"Jens, the coaching humbled me, because I have been working in the industry a long time. Being with you was the first time that I really got to hear 'first hand' how day traders think. I've found there are many misconceptions that I built up over the years that I must now change
ó or I wonít be successful. Thank you for everything."
Step 1 - Pull up a Weekly chart of the stock.
Step 2- Look for a BULLISH HARAMI resting on MINOR PRICE SUPPORT, and/or a rising Major Moving Average (10 MA, 20 MA, or 50 MA) on the Weekly chart.
Step 3 - Pull up a Daily chart of the stock. Note that the Harami pattern formed on the Weekly chart is made up of 5 individual daily candlesticks.
Step 4 - Look for consolidation of the last 3 or 4 daily candlesticks at the high price of the week. This consolidation line represents an area where the stock takes a rest before resuming it's uptrend. The objective is to enter the stock just before the next big upward move.
Step 5 - Enter the stock only if it breaks 1/8th above the area of consolidation line. This will often correspond to the high price of the week. If the stock does not break through the area of consolidation, DO NOT ENTER THE TRADE.
Step 6 - Mark off the 50% retracement line. This will be the halfway point between the line of support where the stock began it's rally, and the line of resistance where the stock made it's last major pull-back.
Step 7 - After entry, place an initial protective stop 1/8th below the low price of the previous day's candlestick. Sell the stock immediately if the stock breaks below this price.
Step 8 - On each new day, adjust the trailing protective stop to 1/8th below the previous day's candlestick's low price. Continue to use a trailing stop as long as the stock remains below the 50% retracement line.
Step 9 - After the stock has broken above the 50% retracement line, look for a reversal candlestick. This will most likely be a bearish candlestick which closes near it's low price of the day. Sell the stock for profit either before the market close, or at the market open the next day.
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Sunset Capital Management Ann Arbor, Michigan