First, restrict your selection to the universe of stocks that fulfill certain criteria.
Choose stocks that …
• Have a price of at least $7
• Have an average daily volume of at least 500,000 shares
Then …
STEP 1 – Identify a stock that is in an uptrend or a downtrend.
STEP 2 – For stocks in an uptrend, identify those that are experiencing a pull-back.
For stocks in a downtrend, identify those that are experiencing a pull-up.
STEP 3 – Once an appropriate candidate is identified, place a limit order to buy
(uptrend) or sell short (downtrend) the stock based on the Master Plan.
STEP 4 – Once a stock has been traded (a position opened), place a stop-loss order
to limit downside risk and place a limit order to identify the price at which
you will take profits. (Ideally, these two orders are placed together as an OCO (One Cancels Other) order; this is sometimes called an OCA (One Cancels All) order.
STEP 5 – At the end of each day, adjust the stop loss prices based on the Master
Plan.
