Professional Documents
Culture Documents
TA Sample
TA Sample
1 | May 1, 2016
$DAVIN became a runner-runner for 3 consecutive days after breaking out from its previous resistance.
Whenever I want to enter a highly volatile stock but wasnt able to acquire position before the big move,
theres one strategy that I always use momentum trading.
Momentum trading, in essence, is all about riding strong movements whether up or down. But since
we dont have short selling here in our local bourse yet, we usually refer to momentum trading as simply
riding strong upward moves.
As far as holding period is concerned, momentum trading is often characterized by a Zero (intraday) to
5 days timeframe, on average. And the key to successful momentum trading is to get in when
momentum is picking up and get out when it is dying down. Its profiting from the stock while its green
and selling it during (or before) red days. But of course thats easier said than done.
What is a runner-runner?
A runner-runner is simply a stock that makes successive green (or red) candles after breaking out (or
down) from a significant resistance (or support). In short, multiple consecutive green (or red) candles.
This is a clear indication that the stock is under the influence of a strong buying (or selling) pressure.
Trade #1: Momentum Continuation on a Runner-runner
Wait a second! Isnt the stock already too high? The breakout candle registered +19.7%. And
today, another +19.6%. Arent you scared that its gonna go down tomorrow already?
Heres the thing, when momentum kicks in especially on runner-runners, its hard to stop. Ask
Sir Newton. Besides, this is just going to be a quick trade right? And to protect us from any
catastrophe, were putting tight cutloss points of course.
4. Sold intraday at 5.65 with +34.67% profit. Candle closed with wick at 5.36 [+29.2%].
Trade #2: Momentum Continuation on a Runner-runner
a. Buy at the CLOSE with significant postion size if the candle is green.
Since these were runner-runner plays, Im buying at the close for possible upward momentum
continuation the next day. If I will exit at 5% gain, thats okay coz I have significant position size.
If the market decides to give me more than 5%, much better.
This strategy works well if you cant monitor a notorious stock by the minute throughout the day. I was
swamped with mid-day appointments during the two trades above. My objective was to sell in the
morning session before I head to my meetings. And in the afternoon, I just checked the closing candle
and open a position again if it matches my buying criteria.
Part 2: Bounce Plays - Profiting From Downward Momentum
When trading downward momentums, the first play that comes to mind is the Bounce Play. The core
premise of this setup is simple: There is no such thing as a straight drop. If the stock is falling there will
be rebounds along the way. What we want is to profit from those rebounds.
But take note that its far more different from trading upward momentums in a sense that youre
rooting for a falling stock to recover after finding temporary support. In other words, youre trading
against the trend. This is more risky of course coz the bearish bias is so strong. But if executed well, it
can give you enough profits in a short period of time.
My key ingredient to trading bounce plays is this: Get in and get out early and dont hope for
skyrocketing profits. Dont be blinded by the Illusion of Bagger. Always align your expectations with the
play at hand. If the bounce is over just accept it, let go of your position, and move on to the next trade.
One very critical part of any bounce play is the previous breakdown. Before excessive selling
pressure comes in, price needs to breakdown from a support first. Always know where the price
came from or its Point of Origin.
Youll easily see if the trade is worth the squeeze or not. If the drop lacks strong downward
momentum (or high volatility candles), its not worth to catch. If the potential bounce wont be
that high for you to gain enough profit from it, then why take the risk?
I want to stress it again, bounce plays is a contrarian setup. You are fighting against the
prevailing trend - which is downwards. This violates one of the golden rules in trading: The trend
is your friend. The chance of losing is greater than the chance of winning. So be extra careful.
2. Price broke down from identified support. Strong downward momentum ensued.
3. Plotted parallel darvas as potential temporary support for the bounce.
4. Price bounced at the identified parallel darvas with an oversold RSI. Objective was to profit from
the bounce while the stock forms the right shoulder of a Head and Shoulders pattern. Opened
position intraday with an AEP of 5.22.
5. 100-MA and RSI-70 resisted the price. Sold intraday at 5.70 with +8.24% profit.
Trade #4: Regular Bounce Play
1. Downward momentum from previous candle continued causing price to drop intraday. It
recovered as the day progressed. Bought at the CLOSE at 5.55 [+8.2%] after successfully creating
a bullish reversal candle.
Regular Bounce plays normally have a 3-day timeframe: (a) Day 1 - The actual bounce, (b) Day 2
The Momentum Continuation and, (c) Day 3 The Resistance Hit. So, if this is only Day 1 of the
bounce, basic strategy dictates to hold until Day 3.
* * * END * * *