Follow the Leader

I know, it's kind of a strange title and could be dangerously misleading. So you want to know what I mean? Well one of the things that I have noticed over the years is that some stocks have a giveaway charachteristic when they are about to make a short term intraday move. It is not always true but I have found if I follow this signal and use a tight stop for the downside that I can book alot of wins.Here is how it works. You are watching a particular stock, let's say that it's YHOO. You see that the numbers coming across for the last couple of trades are above the ASK. Well, a time or two that can just be an out of sequence trade. If it happens more than that it's time to get serious. What is usually happening then is that someone is leading the stock higher. For whatever purpose they know that if the break that tehnical barrier that most likely the stock will rise. It might only be an eighth or a quarter, but that can be a nice quick bit of "bankage". Sometimes it can signal a move of a couple of points. That is an excellent intraday payday. How do you know if it's just an out of sequence trade, a nasty market maker taking advantage of a late market order or a case of someone leading a stock higher? Well the only way to get an advantage there is to really become familiar with a few particular stocks. You have your scans to look for various trends but if you have a few that you know intimately you can add this weapon. Stocks have a certain way of reacting to various stimuli. If you know that a stock will move when it's lead then you can profit from it.

You can't always count on it working out so always use a tight stop when you use this technique. a tight stop will get you out and let you try it again. begin to chart and follow the quote patterns of two or three stocks that have good liquidity and will move multiple points intraday, everyday.You will begin to notice lots of consistent patterns in their everday trading.Use these to your advantage.You can play follow the leader and pick up some bankage. Again, you have to use a tight stop so taht if you get faked out and the stock is not being led, you won't get trapped. Unscrupulous operators will raise one a little to satisfy they uptick rule for shorting and get their short in place. Then look out, the stock is gonna take a quick beating. The tight stop will help you avoid that trap.

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