Things You'll Need:
- Faith
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Step 1
RenaSola is a recent winner.THE 7 LAWS OF HARMONIC STOCK TRADING
"There is nothing to it. You only have to hit the right notes at the right time and the instrument plays itself." Johann Sebastian Bach, composer
THE LAW OF LEAST EFFORT - Flow with the trend.
THE LAW OF SURRENDER - Faithfully follow a stock's "TAO."
THE LAW OF ALIGNMENT- Be in harmony with the markets.
THE LAW OF POTENTIALITY - Trade absolute strength.
THE LAW OF EXPECTANCY - Expect to gain more than you risk.
THE LAW OF VISUALIZATION - See the trade before you make it.
THE LAW OF ATTUNEMENT - Trade the "middle-ground," never the extremes.
By following these seven laws you will be in alignment with the forces that move the markets and individual stocks. -
Step 2
Buy only during strong markets.THE LAW OF LEAST EFFORT - Flow with the trend. BUY ONLY WHEN THE STOCK IS TRADING ABOVE IT'S 20-DAY MOVING AVERAGE. Notice how the 20-day line becomes "support" as the stock moves higher.
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Step 3
The "TAO" (gold line) is draw this way.THE LAW OF SURRENDER - Faithfully follow a stock's "TAO." The "TAO" is an ancient Chinese concept that translates as the "way," "path," or "route," to the true nature of things. To trade a stock, simply follow its "TAO." See our related article on "How to draw a TAO trend line.
BUY ONLY WHEN THE "TAO" IS IN AN UP-TREND -
Step 4
Watch the Nasdaq closely.THE LAW OF ALIGNMENT - Be in harmony with the markets. The great majority of stocks follow the direction of the leading indexes (Nasdaq, S&P 500, Dow). If you buy only when the markets are heading higher, your odds of success improve dramatically.
Here's a simple technique that will always keep you in harmony with the markets: BUY INDIVIDUAL STOCKS WHEN THE NASDAQ IS TRADING ABOVE IT'S 20-DAY MOVING AVERAGE. -
Step 5
CSX and KSU are the profit and price leaders.THE LAW OF POTENTIALITY - Trade absolute strength. Strong stocks tend to get stronger. Legendary trader Jesse Livermore, who made over $100 million during the 1920's recognized that the markets are led by a small number of powerful stocks. Companies that dominate their field and have explosive profits from a hot new product or service or from changing conditions. Big winners from the past include U.S. Steel, RCA, Xerox, Boeing, IBM, Amgen, Microsoft, Charles Schwab, Cisco Systems, Home Depot, Google, Yahoo, Ebay, Apple, etc.
Here's a simple rule that will lead you to the strongest stocks. LOOK FOR STOCKS WITH EARNINGS UP 70% OR MORE IN THE MOST RECENT QUARTER -
Step 6
The TAO is now in an uptrendTHE LAW OF VISUALIZATION - See the trade before you make it. The "buy point" is triggered the moment the TAO line makes a new high like in this chart.
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Step 7
Risk / Reward is essential to trading.THE LAW OF EXPECTANCY - Expect to gain more than you risk. Make sure that the profit you expect to make ("profit target" minus your "buy price") is always more than the amount you are risking (your "buy price" minus the "stop loss").
You typically do not want to risk more than 5-6% on any trade. The lower the better. -
Step 8
Stochastics are easy to use.THE LAW OF ATTUNEMENT - Trade the "middle-ground," never the extremes. "Stochastics" measure if a stock is "Over-Bought" (over 70) or "Over-Sold (under 30)." BUY ONLY WHEN STOCHASTICS ARE MOVING UP AND NOT OVERBOUGHT. Learn more about Stochastics in our other articles.
Comments
Gardengates said
on 8/20/2008 Fascinating stuff!