Opportunities

I like to let time be my ally instead of my enemy so here is what I look for to maximize my window of opportunity when playing the momentum game.

Knowing that buying and selling comes waves, I like to position myself so that my stocks of choice provide me with the maximum movement in the time period that the momo lasts.

 Take SKF for example currently at $131: The chart shows on my screen as having a daily range of $119-$132. That means it has the potential to pay back nice profits when you can time your entry correctly and get into the momo flow.  For the last few minutes it also has had a spread of .03 on average and today has over 20 million shares traded. That means you can enter and exit at will at the price you want without getting screwed.

You can be late on the entry and early on the exit and still make good profits.

Now compare that to something like MSFT. Currently at $19.40. The daily range is $19.25 - $19.85 spread is .01, volume 34 million so easy to get in and out as well.

So if I bought 13400 shares to invest the same amount as in SKF what has the potential to pay off a bigger chunk?

Hands down SKF. If I had shorted MSFT at the same time as I bot SKF I’d be plus  $2144. Certainly a nice profit. But currently I’m up $12400 in SKF. Almost 6 times the dollar amount in the same period of time. And who knows where it might end up today. Recent performance of something like SKF shows that $10-$40 moves are commonplace.

My trading plan dictates that I ride the momentum moves as they last long and short so you can see how 6 or 7 runs a day in large daily range stocks can pay exceptionally well.

If you are grinding out pennies when you see dollars all around you, then start looking for stocks that have wider trading ranges, small spreads and good daily volume.