Permission To Trade

Once you have developed, discovered or adopted a reliable trading method the burden of successful trading shifts to selecting favorable underlyings and following the rules of the method. With 40,000+ symbols to choose from the selection process is no mean task. Some people avoid the potential enormity of the selection process by focusing all their attention on one or a handful of symbols. That’s OK too but unless you have the skills, the time and the temperament to daytrade your handful the really good trading opportunities will be few and far between.

We are swing traders. We expect to hold a position from a few days to a few weeks. You can divide swing trading into two categories: One category is Campaign Trading where you grab onto an underlying at a major turn, like happened for many stocks in January and February, and swing trade the same underlyings in and out for the duration of the campaign. If done well a swing trader could pull multiples of the actual move in a Campaign Trade.

The other swing trading category is to grab Targets of Opportunity across currently attractive sectors and industries (gold miners and oil exploration for the recent past) and ride them for the points from entry to the counter signal.

No matter how you swing trade you have to have a way to quickly and reliably narrow the field to the best possible candidates. Here’s how we do it with Options Master Chartist.

For the example we used Stockcharts.com to scan for symbols of optionable stocks/ETFs that have 1,000,000 share volume and an Average True Range (ATR) of 3+. We then ran that symbol list through OMC’s Permission-To-Trade routine. That gave us lists of stocks that were trending Bull or Bear.

We could then copy and paste those Longs and Shorts lists into the OMC watchlists and run a front page or an indepth analysis on them. A quicker alternative is to Candlescan the Longs and Shorts for candlestick trading signals.

In just a few minutes we were able to sort through 1000s of stocks to find 3 liquid fast movers with active candlestick signals. Now we can spend more valuable time evaluating the trade itself instead of rotating through dozens or maybe even hundreds of individual charts.

The Permission-To-Trade routine will really begin to pay for itself at the next major industry group turn. Right now many tech stocks and airline stocks are at or near February lows. At some time in the future, be it days or weeks, these beat down stocks will be accumulated by Big Operators and marked up for big profits. It happens endlessly. Permission-To-Trade will tell us when it’s time to jump on board for the Campaign Trade.