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EDUCATION


Active-Investor Tutorial On Preparing A Watch List
Active-Investor Tutorial On Placing Orders
Active-Investor Tutorial On Exiting Trades
CBOE Tutorial On Covered Calls
Investment Glossary
Other Educational Material Is Available At Our Bookstore

 

 

 

 

 

 

 

 

 

 

Active-Investor Tutorial On Preparing A Watch List

 

There are as many different ways to trade the Active-Investor system, as there are members to the service. However the main purpose is not to pick winning stock trades for you. The goal has always been to narrow your investment focus for the trading day. Below are a few guidelines you may want to consider when trading the system.

  • Review the Daily Comment page each morning. Is an up market expected today? If so, the Bullish Stocks page may provide the best trading ideas for the day. Is a down market expected instead? If so, the Bearish Stocks page may provide the best trading ideas for the day. Are large caps expected to be outperforming small caps? If so, the Stock Splits page may provide good trading ideas for the near term. Are small caps expected to be outperforming large caps? If so, the Covered Calls page may provide good trading ideas for the near term.


  • Review the Bullish Stocks and Bearish Stocks tables each morning. These are usually updated by 8:00am every trading day and almost always by 9:00am. Does the Target Price meet your return requirements? Check the historical charts on the picks using the links provided to Big Charts. Do you like the chart? Does the trading volume for the company meet your requirements? Check the company fundamentals using the links provided to Zack’s. Would you trade these stocks even if the technical indicators were not firing a trading signal? Also, always be sure to keep in mind the industry sector the company belongs to.


  • Review the Indexes page each morning. Are any of the companies you are considering on the Bullish Stocks table also part of an Industry Sector with a buy signal? Are any of the companies you are considering on the Bearish Stocks table also part of an Industry Sector with a sell signal? By now, you have probably narrowed your watch list for the day down to 1,2 or 3 companies and Active-Investor.com has done its job. Remember our main purpose is to narrow your investment focus for the trading day. Following 3 stocks each day is much easier than following 10,000 stocks!


  • Stocks can remain on your watch list for more than one day. Many of the technical signals are leading indicators, meaning that the actual move in the stock price may take a few days to develop. Do not hesitate to trade ideas 2 or 3 days after the stocks were originally profiled. Some of your most profitable trades can be made this way. These will not, however, make the Model Portfolio. Be sure that the stocks are still generating the appropriate buy/sell signal. Active-Investor provides a listing of stocks with current technical signals at the bottom of the Bullish Stocks table and Bearish Stocks table.

This may sound like a lot of work and time. Actually, after you become comfortable with the system, the whole process should take less than 15 minutes. We strongly suggest that you paper trade the system until you feel comfortable with it. Some members become comfortable with the system by the end of their two-week free trial period. Others paper trade the system for several months before using real money. Always remember there is no "sure thing" when dealing with the stock market. You will lose money on some trades! If you can’t deal with this fact, you shouldn’t be trading stocks! Active-Investor’s goal is to give you an edge over other traders in the market.

 

Active-Investor Tutorial On Preparing A Watch List

Active-Investor Tutorial On Placing Orders

Active-Investor Tutorial On Exiting Trades

 

 

 

 

 

 

 

 

 

 

 

Active-Investor Tutorial On Placing Orders

 

Now that Active-Investor has provided you with a manageable watch list for the day, it is time for you to go to work. You’re already ahead of 99.9% of all investors. But what’s next? You guessed it, placing your orders.

  • First of all, never place your order before the market opens and if at all possible never place a market order. These are errors typically made by inexperienced stock market players who get over-zealous in their desire to buy or sell a particular stock.


  • After the market opens, you will have a good sense of where it is headed. Did the Daily Comment predict the market’s direction for the day? Take a look at the stocks on your watch list. Did any of them gap open? If so, you will need to decide if they are worth chasing. Chances are they are not. Most would prefer missing the entire trade to chasing a trade that may have already made its major move. There will always be another trade tomorrow. Always remember, "Missed money is better than lost money!"


  • You will now place your order with your broker. You will probably not have the time to sit in front of your computer screen and follow the stocks on your watch list tick by tick. If you do, great! There are many great pager services offering stock alerts that can make following the stocks on your watch list easier. Chances are, however, that you will need to place a "Buy Stop Order" with your broker. A buy stop order instructs your broker to buy a stock once a specific price objective has been met. Not all brokers can do this, so try to find one that can.


  • Make sure you place your order at an entry point that confirms buying or selling pressure on the stock. Usually a move over 1/8 is sufficient to confirm the price movement for more aggressive investors. But investors use different parameters for their entry points depending on their risk tolerance and the price of the stock in question.


  • Also never put more than 10% of your investment capital into any single trade. Active-Investor is a very aggressive investment system. With this aggressiveness not only comes a potential for greater profits but also added risk. Making sure your portfolio is well diversified will help reduce this risk. What is really being said is, "Don’t get crazy and bet the kids’ inheritance on a single trade."

It is strongly suggested that you paper trade the system until you feel comfortable with it. Some members become comfortable with the system by the end of their two-week free trial period. Others paper trade the system for several months before using real money. Always remember there is no "sure thing" when dealing with the stock market. You will lose money on some trades! If you can’t deal with this fact, you shouldn’t be trading stocks! Active-Investor’s goal is to give you an edge over other traders in the market.

 

Active-Investor Tutorial On Preparing A Watch List

Active-Investor Tutorial On Placing Orders

Active-Investor Tutorial On Exiting Trades

 

 

 

 

 

 

 

 

 

 

 

Active-Investor Tutorial On Exiting Trades

 

Knowing when to buy is only half the battle of becoming a successful trader. Knowing when to exit a trade is equally important.

  • One of the hardest things to realize as a new trader is to never get emotionally attached to a stock.


  • After you enter a trade, always place a stop loss order. We suggest you place your original stop loss at ˝ point from your entry price. You can put your stop loss any place you feel comfortable with but never lose more than 10% on any one trade. This strategy will help you avoid getting caught in a Bear Trap or a Bull Trap and losing your shirt.


  • Never let an unexecuted trade languish for more than 5 trading days. If you enter a trade and the trade does not develop after 5 trading days, exit the trade. There are too many good trades out there to get stuck in a nonmover. Low commission rates, especially those offered by online brokers, have made this technique possible.


  • It is suggested that you place a breakeven stop loss once you have attained a ˝ point profit on your trade. Make sure you use the bid price on stocks you are long and the ask price on stocks you are short to determine where to place your breakeven stop loss. This step can help reduce your number of losing trades dramatically.


  • Consider taking some money off the table once your trade has produced more than a 1 point profit. Active-Investor suggests you sell ˝ your position at this point in your trade. Also place a breakeven stop loss on the remaining ˝ of the trade. If your trade makes it to this point, you are guaranteed a profit. This one little step guarantees you of not letting a winning trade turn into a losing trade.


  • At this point, the pressure is off and the trading becomes fun. If the trade continues to move in your favor, simply adjust your stop loss for every ˝ point move in the stock. Some brokers will place a trailing stop loss on the trade for you. Others will require you to do this step manually. Now just sit back and watch your profits grow and grow and grow. This step will help maximize your returns.

Simply put, the Active-Investor.com trading system is a powerful tool for Active Investors. It is strongly suggested that you paper trade the system until you feel comfortable with it. Some members become comfortable with the system by the end of their two-week free trial period. Others paper trade the system for several months before using real money. Always remember there is no "sure thing" when dealing with the stock market. You will lose money on some trades! If you can’t deal with this fact, you shouldn’t be trading stocks! Active-Investor’s goal is to give you an edge over other traders in the market. Good luck and happy trading!

 

Active-Investor Tutorial On Preparing A Watch List

Active-Investor Tutorial On Placing Orders

Active-Investor Tutorial On Exiting Trades

 

 


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