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Beginner's Guide to Stock Trading

The document describes three stock trading strategies: 1) The MACD Buster strategy uses the MACD indicator and resistance levels to identify entry points. 2) The Pincher strategy uses oscillators like RSI and PPO along with candlestick patterns to time entries on oversold bounces. 3) The Volume Surge strategy looks for large volume spikes and breakouts above moving averages and the CCI indicator to find momentum plays. Examples of each strategy are provided using stock charts.

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100% found this document useful (3 votes)
786 views16 pages

Beginner's Guide to Stock Trading

The document describes three stock trading strategies: 1) The MACD Buster strategy uses the MACD indicator and resistance levels to identify entry points. 2) The Pincher strategy uses oscillators like RSI and PPO along with candlestick patterns to time entries on oversold bounces. 3) The Volume Surge strategy looks for large volume spikes and breakouts above moving averages and the CCI indicator to find momentum plays. Examples of each strategy are provided using stock charts.

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moneymaker1905
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Introduction
Trading and investing are two of the most enjoyable and self rewarding activities a person can participate in. Each allows you to increase your financial well being from either the comfort of your own home or office. With enough patience and diligence, it is possible to become consistently profitable, allowing you to become a full time trader! Many believe that in order to be considered a professional trader, you must have fancy college degrees, wear expensive suits and live near Wall Street. This is a total myth! All it takes is a desire to learn, willingness to lose money along the way, and persistence. In fact, you could have no college degree, wear your pajamas, and live in the rain forests of the Amazon, but as long as you have an internet connection, youre in business! Remember, trading is simple, but not easy. Is this something that should intimidate and frighten you? Absolutely not! Is it something you should be aware of in your quest? Yes!

Three Warrior Winning Stock Strategies is geared toward giving you solid methods that can provide
a steady income of profits. Are these strategies the Holy Grail of trading? No they are not, and if you believe such a thing exists, please go and place your money in treasury bonds and CDs. These strategies will give you a strong foundation to build from. Based on the principles presented, we highly encourage you to explore and create your own twists to each. By doing this, you conquer two important psychological concepts that must be realized. First, you will see there are multiple ways to pull profits out of the market. Many people enter the market thinking they must follow a strict set of rules, and if they stray just a tad they will be failures and lose money. Second, you will force yourself to step outside of your comfort zone which will ultimately lead to a new sense of confidence in your trading abilities. The market is not the place you want to be without having a strategy in place. As mentioned above, if you think you can walk into this arena without a strategy, please just go and place your money in a very low risk interest instrument. As you venture through the various methods, take your time and make sure you have a firm understanding before using any real money. This book is broken down into five sections, each covering a separate and unique strategy. The strategies will be explained by the Three Whats: What is needed? What must happen? What to do? We at Bull Market Newsletter encourage you to take your time, and carefully proceed through each strategy. Now lets get started!

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What is needed?
Moving Average Convergence Divergence (MACD) indicator o Default setting of 12,26,9 is normally used, but it can be varied Ability to identify resistance levels 8 period simple moving average

What must happen?


1. Bullish MACD crossover (most explosive moves come when this occurs below the zero line) 2. You must then identify the nearest resistance level (usually a previous high or low) 3. Put on your MACD Buster watchlist

** IMPORTANT ** - No further actions should take place until #4 occurs

4. When the price closes above the marked resistance point, you have the green light!

What to do?
5. Place a limit order at your marked resistance point (which is now a support level).

6. When your order is filled, use the 8 period simple moving average as stop-loss. Gradually take profits on the way up.

We will now go over two examples of the MACD Buster in order to show you this strategy in action. We will look at the daily charts of AAPL and LVLT.

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ExampleExample #1: AAPL (Apple, Inc) Daily Chart

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Example #2: LVLT (Level 3 Communications, Inc) Daily Chart

Place on watchlist.

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What is needed?
ADX (14) RSI(2) and RSI(5) PPO (12,26,9) 20 period simple moving average Understanding of candlesticks

What must happen?


ADX(14) must be greater than 40 PPO(12,26,9) must be less than -10 Both RSI(2) and RSI(5) must be less than 30 If stock matches the above criteria, place on Pincher Watchlist

** IMPORTANT ** - No further actions should take place until next event occurs

When the RSI(2) and RSI(5) cross above 30, along with the formation of a bullish candle, you have the green light!

What to do?
Place a limit order at the previous high that is less than the close of the bullish candle.

When filled, look to take profits up around the area of the 20 period simple moving average.

We will now go over two examples of The Pincher. By using the charts of USB and CHTR, you will see how bullish this strategy can be! PDF compression, OCR, web optimization using a watermarked evaluation copy of CVISION PDFCompressor

Example #1: USB (US Bancorp) Daily Chart

When the chart is at this stage in the strategy, you have a red light and should not do anything else! Place it on the watchlist and wait for the RSI(2) and RSI(5) to cross back above 30.

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Example #2: CHTR (Charter Communications, Inc) Daily Chart

When the chart is at this stage in the strategy, you have a red light and should not do anything else! Place it on the watchlist and wait for the RSI(2) and RSI(5) to cross back above 30.

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What is needed?
CCI (20) Volume bars 8 and 20 period simple moving average Understanding of candlesticks

What must happen?


8 period simple moving average must be rising and above the 20 simple moving average CCI(20) needs to break above 190 Volume bar on the period of the break must be clearly larger than previous periods Long bullish candlestick

What to do?
Place a limit order a 33% retracement level based on the single large bullish candle.

This is a quick trade, so only give your order three periods to fill. When filled, look to begin to scalp half of your position quickly. You want to ensure profits incase the price reverses on you; however, sometimes these plays are explosive, so you will want to hang on to a portion of your position.

We will now go over two examples of two separate time frame charts to show you this strategy in action.

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Example #1: JASO (JA Solar Holdings, Co., Ltd.) Daily Chart At this point in the strategy, you should be putting in your limit order at the 33% Retracement level. This strategy appeals to many because there is no watchlist. You either have a play, or you dont. Very simple.

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Example #1: MAC (Macerich Co.) Daily Chart At this point in the strategy, you should be putting in your limit order at the 33% Retracement level.

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By utilizing the illustrated technical analysis lessons, you can successfully profit the majority of the time in your trading. Though no technical or fundamental techniques are 100% guaranteed in the market, you can certainly tip the scales to your advantage. Exercising patience, combined with strategy and knowledge, will assist you in finding the right entries and exits. Locking in gains, as well as preserving capital using stop losses when a stock goes down unexpectedly, takes the anxiety and guesswork out of your trading. Building your trading account portfolio through consistently making wise choices is a gratifying skill that is also very lucrative. Using these Three

Warrior Winning Stock Strategies can help you to be a bull in any market!

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