The easiest trades to manage are the ones that work immediately.
After all, if your position is always in the green, there’s no panic.
You’re not stressed. And your account balance is growing.
But how do you know whether to sell or hold on to what could be a big winner?
As always, nothing is foolproof. But there are signs that a stock has more room to run.
So if you’re looking for home-run stocks, it pays to know what they all have in common…
Follow-through After a Breakout
A strong breakout day is a very good way to start a trade.
But if the price keeps climbing for several days, that is an ever better sign.
More Up Days Than Down Days
This one is simple…
Count the number of days the stock is up versus the number of days when the stock is down.
If you’re swing trading, count up weeks versus down weeks.
More Volume on Up Days Than Down Days
Watch the volume, too…
You want to see high volume on up days, as it shows big participation on the buy side and lower volume on the down days.
Again, if you are swing trading, compare volume on up versus down weeks.
Tennis Ball Action
Any time a stock pulls back (which is natural, by the way), I watch the stock’s reaction.
Is it acting like a tennis ball or an egg?
Tennis ball action will result in a quick bounce back to back to recent highs.
An egg, on the other hand, will “splat” and fail to rebound.
I give a lot more weight to where a stock closes the day than where it opens.
You want to see the stock closing the day or week in the upper half of the candle.
This is a signal that bulls are winning the battle and a big winner could just be getting started.
The Bottom Line
These five metrics should help you determine whether or not you are holding a winning stock.
I hope you have some of them in your portfolio…
But if you are not seeing most of these metrics, you may want to consider taking profits early.
Embrace the surge,
Editor, Stock Surge Daily