I’m using what has worked in forex and now am starting in stocks. Today I made my first purchase of Alon (ALJ). Here is what I am looking at:
I made my first purchase at $8.20. My second order is at $6.75. My third order is at $4.67 and my 4th order is at $2.22. All orders are limit GTC.
If the current swing low holds then I’m looking at exiting around $13.50. For which stocks to select I am using a screener: http://finviz.com/screener.ashx?v=111&f=fa_div_o5,sh_avgvol_o300,sh_price_u10. The stock has to have a dividend yield of 5%+ and I am only looking at taking longs. The reason why is I am using the daily chart and while I am waiting for the stock to make it’s move I might as well get some free money from the dividend payouts since these moves can take over 3 months. I’m also looking for stocks with an average volume of 300k+ so there is plenty of liquidity. Right now I’m looking at stocks under $10. As my account increases I’ll raise the limit on the stock price.
An interesting dynamic that stocks have which doesn’t come into play in forex is that since this stock is so close to zero I only have a couple of entries based upon my fib extensions to get in. Normally I would have 10 different limit orders waiting to get filled.
The charting platform I am using for stocks is Think or Swim. It’s easy to find the different stocks but one feature I wish it had that Ninja Trader has is hot keys. That way I can press CTRL + Space Bar to have the fib retracement tool pop up and not have to go manually select it each time. MT4 has this same issue as well.
