Hire some trading clerks to watch your stocks. Here’s how, using Netease (NTES) as an example.
Discussed in this article: NetEase Inc. ( $NTES )
I want to look at NetEase ( NASDAQ:NTES ) today. Yesterday the stock was up big when they announced a joint venture with China Telecom ( NYSE:CHA ) to create an instant messaging application. You can see how the stock really ramped during the day and I had mentioned in the forum at around 2:30, that it was up but it was testing resistance, so it was really not anything that I was interested in buying at that time.
Lets break this down into an intraday chart. This was yesterday here on a 15-minute chart but let’s go further down to 5-minutes. This was what I was talking about, the stock had run up here and really printed a high; again we’re talking intraday here, at this level we’ll call it 69.25 and then the stock just really trickled down towards the end of the day and was really in my view not worth buying.
If you want to trade this type of thing in the future what you don’t want to do is forget about it. Now, I didn’t make this trade so I don’t want you to think that I did, I just have other things going on. But when you see a trade like this that you just for whatever reason you think, okay, well this could be a nice trade but not right here, not right now, it’s just not working.
Don’t let that trade out of your site. Just set a price alert and I think the tactic here would have been, look you can see here the high was 69.48 so let’s say you set price alert at $70.00. You’re not going to get all of this trade because the stock gapped up from the close and just kind of continued to move up.
If you’re trading it pre-market or you’re seeing what’s happening that’s fine, but you know you’re going to at least have this stock brought to your attention, you drag a line across here, so maybe it’s not 70.00, maybe it’s 69.00 or whatever, but the bottom line is you have to identify key levels of resistance and set a price alert; you can do them for free, Yahoo Finance, or you can do them with your broker, I know your broker’s software platform has price alert features, and then you have a stock drawn back to your attention.
I’ve done that with Netflix ( NASDAQ:NFLX ) recently, the stock just broke out today, though there were several other price alerts that you could have set along the way. You can do that for a lot different stocks, for example, let’s just look at Apple ( NASDAQ:AAPL ). Let’s say you believe, and I think we’ve got kind of short-term trading top here, but let’s say you really believe Apple’s ( NASDAQ:AAPL ) just getting started and the stocks really going to start screaming higher.
So you go ahead and set your price alert for up here, set it for the high of 513.74. You set a price alert for 510.00, you’re not going to be drawn back to the stock until it crosses back above here, at which time you’d say, “Okay, well our pullback is over, I want to take a position in this stock.” That is one price alert, then the other price alert that you can set would be a price alert down here at say 490.00, and then another one down at 480.00.
What you’re really doing is you’re bracketing the price, it’s like you’ve got a trading assistant who you instructed to watch various levels and you only want them to notify you if any meaningful levels are hit. This way you can really expand your horizon, you can expand the number of stocks that you’re watching and I’ll leave you with that.
However, I do want to say one thing and this is really important; don’t watch too many stocks. It’s really easy to flit around from one thing to another, from this one to that one, whatever is in the news, and what you’re not really thinking about is the fact that stocks only make news after they’ve moved.
They don’t make the news where you’ve got someone on CNBC or it’s posted on the home page of Yahoo Finance or whatever. Such-and-such a stock is about to move, its really boring right now but why don’t you watch it over the next couple days? You don’t see that, so if you’re trading the news all the time you are necessarily late, you’re just late, so I don’t want to do that.
Have a finite number of stocks that you’re going to trade and you’re going to watch. You can switch from time to time if something is not working, or it’s boring, or whatever. But use these price alerts to help you keep track of things. But don’t go nuts because you can wind up over trading and that does only one thing that’s good, and that is make your broker more money.