How to identify trading opportunities when analysing a stock

By ,

Money Morning

[Click on the picture to watch Murray analyse a company that has just popped up on his quarterly scan. You will learn how to find compelling trading opportunities using pivots to define shifts in momentum.]

In today’s video update, I give you a comprehensive technical view of a stock that is trying to turn the corner after a few years of weakness. It is a great example of how I use the buy and sell pivots to outline large shifts in momentum.

The cornerstone of an effective trading strategy is defining exactly where you are proven wrong and making sure your stop loss is below that level. You want to be proven wrong as quickly as possible so that your risk/reward on the trade is as high as possible.

For example, if you can only risk $1,000 on each trade that you make, the size of the position you put on will be decided by the size of your stop loss. If you have a strategy, that means you can be proven wrong by a 10% fall in the price of the stock, you can buy $10,000 worth of that stock because 10% of $10,000 is $1,000, which is the amount you are willing to risk on the trade.

Download your FREE report by clicking here and discover three Aussie fintech companies flipping the industry on its head.

Hunting a shift in Momentum

If your strategy isn’t proven wrong until the price falls 50%, then you can only buy $2,000 worth of the stock.

Your outcomes are intimately tied to your ability to work out exactly where you are proven wrong. You want to enter a stock as close to that level as possible so that you can leverage up the size of your position.

The stock I analyse for you today came up on my quarterly scan and I haven’t had a chance to do a detailed fundamental analysis yet, so this is not a recommendation to buy, but is instead a useful case study for you.

You will see how I define waves using quarterly buy and sell pivots. Calculations are then made based on the waves to search for good risk/reward entry points, and targets are based on retracements of the waves.

Using mean reversion to help you to become free carried on a trade as quickly as possible is the name of the game, and from there you just sit back and hope for the best.


Murray Dawes,
Editor, Alpha Wave Trader

PS: Download your free report to learn the four hottest AI and Automation stocks on the ASX right now. Plus, you’ll receive a free subscription to Money Morning. Click here to download.

About Murray Dawes

Murray Dawes is the Editor of Pivot Trader and contributing Editor at Money Morning. He was one of five, from 5,000 applicants, chosen for a graduate position with the Swiss Banking Corporation — now part of banking giant UBS. The bosses quickly cottoned on to his potential and pushed him…

Bubs Announces $68 Million Capital Raise

[ASX:BUB] is rattling the can to raise $68 million to support ‘growth opportunities.’

Is Stock Analysis Worth It? Finding Your Investment Edge

Is stock analysis worth your time? The question boils down to a key academic topic: market efficiency.

Bubs (ASX:BUB) Shares up on US Supply Deal Update

Infant nutrition producer Bubs Australia [ASX:BUB] came out with another supplier update today, signing supply agreements with two more US retailers.

NeuRizer [ASX:NRZ] Shares Soar on $1.5 Billion Binding Offtake

NeuRizer [ASX:NRZ] opened 35% higher on Monday after announcing a binding $1.5 billion offtake agreement with Daelim.

Electric Car Demand Is in Overdrive

With the way things are shaping up between automakers, EVs are quickly becoming a hot commodity. And I’m not just talking about Tesla here.

[WATCH] Closing Bell — In the Eye of the Storm

It’s a sea of bad news out there at the moment. Equities have cracked and they are continuing to drift lower.