Stock Trading Signals

STRATEGY #2: Gap Up or Gainer - Lateral - BreakOut

This stock trading signal can be found with stocks that are either on a Gap Up OR Gainers list .

If you're not familiar with a stock market gainers list, it's also known as a % change list or a net change list. This is simply a list of stocks in tabular form, that are updated in real time and ranked according to either their % gain or net dollar gain from the previous day's close.

Stocks that are on the gap and gainer lists are stocks that are in play. In other words, that particular day they are going to be getting a lot of attention from traders, because of their price action and will most likely have higher than their average volume.

With this stock trading signal you are looking for stocks on the gap up or gainers list, that have formed a Lateral. After finding a stock that meets these requirements, a buy stop order can be placed immediately above the lateral.

At this point, you are waiting for a Breakout to get a long position in this stock. If the stock breaks out and you've bought the stock, make sure you immediately place your stop. Depending on the trading platform you are using, a stop can be placed automatically for you. If you decide to use support and resistance for your stops, rather than fixed dollar or percentage stops, then of course you'll need to adjust your stops manually after they're placed by the trading software.

Now as with all the entry strategies here, once you have an entry and your stop is in place, you'll need to decide on an exit strategy. If you need to review the page on day trading system exits, go ahead and do that.

You should know in advance of the trade whether you're going to use a profit target or not. If using a profit target, how are you going set the target? Will it be a multiple of your stop ( 2 x stop, 2.5 x stop, 4 x stop, etc.) or will it be a fibonacci extension target? Will you use a trailing stop method? These are questions, that will need to be answered before the trade is initiated.

Alright, so back to this stock trading signal. As I mentioned on another page, the Lateral is a really hard working chart pattern. This boring pattern just keeps on producing year after year, no matter how many people know about it, and of course, it's been around since sliced bread.

The pattern does not have to be perfect to work. If you have a lateral with a little bit of candle wick sticking out, so what! You can still trade it. Chart patterns don't have to be perfect!

Here's some example's of Strategy #2.


Stock trading signals on a chart of HST

EXAMPLE 2 Gap Up Trade signal on stock chart of FLS