and have come to realise the strong co relation between Supply and Demand, Price, Volume, MACD and DMI.

For now I personally would like to just focus only on shares yet I do see people talking about CFDs and Futures quite a lot when it comes to trading.

The situation is I do not want to spend too much money in accumulating different resources such as Charting softwares etc while I am learning so I thought I'll come here for help.

I have downloaded Incredible Charts Pro and Trial version of Amibroker and after reading few posts here I have noticed that you got to be bit of Software genius ( which I am not) to get these softwares working for you.

My first question is how do you pick the stocks where trend is about to emerge or initiate?

My second question is, can someone will be kind enough to help me to become expert on finding stocks by using Incredible Charts Pro or Amibroker, based on MACDs and DMIs, hence I am asking basically step by step guide to assist me with one of these softwares using only MACD and DMI indicators for now until I build my knowledge and confidence.

I have tried to read the User guides for these softwares but can't get my head around to them as yet.

I would be grateful if some experts can take some time to help me out and post reply to this post so slow learners like myself can learn from it.

Many Thanks in advance.

CrazynWild

RamonR · 10 May 2009

Hi Crazynwild

Can't answer the specifics questions you have asked. I wanted to add that essentially I am in the same situation but I have decided to focus on Long term investment instead.

I have borrowed for my portfolio but it is positively geared.

I am doing some trading but that is only amongst the shares I have in my portfolio as I know them the best and also div yield being very high on my list of criteria for holding them if something went wrong with my trading I could convert them to long term holds.

Essentially what I am trying to say is that you can trade in any market but it is rare that you can borrow to build a portfolio and have it positively geared.

sandybeachs · 10 May 2009

CrazynWild said:
Hi Wonderful People

I am a newbie and have been surfing on this forum for some months to educate myself.

First of all I would like to thank some really good people here who really make time to post some valuable stuff to assist people like myself.

In today's world when most of the time things are going wrong, I decided that may be its a time to put Plan B in place for my income stream instead just relying on the day job, so I started to look into investing some money in shares.

After my research I soon realised I have 2 options in share investing i.e. Long term investing or Share trading.

I decided to go for Share trading than Long term investing.

I have read few books on Share trading and have come to realise the strong co relation between Supply and Demand, Price, Volume, MACD and DMI.

For now I personally would like to just focus only on shares yet I do see people talking about CFDs and Futures quite a lot when it comes to trading.

The situation is I do not want to spend too much money in accumulating different resources such as Charting softwares etc while I am learning so I thought I'll come here for help.

I have downloaded Incredible Charts Pro and Trial version of Amibroker and after reading few posts here I have noticed that you got to be bit of Software genius ( which I am not) to get these softwares working for you.

My first question is how do you pick the stocks where trend is about to emerge or initiate?

My second question is, can someone will be kind enough to help me to become expert on finding stocks by using Incredible Charts Pro or Amibroker, based on MACDs and DMIs, hence I am asking basically step by step guide to assist me with one of these softwares using only MACD and DMI indicators for now until I build my knowledge and confidence.

I have tried to read the User guides for these softwares but can't get my head around to them as yet.

I would be grateful if some experts can take some time to help me out and post reply to this post so slow learners like myself can learn from it.

Many Thanks in advance.

CrazynWild

Hi Crazynwild

one of the most complexed posts i've seen from a newbie, you cover a number of issues.

so i'll try and help you out with a couple of things.

1) Trading, any share trader now a days needs the best of the best systems available.

2) Very important you use a "Dynamic Live System" for example Power E*Trade, which gives you access to WebIress. This gives you live trading as it's happening on the ASX.

The benefit with the above is you don't need too keep refreshing your screen so you can keep up with what's going on.

3) i use software called Marketscan by Paritech. IMO it's a 5 star software product, but it does take sometime/patience before you can grasp how things operate and using your own predefined searches.

4) lastly i wouldn't be throwing your own money on the table until you fully appreciate trading, therefore as the saying goes "Practice Makes Perfect".

how ever long it takes start off with monopoly money so you can get a feel what it's like losing money or perhaps making money.

i honestly believe it takes at least 1 year before you've become extremely familiar with trading.

well i've covered a couple of things which i hope gives you some guidance and remember daytrading can be very very dangerous.

simoncar · 10 May 2009

I could easily tell you how to find emerging trends. I could easily tell you how to be consistently profitable in the markets. I may have only had a few posts on this forum but that is for a reason. I am now consistantly profitable and feel able to contribute back to this forum that I learnt so much from. I stopped posting on this forum and went to work. I spent about 8 hours a day for the last 3 years looking at thousands of stock charts. This is no exageration. You must perform extensive study of money management and of trading psychology. Get yourself a charting program, pour over thousands of charts and you will start to see the same patterns emerge time and time again. You must then work out a strategy for how YOU would trade these. If you do not design your own strategy for how you would trade these patterns then you will not be comfortable doing it and will be strongly tempted to break the rules imposed by the other persons strategy.

Simon

MichaelD · 10 May 2009

1. Read better books. I suggest Trading Your Way To Financial Freedom by Van Tharp would be a good start.

2. Ignore the bad advice in posts 2 and 3.

3. Read carefully the good advice in post 4.

Oh, and how do you pick a stock which is about to trend? You can't. You can, however, easily spot a stock already trending by showing the chart to a 3 year old and asking if it is going up or down.

(As an aside, is this sudden explosion of newbie interest in the stockmarket 1/ a sign that the end is nigh, or 2/ a sign that a new bubble is inflating)?

awg · 10 May 2009

CrazynWild said:
Hi Wonderful People

My first question is how do you pick the stocks where trend is about to emerge or initiate?

My second question is, can someone will be kind enough to help me to become expert on finding stocks by using Incredible Charts Pro or Amibroker, based on MACDs and DMIs, hence I am asking basically step by step guide to assist me with one of these softwares using only MACD and DMI indicators for now until I build my knowledge and confidence.

I have tried to read the User guides for these softwares but can't get my head around to them as yet.

I would be grateful if some experts can take some time to help me out and post reply to this post so slow learners like myself can learn from it.

Many Thanks in advance.

CrazynWild

I am not an expert.

If you plan to "trade"

Q1)...easy to do using SCANNER in Incredible Charts, program software to search for stocks breaking Moving Averages in last 5 days + Volume Spike (a simple for instance)

Q2)..you really have to read the educational/instructional material that comes with the IC site...it gives examples of the indicators and their applications.

Further detailed study can be undertaken on the net, or buying books.

IC is very user friendly, if you cant use it, you are unready to commence trading.

The experienced posters on this site may say, that you are unready until such time as you have a demonstrable back tested strategy, live-tested on a demo account. IMO the case is that you will almost certainly lose money, if you commence trading prior to acquiring skills, unless the market is rising, which can then engender overconfidence in itself

Amibroker takes more time and knowledge to understand, you will need to persist, it is relatively inexpensive.

You may wish to open a demo trading account or at least paper trade, for a fair while, before you over-commit real cash

happy learning, there are no shortcuts

simoncar · 10 May 2009

In response to MichaelD's post. Read Van tharps book...then read it again....then read it again....then read it again. I read this book when I started to trade and I thought I understood all in it. When I read it now I realise how much I didn't. It is possibly the best book on trading written IMO. You can get on board stocks that are about to trend....just look at thousands of charts and see what patterns pre-empt a great trend. Then work out a low risk way of entering. You will win some and you will lose some.....this is how trading works. When you lose some...don't lose much. When you win some...make sure you win alot more than you lose. Result you make money. Although this is not the aim of trading. The aim of trading is to preserve your trading capital. If you can do this you will have money to trade with and become profitable when you work out how the game is played successfully. This in my case took 3-4 years. And guess what that is about 2 years longer than I thought it would as I thought I was pretty intelligent.

craigj · 10 May 2009

as a fellow newby i am having success following sectors that are trending upwards and picking some stocks in that sector

recently oil and copper plays have been rising sectors so have bought into some of these stocks for gains

It's Snake Pliskin · 10 May 2009

craigj said:
as a fellow newby i am having success following sectors that are trending upwards and picking some stocks in that sector

recently oil and copper plays have been rising sectors so have bought into some of these stocks for gains

That's what Jessie Livermore did.

ceasar73 · 10 May 2009

simoncar said:
In response to MichaelD's post. Read Van tharps book...then read it again....then read it again....then read it again. I read this book when I started to trade and I thought I understood all in it. When I read it now I realise how much I didn't. It is possibly the best book on trading written IMO. You can get on board stocks that are about to trend....just look at thousands of charts and see what patterns pre-empt a great trend. Then work out a low risk way of entering. You will win some and you will lose some.....this is how trading works. When you lose some...don't lose much. When you win some...make sure you win alot more than you lose. Result you make money. Although this is not the aim of trading. The aim of trading is to preserve your trading capital. If you can do this you will have money to trade with and become profitable when you work out how the game is played successfully. This in my case took 3-4 years. And guess what that is about 2 years longer than I thought it would as I thought I was pretty intelligent.

Good stuff Simon - can you give more info on the patterns that pre-empt a great trend?

cheers,

ceasar73

simoncar · 10 May 2009

Caesar, usually for a stock to have a great run to the upside it needs to form a solid base. This involves a sideways consolidation for a cosiderable length in time depending on the time frame to be traded. When you see this it is a sign that the smart money has been accumulating the stock therefore stopping either its downside run or stopping it from travelling lower.

simoncar · 10 May 2009

Like I have said before, study thousands of charts. This has been easy for me as I absolutely love doing it. After time you will notice many many things. You will see breakouts and retracements and revesals and consolidations. Work out what pre empts all these things. Look at the volume when certain things happen. Never use indicators. Never use indicators. Never use indicators. They will distract you from what is the most important thing. Despite what anyone says, they are useless. All the answers lie in the price and the volume. Basically work out if A. happens then B. usually happens then C. follows. Then you have to understand that the market will go whatever way it chooses after you enter a position,and all your analysis could be wrong. So don't try and be right and wait for the stock to turn around and move higher. Exit for a relatively small loss and move on to the next trade. Stocks move in waves....learn how to catch a wave and get off when it ends. Work out a strategy that suits you. I trade off weekly, daily and hourly charts...because they all suit my timeframes of choice. But these are not nearly the most important aspects of trading. Understanding your psychology, understanding position sizing and understanding risk management are. Study lots of charts, read some books on money management and position sizing, some on psychology and over time the questions you will be asking will be answered.
I read many a post like this when I first started trading but it didn't sink in. I just wanted to know when I should enter a position. Give me the entry!!! Yes the entry is important but managing your trade after entry is soooooo much more important.

beamstas · 10 May 2009

Caesar, usually for a stock to have a great run to the upside it needs to form a solid base. This involves a sideways consolidation for a cosiderable length in time depending on the time frame to be traded. When you see this it is a sign that the smart money has been accumulating the stock therefore stopping either its downside run or stopping it from travelling lower.

This one may interest you

ceasar73 · 10 May 2009

thnx simon

ceasar73 · 10 May 2009

simoncar said:
Like I have said before, study thousands of charts. This has been easy for me as I absolutely love doing it. After time you will notice many many things. You will see breakouts and retracements and revesals and consolidations. Work out what pre empts all these things. Look at the volume when certain things happen. Never use indicators. Never use indicators. Never use indicators. They will distract you from what is the most important thing. Despite what anyone says, they are useless. All the answers lie in the price and the volume. Basically work out if A. happens then B. usually happens then C. follows. Then you have to understand that the market will go whatever way it chooses after you enter a position,and all your analysis could be wrong. So don't try and be right and wait for the stock to turn around and move higher. Exit for a relatively small loss and move on to the next trade. Stocks move in waves....learn how to catch a wave and get off when it ends. Work out a strategy that suits you. I trade off weekly, daily and hourly charts...because they all suit my timeframes of choice. But these are not nearly the most important aspects of trading. Understanding your psychology, understanding position sizing and understanding risk management are. Study lots of charts, read some books on money management and position sizing, some on psychology and over time the questions you will be asking will be answered.
I read many a post like this when I first started trading but it didn't sink in. I just wanted to know when I should enter a position. Give me the entry!!! Yes the entry is important but managing your trade after entry is soooooo much more important.

never use indicators..interesting!
simon you recomend van tharp, many in this forum have said weinstein.what are your thoughts on weinstein?

thanks again.

matty2.0 · 10 May 2009

wait for a double or triple pop .... then you know it's about to explode like a volcano ...

simoncar · 10 May 2009

Weinstein stuff about the 4 stages of a stocks life is worth looking up and then conducting some of your own research on for sure. I have looked into his stuff about the 4 stages and it does have its place in my trading strategy.

kam75 · 16 May 2009

How do you pick stocks with an emerging trend?

1. Volume, volume volume volume volume.
2. Higher-highs, higher lows
3. New breakouts
4. OBV rising.
5. And volume

sleepy · 16 May 2009

simoncar said:
I stopped posting on this forum and went to work. I spent about 8 hours a day for the last 3 years looking at thousands of stock charts. This is no exageration. You must perform extensive study of money management and of trading psychology. Get yourself a charting program, pour over thousands of charts and you will start to see the same patterns emerge time and time again. You must then work out a strategy for how YOU would trade these. If you do not design your own strategy for how you would trade these patterns then you will not be comfortable doing it and will be strongly tempted to break the rules imposed by the other persons strategy.

simoncar said:
In response to MichaelD's post. Read Van tharps book...then read it again....then read it again....then read it again. I read this book when I started to trade and I thought I understood all in it. When I read it now I realise how much I didn't. It is possibly the best book on trading written IMO. You can get on board stocks that are about to trend....just look at thousands of charts and see what patterns pre-empt a great trend. Then work out a low risk way of entering. You will win some and you will lose some.....this is how trading works. When you lose some...don't lose much. When you win some ...make sure you win alot more than you lose. Result you make money. Although this is not the aim of trading. The aim of trading is to preserve your trading capital. If you can do this you will have money to trade with and become profitable when you work out how the game is played successfully. This in my case took 3-4 years. And guess what that is about 2 years longer than I thought it would as I thought I was pretty intelligent.

simoncar said:
Caesar, usually for a stock to have a great run to the upside it needs to form a solid base. This involves a sideways consolidation for a cosiderable length in time depending on the time frame to be traded. When you see this it is a sign that the smart money has been accumulating the stock therefore stopping either its downside run or stopping it from travelling lower.

simoncar said:

Like I have said before, study thousands of charts. This has been easy for me as I absolutely love doing it. After time you will notice many many things. You will see breakouts and retracements and revesals and consolidations. Work out what pre empts all these things. Look at the volume when certain things happen. Never use indicators. Never use indicators. Never use indicators. They will distract you from what is the most important thing. Despite what anyone says, they are useless. All the answers lie in the price and the volume. Basically work out if A. happens then B. usually happens then C. follows. Then you have to understand that the market will go whatever way it chooses after you enter a position,and all your analysis could be wrong. So don't try and be right and wait for the stock to turn around and move higher. Exit for a relatively small loss and move on to the next trade. Stocks move in waves....learn how to catch a wave and get off when it ends. Work out a strategy that suits you. I trade off weekly, daily and hourly charts...because they all suit my timeframes of choice. But these are not nearly the most important aspects of trading. Understanding your psychology, understanding position sizing and understanding risk management are. Study lots of charts, read some books on money management and position sizing, some on psychology and over time the questions you will be asking will be answered.
I read many a post like this when I first started trading but it didn't sink in. I just wanted to know when I should enter a position. Give me the entry!!! Yes the entry is important but managing your trade after entry is soooooo much more important.

Click to expand...

Nice posts Simon .... Excellent advice!

sleepy

Uncle Barry · 16 May 2009

Good evening Simoncar,
Mate this is the most honest and square of the chin advice I have ever seen, and I've only been in this business for about 20 years or so.
--------------------------------------------------------
"Like I have said before, study thousands of charts. This has been easy for me as I absolutely love doing it. After time you will notice many many things. You will see breakouts and retracements and revesals and consolidations. Work out what pre empts all these things. Look at the volume when certain things happen. Never use indicators. Never use indicators. Never use indicators. They will distract you from what is the most important thing. Despite what anyone says, they are useless. All the answers lie in the price and the volume. Basically work out if A. happens then B. usually happens then C. follows. Then you have to understand that the market will go whatever way it chooses after you enter a position,and all your analysis could be wrong. So don't try and be right and wait for the stock to turn around and move higher. Exit for a relatively small loss and move on to the next trade. Stocks move in waves....learn how to catch a wave and get off when it ends. Work out a strategy that suits you. I trade off weekly, daily and hourly charts...because they all suit my timeframes of choice. But these are not nearly the most important aspects of trading. Understanding your psychology, understanding position sizing and understanding risk management are. Study lots of charts, read some books on money management and position sizing, some on psychology and over time the questions you will be asking will be answered.
I read many a post like this when I first started trading but it didn't sink in. I just wanted to know when I should enter a position. Give me the entry!!! Yes the entry is important but managing your trade after entry is soooooo much more important. "

Thanks again, EVERYBODY should read your advice !
Kind regards,
UB

How do you pick stocks with an emerging trend?

CrazynWild

RamonR

sandybeachs

simoncar

MichaelD

Not fooled by randomness

awg

simoncar

craigj

It's Snake Pliskin

ceasar73

simoncar

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simoncar

beamstas

ceasar73

ceasar73

matty2.0

simoncar

kam75

sleepy

Uncle Barry

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