Strategy

I buy stocks that made new high recently on strong momentum, went through tight consolidation, and are breaking out again.

Swing Trading

Rules for buys:

1. On Day 1 (within the previous 5 trading days), the stock must do all of the following:

• Made a 52 week high, historical high is even better.
• Day 1's range was the largest in the previous 10 trading days. A gap up is even better.
• The stock closed near its high of the day.
• stock released news that had significant impact on future earnings.

2. Stock consolidated after Day 1, never breaking below the low of Day 1.

3. Today the stock must do all of the following:

• Makes a new high, the first new high after consolidation.
• Today's range must be larger than all the consolidation days.
• Today's close must be near its high of the day.

4. Buy tomorrow on an opening range breakout (ORB) to the upside.

5. The stop is at 5% loss.

Day Trading

Rules for buys:

1. Today the stock did all of the following:

• Made a 52 week high, historical high is even better.
• Today's range was the largest in the previous 10 trading days. A gap up is even better.

2. Buy tomorrow on an opening range breakout (ORB) to the upside.

3. The initial stop is the low of the opening range. I use the 13 bar EMA on a 5 minute chart as trailing stop.

If a stock never breaks the trailing stop and close near the high of the day, I hold at least half of the position overnight.

Opening range breakout (ORB)

Stocks form an opening range (OR) in the first 15-30 minutes of trading. Valid ORBs often meet one or more of the following conditions:

• ORB occurs between 9:50am and 10:10am.
• Low volume in the OR and high volume on the breakout.
• OR is narrow and flat.

In my main strategies, the stock is trading at a 52 week high, it has broken out again after at least an intraday consolidation on Day 1, The stock should be in a strong industry group and it just released positive news. I have both the technical and fundamental sides working for me in the immediate short term, and the path of least resistance after the ORB is likely to be up.