Without a doubt one activity that many professional traders share is that they get to know their friends. Stock friends, that is. One of the most valuable things that we have learned over the years is how important it is to become familiar with the behaviour of your stocks. For example, you have been watching stock HCPG for a break of 50 for over a week, 50 representing new highs. For days you have followed the stock approach 50 from different angles, with different volumes, at different times of the day, only for it to be rejected near the buy point. The next day HCPG is sitting at 49.5 in a flattish market. Then, however, you notice the way she starts to climb up towards 50 this time is somehow different -- this time you know that most likely it will successful. How do you know? Because you have become familiar with your friend and you note a behavior change. At some levels it has to be sub-conscious; if a buddy sitting beside you asks what exactly was different, often it's difficult to pin down. But from our own experience, we have no doubt how well it works.
This is the reason that we also place stocks whose patterns are not completely formed or are too far away, in the "secondary list" of our newsletter; so that subscribers can start watching them days before and familiarize themselves with the stock's behavior. It is also the reason we like to stick to a core group of stocks, around 200 of them, instead of scanning each night through a 1500 stocks looking for patterns. As a rule we never trade a stock that we are not familiar with. If there is a new stock that is gaining attention from momentum traders, we immediately add it to our core group of stocks so that it too can become our friend.
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