Especially for the superheroes who are in my exclusive email list.
If you’re not, then join the other 5,000+ people who benefited from my free guide worth $259. Follow the instruction in the image below.
If you are part of my secret insider group, then you should be receiving the recommended stocks with the greatest potential to give you triple digit profits like these every week.
Some of you are clueless with the weekly stock picks. You’re wondering what should you do with them. You may feel that these suggestions seem pointless.
Alright. This post serves to guide you how to profit from the stock selection. I guarantee that the next time you receive the weekly recommendations; you will know what to do next.
Are you ready? Let’s begin.
There're several reasons for choosing the three filter as shown in the image above. For the geeks out there who wants to know the reason that I select them, here's why:
THE MOVING AVERAGE
The 50-day moving average or SMA50 is calculated by summing up the past 50 closing prices points and then dividing the result by 50, while the 200-day moving average or SMA200 is calculated by summing the past 200 daily closes and dividing the result by 200.
SMA200 may be the granddaddy of moving averages.
Basically, a stock that's above SMA50 and SMA200 is considered healthy; below them, unhealthy. The 50 DMA describes recent price trend and SMA200 describes the sentiment of the market on a longer term basis. This is where major players like pension plans, mutual funds and hedge funds need to look in order to move a large amount of stocks.
Imagine, just 2 simple daily moving averages can help you make the best trading decisions of your life, whether you are a day, swing or options trader!
IDENTIFYING BULLISH TREND
To analyze the trend, study the closing price in relation to these SMAs, and the averages in relation to each other.
Here's a few quick quotes from a famous trader on my logic for the filters :
"...my metric for everything I look at is the 50 & 200-day moving average of closing prices. I’ve seen too many things go to zero, stocks and commodities. The whole trick in investing is: “How do I keep from losing everything?” If you use the 50 & 200-day moving average rule, then you get out. You play defense, and you get out..."
"...I get very nervous about the retail investor, the average investor, because it’s really, really hard. If this was easy, if there was one formula, one way to do it, we’d all be zillionaires. One principle for sure would get out of anything that falls below the 50 & 200-day moving average..."
There you go!
That's the quick guide on how to find the suitable stocks to buy from the weekly recommendation.
Also, I need to remind that this post forms only 25% of the whole trading process. There is more than figuring out which stock is the best choice to buy for that particular day.
For example, you will still need to figure out your risk/reward ratio, initial position sizing and your emotional trading state. Hey, don't fret about them. I'll cover them in future posts.
ONE MORE THING
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