Hapaboy,
There isn't really low-risk newbie trading strategies. I would rather say that the right approach is to take your time in learning curve, between 2-4 years, 8-16 hours/day, if you are really serious about trading. Only then you can be sure that you are almost most of the times on the right side of the market !
Low risk stock doesn't exist. You can say rather,"optimum tradable stock " which should have, in my opinion, the following characteristics :
1. Liquidity through the daily volume around 1.2 millions shares.
2. Value between $25 - $50. Easy to understand : a gain of 3%
from $15 stock, is three times less that the same 3%, from a $45
stock, and ... the risk is the same !!!
3. Volatility of the stock is visible, by observing the 1-min. chart,
( for daytrades ). No big spikes, no weak volumes, etc.
The candles should never have huge and numerous tails ( one after the other ) ; that it's call ''fuzziness", and is poison, for
trading, especially for the stops !!!
4. Intraday ranges : more than 3-5%. Check the 10-day 15min.
charts.
5. Stock's behavior : go with it, for several days, or better
weeks, see how it's behaving at: open, 9:40, 9:50, 10:00(great
reversal time ), 10:20 and 10:30 ( again reversal time ),
6. ALL this can be accomplished either by having a stock BASKET
or utilizing scanning. I am an adept of the first, because you
finish by knowing really good your stock's members. But careful
the membership of the stock's BASKET should be "dynamic" or
better said "cinematic". Once, it doesn't fulfill your imposed
characteristics, get rid of him.... for the moment !!! This is what
we call "the perpetual cycle " of the market.
7. Once you select your stocks BASKET, you can follow them, really
very closed and find out about, so called "success" parameters :
- stock pairing within the same sector ;
- stock(s) going with or against its( their ) sector,
- sector going with COMP or against ;
- who are the tier 1 ( 2 ) within its sector; you can easily classify
for trading decisions, tiers 3, 4 together with tier 2.
- do not forget about stock's rotation within a sector, and
sector's rotation within an index ( intermarket analysis ).
8. NOW, we reached " the question ": Which stocks are tradable ?
Tell you what I did.
I observed the COMP's movement, for weeks, even months, and ... I found out that most of the time, the following sectors, signify more than 80% of the flow : SOX, GSO, GIN, GIP, NBI and IXTC.
Now careful Happy Boy... the % of each sector's contribution, within the COMP, is changing like hell, every day; but that doesn't bother us, we got the most influential sectors.
Now you go at "quicken.com" at "compare", with a stock that you
believe, let's say, it is in eg :SOX, and you will be happy to see all the members of its industry, with the adequate turn over. Once you have that, go to the charts, and observe thoroughly the above points 1 through 5.
" Quicken compare" , should give you, most of the time, tier 1, because of its capitalization.
And please do not ask for "gurus" anymore ! They will make you pay "dearly" for their "theoretical experience" !
Hope, I've been of some help for you Hapaboy !!!
Good Learning !
MD-doc
