(Underlined italicized
text represents the latest additions to this training
guide. Underlined text represents the previous additions
to the training guide)
There is no one secret to maximizing your profits in the
publicly traded markets. However there are some
guidelines which we have developed specifically for the
Hannaian system of business trading and investments.
IT IS IMPORTANT TO REALIZE THAT SINCE 1998 THE
MARKETS HAVE DRAMATICALLY CHANGED AND ANY INFORMATION
THAT YOU COME ACROSS ANYWHERE MUST BE EVALUATED WITH THIS
TIME LINE IN MIND. STRATEGIES AND RULES WHICH APPLIED TO
THE MARKET PRIOR TO 1998 MAY NOT BE APPLICABLE IN THE
CURRENT MARKET, THERE HAVE BEEN TOO MANY CHANGES IN THE
WAY STOCKS ARE TRADED AND ACCESS TO MARKETS HAVE CHANGED.
SO IF YOU ARE RELYING ON INFORMATION PRIOR TO 1998 YOU
WILL RUN A GREAT RISK OF LOSING YOUR MONEY IN THE CURRENT
MARKETS. IT IS ABSOLUTELY IMPORTANT THAT YOU RECOGNIZE
THAT THE MARKETS AND INVESTMENT OPTIONS ARE GOING THROUGH
A MAJOR PERIOD OF FLUX THAT WILL LAST WELL INTO THE NEW
MILLENNIUM AND THEREFORE YOU MUST BE PREPARED TO KEEP UP
WITH THE CHANGES AND NEW STRATEGIES AS THEY
OCCUR.
The greatest tool you have in
making money with money is your realization of the
principle of "Opportunity Cost". Every dollar you have in
your control should be used to make money for you, and
secondly at any moment in time there is one investment
that is the best available at that moment. None of us are
good enough to always find that best investment, but
keeping in mind the principle of opportunity cost will
keep you focused into trying to do what it takes to come
as close as possible. "Opportunity cost" says that the
true cost of any investment you make is the difference in
value of that investment and a better investment which
you did not make. This means that since no one has all of
the money to make all of the good investments available
we must try and make the best choices available at the
time of our investment. Based on the circumstances
involved we must always attempt to achieve the greatest
percentage increase on our investment in the shortest
period of time. While we will never be perfect or even
close in this regard this is always the ultimate goal we
aim for. Your level of knowledge and hard work will make
the difference. This principle is perhaps first and
easiest to use when determining where to put your money
in the first place, a private investment or a public one.
Then more specifically what type of system to use and
investment to make. This is where your knowledge and hard
work will make the difference, helping you make the
difficult "opportunity choices" essential to minimizing
your "opportunity costs."
1. First get familiar with and closely follow the
rules in the Stock Investment Tool Kit. These rules give
guidance on what type of stocks to buy.
2. Get familiar with the stock
selections in the Hannaian Intellectual property Stock
Focus and the rating system use in the reports. This
gives you a starting point of some stocks we have already
researched and shows you how we basically analyze stocks.
Keep up with the HIPS service it provides a comprehensive
and updated review of potentially valuable issues based
on our proprietary system. It also provides the benefits
of a network of HIPS knowledgeable individuals and their
shared research activity. It also allows you the benefit
of onsite research and investigations by members in their
local geographic area, and within their spheres of
influence. This is a very important aspect of network
function and benefits.
3. Always do your research and keep up with it.
Research, research, research. This is the number one
activity you must be involved with.
4. Always, always, always stay abreast of the price
changes in the stock. This is most important because it
allows you to monitor prices, trends, purchases, gains,
losses, percentages, and other changes. It also allows
you to take advantage of volatility in the stock. This is
the number two activity that will determine your success
and set you apart from the typical investor more than any
other. You must use good software to do this. We have
recommendations ion the Stock Research Tools page to be
downloaded free. A good one is MedVed Quote Tracker. If
your funds or activity allows it utilize software that
allows Level II Nasdaq quotes and direct trading access
such as the Executioner system.
5. Be organized and ready to trade whenever you need
to.
6. Establish a guideline target price for buying and
selling each security you want to purchase. That is;
a. A price you will buy in at.
b. A price you will sell at if making a profit (e.g.
25% gain)
c. A price you will sell at if the stock is losing
money (e.g. 25% loss)
These will be determined somewhat by how much of the
stock you will buy.
7. Remember buy good companies with valuable
intellectual property holdings, in hot sectors, with
sound fundamentals, and good management.
8. Always research and buy the least expensive stock
you can. There are major statistical and profit
accumulation advantages to purchasing stocks at small
prices.
Example:
an investor with $10,000 can buy 10,000 shares of a
$1.00 stock or 100 shares of a $100.00 stock. If his
stock price increases by 20% the 100 shares of the
$100.00 stock would bring a profit of $20 x 100 =
$2,000. The $1.00 shares would bring $0.20 x 10,000 =
$2,000. Although the profit looks the same, in reality
how often will your $100 stock in a mature developed
company move up $20 compared to the $1.00 stock in an
emerging growth company having to move only 20 cents.
A more likely scenario is that the $100 stock will
rise $5 dollars giving a profit of $500 dollars. While
it is fairly easy for a $1.00 stock to rise 20 cents,
giving the profit of $2,000.00.
In addition, how far can your $1.00 stock price
fall compared to the $100.00 stock.
If you pick good relatively safe emerging growth
companies, the chances for you getting a 20% increase
is a lot more likely than in a much higher priced
stock.
Also remember that high priced stocks usually start
out as small priced stocks and as the companies matured
the prices rose. You want to be able to find those small
priced stocks which have the potential to rise. That is
the real challenge to the smart investing in public
securities. We know that there will always be companies
which start small and grow large, your job is to find
them before they grow. This must be the ultimate thrust
of your research. Why spend valuable time looking at
companies that have already matured and that everyone
else has already discovered. Opportunity cost principles
say that you would be better off spending your research
time in the other direction, i.e., researching, finding,
trading, and investing in low priced emerging growth
companies.
9. Be ready to take profits on stocks which spike
straight up in a short period of time. Many times they
will fall immediately back and you will lose your profit
if it is not taken right away.
Knowing the behavior of a stock and studying its
historical charts carefully will allow you to take
advantage of these spikes or regular rolls of a stock's
price where it moves up for a short period of time. One
particularly important strategy we call
"Spike Sale Buy Back"
is an essential strategy to maximizing profits. When
there is a sharp spike in a stock's price of significant
proportions it is almost certain to drop just as
precipitously. This rise and fall must be followed very
closely to be able to sell the stock at the highest
price. If the stock is one that is likely to rise in
price at another time and you would like to maintain your
position in the issue, you can sell all of it as close to
the spikes summit as possible and rebuy (buy it back)
after the drop. This allows you to keep the profit and
still maintain the same number of shares you held before
the sale. This is a simple but very effective and
important concept to understand particularly when
investing or trading in small priced stocks. Such stocks
unlike large priced stocks are more likely to have the
precipitous high percentage gain spikes that must be
protected.
10. Watch the percentage gain and loss rather than the
absolute dollar figure. This will usually facilitate your
determination of buy and sell points.
11. take advantage of the strategies of using a margin
trading when available. trading on the margin means you
can borrow money, usually up to 50% of your account
balance to trade with. This allows an increased ability
to make profits. margin interest rates are usually below
10% and some brokerages like Datek provide margins much
lower. This means as long as your investments are
bringing in more than the interest on the margin you are
leveraging your capabilities profitably with margin
trading.
12. Take advantage of the leverage provided by use of
check writing privileges in your brokerage account. not
only does check writing privileges allow you easy access
to the cash in your account, but it allows you to utilize
monies you may need on a short term basis to make money
for you until the time comes for you to spend it on the
anticipated bill or purchase. for example if you have a
$1,000 bill that you must pay in two weeks and you have
the thousand dollars on hand for two weeks before your
bill is due, you can trade with that money for two weeks
and reap the potential of significant returns during that
time. Check writing privileges are essential to this
strategy since if you desire you can deposit some or all
of your income in such an account and trade with these
funds on a short term basis and then write a check on the
account when you need to pay the bill or transfer the
money to your bank account if you prefer. When operating
your public acquisitions as a business this becomes an
extremely important tool and strategy. These strategies
are the same ones many large institutions such as banks
and insurance companies use to profit from monies they
hold and control but do not necessarily own or have as
disposable income. More risk is involved here but this is
also similar to some of the risks you would take if you
were operating a conventional private business.
13. Study stock market psychology. This means that in
addition to understanding and researching the
fundamentals of a company, you must understand that many
other factors affect the way a stock acts and how it
trades. Many times the fundamentals of a company's
operation will not determine whether or not its stock
will rise commensurately. Fundamentals are important, but
relate more with long term performance of stock prices.
Short term price performance is determined more by many
other factors best grouped and described as factors
relating to what can be termed market psychology. Many
may described this as a type of technical analysis, where
price movements and the charting of these over time form
the basis of predicting changes based on the behavior of
the stock. Technical analysis is a kind of behavioral
analysis of the market and stock performance.
Understanding this "Psychology" of market and stock
performance is extremely important especially for trading
purposes. Understanding market psychology will not only
help you pick the right stock but will determine when to
buy, sell, or hold the issue.
14. Watch for changes in the maturity of a stock or
company. On the HIPS Research report mature companies
will be highlighted in yellow. When an issue changes in
maturity it will usually begin to perform differently and
is capable of quick and longer lasting growth in price.
Understanding this phenomenon will help you make better
decisions as to when to sell or hold your profits.
15. Diversify your portfolio, not just for safety
purposes but for opportunity purposes. Stocks go up and
down daily. If you have your money spread on several
stocks you have increased opportunity to have gains in
some of them every day. Based on your ultimate strategy
and circumstances this diversification for opportunity
purposes will allow you to regularly have some stocks
always in the money. You can then develop your trading
strategy to buy and sell to produce a regular and
consistent cash flow. Allocate your available monies
wisely with this concept in mind. Remember do not spread
your investments too thin since you must make allowances
for brokerage and trading expenses which have to
ultimately be covered by the profits you generate.
Particularly when starting your public trading operations
expose no more than 20% of your portfolio in any one
stock. The only reason to even expose this much is that
for small accounts under $1000 you need to have enough
invested to cover the trading commissions. As your
portfolio grows in value you will expose even less of it
on any one issue. As you have more money to invest you
should establish a typical amount you will invest in any
one stock. In exceptional circumstances when you can
predict that an issue will rise in price you may deviate
from this standard however it should be only in
extraordinary and highly predictable circumstances.
16. The opposite of diversification can also be
successful, but is more risky. But with risk comes
greater rewards if successful. If you are certain that an
issue will rise in price, loading up on it may produce
spectacular gains. However your expertise, hard work and
experience will determine your success with this
strategy, it works if you are truly operating in the
business approach mode.
17. Never worry about taking
profits when they occur. One worry is that the price will
continue to rise and you will miss out on further
profits. Do not fall prey to this concern. If you are
following the stock closely you will be able to
expeditiously buy back into it. However if you do not
take your profits when present you may lose the
opportunity in these new volatile markets where there are
a lot more traders and momentum watchers who take profits
quickly and cause high volatility.
Remember to concentrate on the stocks that are rising
and in preserving profits when they occur. This is
necessary to maximize profits. You should always follow
your portfolio on a stock by stock basis. Resist the
temptation to operate your portfolio like a mutual fund
by following the overall gain on a daily basis. This will
distract you from your primary goal of taking profits
individually when you need to. Remember that the new
markets are very volatile and any dips in the price of a
stock are very likely only temporary and does not reflect
a true picture of the value of your holdings. The
important picture is the stocks that are increasing in
price. These increases must be watched closely to take
profits when they come or to recover in stocks which have
been true losses prior to the increase. You need to take
profits in stocks which your research tells you are close
to their all time high for a long period, or to take
profits in stocks which are spiking sharply and which
will fall quickly never to to see such heights for a long
time if ever. If you picked good stocks in the first
place the daily losses in these stocks are not
significant since over the long haul they will rebound.
Active trading however will allow you to take profits and
prevent losses on swings in the price of stocks which are
highly affected by the growing volativity in the markets.
Therefore concentrate more on preserving gains, since
your hard work and research in picking good companies
will usually protect your downside.
However In order to protect the
downside be careful about watching for the signs of an
imminent loss or depression. In such situations the
"General Loss Rule" and the "Depression Income
Rule" should be implemented. In fact by utilizing the
General Loss Rule and placing stop loss orders and alerts
to guard against price drops, you will be able to better
concentrate on taking profits when they occur, while not
missing significant drops in price.
18. Watch for stocks which provide excellent "Trading
Performance". These stocks may not start low and
gradually and consistently grow high in price. Due to the
new volatility in the modern markets many stocks
regularly rise and fall, some do so periodically and
regularly. There are many reasons for this. The vast
increase in general traders both individual and
institutional, Day Traders and their techniques, plus the
overall increase of investors and access to the markets
have produced this phenomenon. in addition, the large
percentage of "Dumb Money" in the markets (Those
investors and traders who follow the herd, plus the vast
amount of dabblers and part time players) is also
responsible for this. The increased amount of, and access
to, "Pump and Dump" schemes is also a cause of
volatility. The "Smart Money" (well researched, business
mode players) can take advantage of this volatility by
judiciously trading such issues. In fact it is almost a
necessity in the new markets to do this in order to be
successful. Despite what traditional full service brokers
and advisors may advise this environment is so pervasive
today every one from the simple trader to sophisticated
day traders and institutional traders are involved. It
has become foolish to sit on the sidelines without
recognizing this trend, seriously understanding it and
profiting from it with the proper research and careful
following. Without doing so your investments will be
manipulated by this phenomenon and you will miss
tremendous opportunities and profits. However essential
to maximizing your success will be involvement as a
"Smart Money" player in full business mode. This
volatility or the regular rise and fall of prices called
"rolling allows for a strategy similar to the
"Spike Sale Buy Back"
strategy which we call "Roll
Sale Buy Back", where stocks which regularly
roll can be sold at the high and bought back when they
roll lower, thus allowing the trader to make the profit
and maintain the same amount of shares at the lower buy
back price.
19. Parking: Utilize the concept of "Parking"
your money in good stable stocks rather than holding too
much of it in cash. While it is important to always have
some cash available to do quick and timely purchases, you
must keep the potential for making money at its peak. If
you constantly keep track of which stocks you can sell on
short notice, you will have the ability to quickly raise
cash need to take atvantage of new opportunities. Using
this system you may then be able to keep almost all of
your funds fully invested. Parking your money allows you
to take advantage of some growth and even unexpected
spike and roll potential rather than having the money
just sitting on the sidelines. Be
careful about parking your money if signs of a loss or
depression is imminent, in such situations the
"General Loss Rule" and the "Depression Income
Rule" should be implemented.
20. Remember to consistently
follow the research ratings as they appear on the HIPS
reports. Regularly revisiting these ratings will prevent
missing good deals at low prices. Many times in the midst
of trading and other activities you will forget to
purchase some issues you initially intended to. In
addition conditions and circumstances are constantly
changing and you will need to be constantly reminded of
how stocks compare to each other in the important
criteria which makes a difference in their performance.
This is easily done by looking at the HIPS ratings and
comparing stock to stock. The report format and rating
criteria were developed over time with this in mind and
helps to keep you focused on understanding the true
elements of the issues. The regular comparison of these
criteria between issues will help you in many ways, but
the one most important assistance it provides is helping
you to allocate your investment funds and prevent your
missing out on stocks you should be invested in. This is
a most important feature of H.I.P.S.R.S.. As you become
more experienced in your public acquisitions activity you
will hear many horror stories about fellow publishers
missing out on opportunities they should have been
invested in. Generally they discover their mistake after
the stock has spiked in price and they realize they had
initially thought about purchasing the stock or may even
have thought they had purchased it. You will also
experience this yourself. One way to prevent it from
happening is to keep revisiting the ratings in the
H.I.P.S. reports. These reports should always be open on
your computer during the day so that you can quickly
revisit them as needed. They are also designed to provide
three (3) research links for each issue which can be
quickly accessed if needed once the report is sitting
open in the background should you need it.
21. In your initial evaluation
and revisitations to the H.I.P.S. reports always make
careful notice of the I.P. and Sector ratings. While all
of the ratings are important these two should keep you
focused on the main reasons we are interested in the
stock. These ratings have a tremendous correlation to the
ability of the issue to spike in price. The other ratings
lend support in your determination of which stocks to
pick when there are similarities in I.P. and Sector
ratings between issues. The other ratings become powerful
predictors in showing which I.P. and Sector rich issues
have other strong attributes which should put them at the
top of your list at any point in time.
22. General Loss Rule: In addition to the
techniques employed in the training guide
"Handling the Hannaian Spike,
Drop & Roll", it is important to protect
your profits or prevent losses by utilizing a rule to cut
losses when the price of a stock gradually drops more
than a specified amount. This general loss protection
rule is utilized generally and is somewhat different than
the rule used in the "Hannaian Drop" situation where the
price precipitously drops. This general rule is utilized
where the price of a stock may drop gradually over the
course of a few days or longer. In such cases the sale of
the stock should probably be ordered at the point where
the price falls 10% to 15% below the point that it
was purchased. The employment of this rule in a
mechanical manner will remove the emotion tied to
ownership of the issue and prevent continued losses in
the stock. If followed closely it can always be bought
back if it drops lower or starts to rise at some future
point. This rule is referred to as the "General Loss
Rule" or "10% Drop Rule". Stock portfolios should be
constantly and regularly reviewed with this rule in mind
to catch applicable issues which may otherwise be missed
due a gradual fall in price. This rule is more easily
implemented by employing stop loss orders with stocks on
the major exchanges. With OTC:BB issues where stop losses
are not available, utilizing the alert system in your
stock tracking software to alert you when a stock drops
to the 10% to 20% level is a most important technique.
These alert levels and stop losses should be routinely
implemented when you first purchase the issue.
This rule is basically the
"Insurance" you must use when investing in small price
non-optionable stocks. When investing in larger priced
major exchange stocks this "Insurance" is best provided
by "Spread Trading" techniques covered in the Hannaian
Training Guides, "Basic Option Principles", and
"Understanding Options & Option
Strategies."
An important derivative of the GENERAL LOSS or 10%
DROP RULE is the BETTY RULE. It was developed by one
of the Hannaian Investment & Publishing Group's
(HIPG) premier affilates Betty Williams. This rule deals
with the philosophy of
preventing losses and keeping cash to be able to stay
ready for other opportunities that may arise, in other
words not only preventing losses but perserving
opportunity choices. It states that the price you pay for
a stock does not matter once you have already bought it.
What makes a difference is the trend in the price of the
stock. If it is staying even or trending down and you
believe it may drop further, you must sell it, no matter
the price you bought it at, because you will be able to
buy it back at a lower price later, or use the money
elsewhere in the meantime. Selling at this point actually
saves money by avoiding further losses. Losses can never
be recovered, therefore you must do what you must to
prevent losses...e.g. excercising the 10% Drop Rule or
even selling before a 10% drop if the trend is down. This
rule is especially helpful for traders and agressive
investors who can watch their stocks closely.
An important aspect of the
BETTY RULE deals with time lost. That is that the monies
derived from the sale of the depressed stocks can be
better used in the meantime to invest in issues that may
be rising in the short run, rather than having these
monies tried up in a depressed stock waiting to regain
the paper loss.
The principle behind the BETTY RULE is that many
investors look at the price they bought a stock at and
make subsequent decisions about selling the stock based
on that price or some other price related to it. This
rule says that the emphasis should be on where the price
trend is going despite the purchase price. If it is going
down there is usually no good reason to hold it, and it
should be sold because it can always be bought back later
at the lower price, in effect saving money by preventing
further losses. Since losses can never really be
recovered, they represent lost opportunity.
23. Another rule which can be attributed to Betty
Williams is the THREE (3) MONTH PROFITS RULE which states
that you should plan your annual investment business
strategy and objectives on no more than three good months
of profits in the markets each year. This will allow you
to realistically plan your resources for the normal up
and down periods which the markets cycle through each
year. As in any business there will be up and down times,
fast and slow periods and good business people plan their
operations around these. The Investor/Trader should
therefore be geared up to take advantage of those times
during the year when the markets are hottest. There is
usually a three month or longer period each year that
presents opportunities for significant profits, and
Investors/Traders cannot afford to miss these periods.
The THREE MONTH PROFITS RULE ensures that the
Investor/Trader will not waste or by pass profits which
can be gained during the best three months of the year.
In other words if you can experience three good months of
outstanding profits each year you should be able to enjoy
a very successful and profitable investment business
operation despite what happens the rest of the
year.
24. STEVENIZING THE STOCK
PURCHASE
An important safeguard that should be utilized when
purchasing OTCBB stocks or any issues which may not allow
stop loss orders to be placed is to "Stevenize" the
purchase, a system designed to keep the investor tied to
consistently implementing the 10% Rule in a mechanistic
fashion. The Stevenization System is named for another
influential HIPG affiliate Steve Deveaux who has been
with HIPG since its early days. The system is inexpensive
and should provide results which will average over time
and pay off in the percentages. With the 10% rule you may
lose a few run-ups in price but over the long term you
will be far ahead by mechanistically limiting your losses
to 10%. Stevenization involves several steps which should
be implemented right after purchasing a stock, as
follows:
1. Purchase the Stock
2. Immediately attempt to place a stop loss order 10%
below the purchase price. If the brokerage system you
used for the purchase allows you to place such an
order then you are OK, if not then move to step 3.
3. If you cannot place a stop loss order at 10% below
the purchase price then you must place an alert with
an appropriate intra-day stock tracking and alerting
service to alert you should the stock price fall 10%
below the purchase price. Most of this type of
software will allow you to effectively follow the
price in real time if you are following your portfolio
on an intra-day basis. (e.g. MedVed Stock Tracker)
4. Then register with an email alerting service which
will provide an end of the day report on those stocks
which trigger an alert (e.g. CNBC.com), and make sure
you check your email regularly. Some systems hae both
intra-day online service and end of day email alerting
capabilities.
5. If the stock rises in price do your best to
manually update the stop loss alert at 10 % below the
most current price or find a stock tracking system
that will automatically do so for you. (We haven't
found one yet that we can reccomend to automatically
do this trailing stop lost alert)
6. As soon as you get either an intra-day or end of
the day report that an issue has lost 10% you must
sell without delay.
Hand held wireless devices that do stock
tracking and alerting can also be used in this process
but maybe quite a bit more expensive than the process
above. The most important thing is that you consistently
follow this regimen each time you purchase a stock. Make
this an integral part of every stock purchase. This will
prevent losses which would otherwise occur if you do not
have a mechanistic approach to peventing such losses.
25. Another derivative of the GENERAL LOSS
RULE is the Depression Income Rule: Several
times each year your stock portfolio will become
generally depressed in price due to certain market
environments and phenomenon which generally affects the
issues for a one to three week period. Generally there is
some condition, news, situation, or shift in the general
money flow in the markets which will indicate this
phenomenon. A good sign of it in the individual stocks is
a significant slowing and drop in the average volume,
with more declining (selling) than advancing (buying)
volume. If this generalized depressed trend in the market
can be recognized early enough in the decline a general
sale of the declining issues can be made with a buy back
later. This does save dollars in potential losses for
those who hold through this depressed period even if as
usual they recover their pre-depression prices. However
what it does for the trader is make money because the
issues can be bought back later after they have dropped
at much lower prices and the profits pocketed while
maintaining the same positions in the stocks. This is
another good reason to pay special and close attention to
your holdings and to keep special rules covering specific
situations in mind at all times particularly the General
Loss Rule. In order to draw and keep attention to this
specific situation we call this rule "The Depression
Income Rule".
Another important aspect of
the General Loss Rule and its derivatives is that the
monies derived from the sale of the depressed stocks can
be used in the meantime to invest in issues that may be
rising in the short run, rather than having these monies
tried up in a depressed stock waiting to regain the paper
loss.
26. TAX LOSS RULE
One important concern in protecting losses in investments
in general is recognizing opportunities to take
legitimate tax losses when an investment has dropped to
significant losses. One important technique used is to
buy the same amount of stock that you currently own at
the depressed level and then a short time later sell the
first block that was depressed. In this way you preserve
your holdings in the issue but also lock in your tax loss
in the issue. We call this the TAX LOSS
RULE. The straight
forward method of taking a tax loss is to sell the stock
before the end of the year and buy it back after 30 days
to satisfy the IRS 30 day Wash Sale rule. However you may
not be able to get the stock back at the reduced price
after 30 days so if you really want to keep the same
investment basis in the stock you must buy a similar
amount before you sell the amount on which you will lock
in the tax loss. This loss can then be written off dollar
for dollar against your capital gains and the excess even
carried over to future years. Tax losses add significant
profits to you investment bottom line. REMEMBER TO CHECK
THIS AND ALL INVESTMENT AND TRADING TAX RELATED ACTIVITY
AND DECISIONS WITH A PROFESSIONALLY QUALIFIED TAX ADVISOR
BEFORE EXCERCISING THIS TECHNIQUE.
27. An important rule that should be generally
applied when figuring changes in price is one based on
the statistical fact that the larger the price of the
stock the faster it tends to move up or down. This is an
important factor when deciding how fast a particular
issue will rise or fall in price as compared to another
of significantly different price size. This
PRICE SIZE CHANGE rule is an
important one to keep in mind when making buy/sell
decisions between two stocks of otherwise equal
quality.
28. Catching The "Day Ending
Spike"
One very important technique is to search for
a "Day Ending Spike". Many Hannaian Spikes begin with
unusual upward moves in the price of a stock within the
last hour of the day. The stock then ends the day on a
full Hannaian Spike or on a significant up movement
within the last hour. This is usually a sign highly
predictive of a full Hannaian spike on opening in the
morning or certainly a cross quote situation with the
stock gapping open up significantly in the morning.
This is one of the most predictable signs of an
impending Hannaian Spike which allows a trader to buy
into a stock that is spiking or about to spike. The
predictability allows for an almost certain profits and
denotes one time when you may want to consider buying in
big time on these issues to take advantage of the gap
open that is almost certain to occur in the morning.
What this means is that you should make it a habit to
search your current holdings and other stocks you are
interested in during the last hour of trading every day.
This strategy will provide you with many positive buy in
opportunities over time.
One way to effectively find stocks which are spiking up
during the last hour of the day is to use the global scan
feature of the Internet Trader stock tracking software.
Global scan is a screening type process which can be
configured to find stocks which change by certain
criteria. It can update the report periodically
throughout the day and report it in the format you
choose. It is a powerful tool to use generally, but
particularly so, near the end of the day to find stocks
which may be spiking. Internet trader can be downloaded
from the link on the Hannaian Stock Research Tools
Page.
29. Follow Money Flow
Indicators......Following the charts on money flow
into stocks and sectors will provide an important
indicator into the potential for price accumulation. In
addition on a short term trading basis the following of
large block trades will give some indication of where a
stock may be going in the short run. Such large block
trades particularly in small priced issues and OTC:BB
issues are significant indicators of where the stock
price is headed. Obviously an increase in money flow
indicates a rise in price, and a decrease in money flow
indicates a fall in price. There are several charting
sites and programs that provide such money flow
indicators and real time Time & Sales
information.
30. With the rise of the Internet and the vast
increase in access to information and new trading
techniques, the phenomenon of "day trading" has exploded.
Professional day traders are in the business of executing
multiple trades within minutes, only holding a position
in a stock for so long as to derive their target price or
to make a desired tactical move. This situation
significantly affects market performance and events and
must be thorughly understood because it will become even
more ubiquitous and set new standards for public trading.
You must understand the concepts, techniques and tools
professional day traders use. Traditional investment
traders, stock analysts and advisors suggest that day
trading is a dangerous and foolish idea. Many of these
same individuals also suggested that the Internet craze
in investments was also a dangerous idea, today they are
all into it. day trading is certainly not for the average
trader or investor, but it is here to stay, and as with
everything else knowledge is king. If you know that day
trading affects the market then you must realize that you
must understand its principles to understand the
competition, modern market moves, manipulations, and
fluctuations. In addition many of the techniques used by
day traders will eventually set the standards for stock
trading, simply because if they make money and work every
one will use them, day trader or not. Remember as
traditional advisors suggest anyone can buy a Microsoft,
Intel or other leading stock and hold it over a long
period of time to bring investment success. This is
really relatively easy. The hard work where the real
innovation occurs is in trading and understanding the
cutting edge techniques that market makers use to control
the market and stock prices. This is the professionals
game and you must understand it even if you are not a day
trader. The true market makers are really all day traders
even if they don't want to admit it. They have no choice
mmeting the competition demands it. The prinicples,
techniques and tools used in this phenomenon called "Day
Trading" is where you will find leading edge trading and
investing knowledge. One excellent source of information
can be found at the Pristine Traders education site at
http://www.pristine.com/aeduc/edmenu.htm.
Click
here to visit the Pristine Traders Education
Site
Read this information carefully and understand it
thoroughly if you want to maximize your profits.
Please read carefully the
training guide "Handling The Hannaian Spike Drop &
Roll" to further maximize your
profits.