Momentum Stock

If I own stocks that fall into the fast moving "momentum" category, I'll be
ready to sell immediately on any upward move that comes along. This
could also be true for any type of stock that I own. If you decide to take a
small profit and the stock goes higher, don't let it bother you.

Some people call this "leaving money on the table", but not me. I call it
making a profit period, end of story! If the price falls back you can buy it
again, or you can find another stock. There's no shortage. A small profit
is always better than no profit, or worse yet, a loss.

If I own stocks that fall into the (52 week low-52 week high) category, I'll
use a different strategy. This is where the stop-loss order comes into the
picture. As I said earlier, I start thinking about selling immediately. The
stop-loss order is used to protect your profits once the stock price is up.

I put the stop-loss order in place once I'm solidly in the money. Everybody
seems to do this differently. Start thinking about doing this once you have
a good profit built up in the stock. As the stock price starts moving up, all
you have to do, is place a new stop-loss right behind the new high price.

Keep doing this right up the ladder, all the way to the peak, no matter
how high it goes. If you let the stop-loss order sit, and wait for the price to
fall back so that you stop-out, you'll miss selling at the new high. The stop
-loss allows you to ride the price up higher than you normally would.

Stocks tend to fall back to a base price in even dollar amounts. A stock
trading at a high of 3-1/2 ($3.50) might bounce back and forth between
$3.25 and $3.50 before settling down to a base price of $3.00. Enter a
stop-loss at uneven dollar amounts behind the base price. Say $2.88.

And remember! If you just can't stand the pressure any longer, you can
cancel the stop-loss and enter a order to sell your stock at the current
new high price. There's nothing wrong with protecting your profits. Using
stop-loss orders is like having "profit insurance".

When I look for stocks that trade off their 52 week low I want to pick the
one's that move up as much as 100% or more. If the stock has a history
of falling to a 52 week low of $1.00 a share, then I also want it to have a
history of 52 week highs that average $2.00 a share or higher.