Fwd: 2 Ways to Play an Early Trend

---------- Forwarded message ----------
From: Rude Awakening <rude@agorafinancial.com>
Date: Tue, Aug 19, 2014 at 7:09 AM
Subject: 2 Ways to Play an Early Trend
To: iammejtm@gmail.com

Trading without chasing... August 19, 2014     2 Ways to Play an Early Trend   Trading without chasing... How to play a bottoming stock Plus: 2 potential trades for your watch list   Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner You don't have to wait for a stock to break out to new highs before pulling the trigger... Sure, you'll come across some high-probability trades that just happen to coincide with a 52-week breakout. That's fine. In fact, it can be ideal. But as a trader, you have to face this important fact: chasing new highs is not an effective strategy. You shouldn't throw money at every stock on the market just because it's having a good day. It's reckless at best. At worst, this kind of behavior can drain your brokerage account in the blink of an eye. Today, I want to show you a couple of methods you can use to spot a stock well before it speeds to new highs. I'll also show you real-world examples detailing exactly how these set-ups can make you money. If you follow my simple instructions, you'll have the tools you need to catch a newer trend while it's developing. You'll also have two potential trades you can put on your watch list... Some traders like to get in a little sooner on some of their trades--yet they worry that this tactic can increase risk. That can be true. However, you can find stocks that are beginning to show signs of turning around. You can also catch the trend early on--without taking on unnecessary risk. Here are two setups you should look for to snag recovering stocks during the early stages of a new trend: 1. Double Bottom The name of this pattern is self-explanatory. With a double bottom, you should be looking for stocks that have found support near the same level and are pushing higher. Here's what it looks like: This example stock endured a steep downtrend. But the stock has found support at $17. Resistance is near $20. You have your buy signal if and when the stock breaks the solid blue line. "When you're looking at a big trend change like the rounding bottom, side indicators - like RSI - can be hugely valuable," our trading expert Jonas Elmerraji explains. "For instance, RSI measures momentum, which is a leading indicator. That means it'll often show a breakout itself just before the stock's price does. Keep an eye on the indicators if you want an early warning for a breakout move." You're not waiting for the stock to jump above where it was trading back in February. You're simply waiting for shares to signal that they've bottomed out and are ready to try and move higher. 2. Rounding Bottom A rounding bottom occurs when a stock slowly begins to bottom out of a prolonged downtrend. Sellers become exhausted, and buyers begin to step in and test the waters, slowly bringing the stock back to life. It's a similar concept to the double bottom. The main difference here is that the chart has more of a rounded look to it (hence the name). Here's an example: Again, you're looking at a stock that's coming out of a powerful downtrend. Note the saucer-like shape of its recovery. Your entry signals are previous resistance levels. This chart still has a lot of work to do before we can confirm that a bottom is in place--but it's on the right track. "Risk management is crucial when you're trying to catch the start of a big new trend like we're seeing in COH," Jonas says. "You need to protect against a downside move in case you're wrong. On this chart, the best place for a protective stop loss is down just below $34. If price reverses and violates that $34 level, you don't want to own COH anymore..." So, how can you put these chart patterns to work for you? And how can they improve your trading results? Jonas has the answer. Right now, he wants to help you go from zero to $10,000 in the next 36 days. And he's sitting on a watch list packed with actionable trades right now... It doesn't matter if you're a market pro with years of experience under your belt...or if you've never traded a single stock before. Just click here to get started... [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   Just one nine-digit code could speed up your retirement plans by 20 years! What NEVER to Buy at the Grocery Store World's Most Valuable Tech Companies for 21-Cents?     BE SURE TO ADD rude@agorafinancial.com to your address book.       Additional Articles & Commentary: Join the conversation! Follow us on social media:         The Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Agora Financial delivering daily email issues and advertisements. 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Jeremy Tobias Matthews