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Hi everyone , here are some tips.....

1.    Find a stock with high liquidity from the NZX50/ASX200 (1million ADV)

2.    Ensure the stock in in a decent uptrend (Determine time frame)

3.    Compare stock to NZX 50/ASX200 – Ensure there is an Upward trend correlation

Important to focus on just ONE stock for now.

Once pre requisites are confirmed, proceed to the next step.

1.    Calculate the volatility on a daily basis for the stock in “$” terms

=Maximum (H-L, H-PDC, PDC-L)

2.    Convert the “$” terms into a “%” value in relation to the stock

3.    Find time frame to average the volatility (5,10,15,20 days etc)

4.    Check chart for basic S/R level (Consider using different time frames together e.g MTF - Multiple time frames.

(#4 will be the key for our “Entry”)

From this information we can gather a few things;

1.    We have found a high probability Market (Uptrend)

2.    We have a found a high probability stock (3/4 Stocks follow the market)

3.    Correlation between the two further confirms this

4.    We know how much “$” the stock moves on a daily/weekly/monthly basis

5.    We know what this means to the bottom line in % terms

Now we have all the information we need to pursue Proper Risk Management.

1.    Consider what our findings of the stocks “volatility” are. Its telling us roughly how much cents/dollars our stock moves on a daily basis.

2.    What if we were to multiply this number by 1.5? What would the results tell us?  It would give us an anomaly figure. Which means, if the stock were to on any given day move this number or beyond, we would be outside the average, which put simply would imply the stock is currently behaving “outside” its normal behaviour.

 

Looking at the chart. Once we determine current support and resistance levels, we can then start to focus on our entry.

Look for an area where a breakout or further move can be confirmed based on previous movements.

I would be happy to answer any questions, and even give examples.

"One thing about the markets that can be said with 100% certainty is that markets trend beyond random"