My simple, yet profitable trading strategy

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traderich

here is a simple yet profitable trading method I have been using for several months:

At 10am sharp, goto yahoo finance and click on "most actives"
then "top % gainers"

Print out this list:

Enter this list on your streaming quotes. I use Scottrade.

Check if each stock has traded over 100k shares. If not, take it off the list.

Now, take the top 6 stocks on the list. Write down these stocks and the exact Ask price at that very moment.

If you have between 25k and 75k in money, you will have 4x margin and enough to buy 1000 shares of each of these top 6 stocks each day.

You can just check this approach for 15 days before deciding if it agrees with what I am saying.

If you do end up real trading these, buy 1000 shares each, 500 at the bare minimum. Anything less will make this profitable method a loser.

Hold these stocks(all of them!) until a)you are up $3000 b)you are down $1800 or c) its 3:55 and time to sell all positions.

I came up with this method because I would look at the % winners and losers every day and for the life of me could not pick enough winners to be profitable.

I have noticed with this method that, as many have eluded to, the winners of this list tend to be VERY BIG winners, and the losers of this list tended to be much smaller.

Overall, the list of 6 will yield only 3 winners. Does not sound great right? However, the winners easily outweigh the losers and overall its profitable over any 15 day period.

Test it out for yourself without actually buying first.

Here is the list today and the prices I bought at:

WFR (in at 50.15..10:03am)
NVL (in at 34.45..10:03am)
TPX (in at 22.60..")
KND (in at 29.74..")
IRF (in at 41.08..")
NTY (in at 51.83..")

notice that NTY is a big loser today, but my stop loss is set for the entire daily portfolio. If I am down $1800 for the day, I sell off the entire portfolio.


I can post the last 3 months of results if you would like to backtest the strategy.

This is just a plain and simple method that has been working. It's not earth shattering. I average about $225 profit per day.
 
Scottrade any many brokers have this on their interfaces, so no need to go to yahoo if you don't want to. I just prefer real time data as opposed to yahoo, which is delayed. Just a suggestion..
 
I hear what you are saying. So my Yahoo data is Scottrade's data at 9:40 (i.e. Yahoo delayed 20 minutes). I understand that.

The Scottrade data only shows top 10 gainers and many of those do not have the volume I require (100k or more).

Also, I take the yahoo data and then put the tickers into Scottrade at 10am sharp and see what the prices are real time.

I am posting my method partly to show off a profitable trading method and partly to see if there is any intelligent life on this site that may suggest some ways to further improve this method.

Obviously the stop loss of $1800 is very important, but so too is letting the winners ride to $3000.

My batting average goes way up if I say I only want to hit 2000, or 1000 for the day before selling off, but in order to maximize the profits, I let the winning days ride to 3000. Often times, these 6 stocks will hit over 5k profit. I have got up 3600 in less than 30 minutes before with this.
 
Gotcha. Do you have a floor as to how low the price of the stocks are?

For example

say X stock is @ $50

Y stock @ $5

Rules say buy 1000 shares of $50 stock. Another $1 pop is not unreasonable in a stock that is $50, so you make $1000

Y stock on the other hand, you bought 1000 shares @ $5, a $1 pop after it has already gained, say 10%, seems improbable. Say it only gains .20, which is still a 4% gain, but you clear only $200

What I am suggesting is doing it so each stock is weighted equally percentage wise. For example, if you had 100K, and you had 10 stocks, do $10k in each.

Not poking at your method, its just a suggestion. Obviously it will yield different results. Now whether they are profitable or not, I have no idea..
 
I, personally have about 90k in cash in my scottrade account.

You should have somewhere between 25k and 50k in cash to trade this method. With this cash you get 4x that amount to trade with or 100k-200k.

Today, I have made $3000 and am a very happy camper folks!

I would be up close to $5000 right now, but I am happy to have hit the 3k.

What do you think of my method?

NVL was AWESOME today.

As I said earlier. Notice that the winners of the list far outweigh the losers. NTY is a loser yes, and so is KND, but look at NVL and IRF and WFR.
 
Rich - interesting, simple strategy. You could easily sell this out there to the general public! lol.

Thanks for sharing. I don't trade stocks, but this is one method that could provide a possibility there.
 
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