If you want to know how to identify and buy a really fast moving stock and also how to hold it for the big wins then I would strongly urge you to buy How to Make Money in Stocks by William J. O’Neil. At the beginning of this book there are over one hundred charts of stocks that were the biggest winners in the history of the stock market. Looking at these charts, studying them, and reading O’Neil’s notes will show you how to hold these monsters as they run up 25%, double, triple, and some even increase by 1000% or more over a few years. These are charts of the best and fastest growing companies in history they are not penny stocks or junk off the bottom companies. This is the bible for stock market operators that condenses O’Neil’s life time of study for what really works in the stock market.
Here are the keys to finding and trading monster stocks to earn unbelievable profits.
Monster Stock fundamentals:
- Outstanding sales and revenue growth. (Triple digits are the best.)
- Strong and accelerating earnings growth for many straight quarters.
- New innovative products that are the best in class.
- High rates of return on equity (ROE)(Greater than 17%)
- Share price over $15 a share stay away from cheap junk stocks.
- Only buy in an overall up trending market.
- Only buy stocks that have sound price action and respect key moving averages. (5 day ema-10-50-200 day sma)
- Buy stocks in up trends that are with in striking distance of their 52 week highs or better yet all time highs at break outs in price
- Buy at the break out from a cup and handle chart pattern.
- Sell when it is time, do not stay in when the price falls through key moving averages.
- Sell the stock if it drops more than 7% from your entry point.
- Do not risk more than 1% of your total trading capital on any one trade.