One stock trading strategy


One of history's most reliable stock-trading strategies is struggling.


Buy low, sell high. It's a classic adage — one that has helped stock investors reap consistent gains for the better part of seven decades.


Having returned 5% on average each year from 1940 through 2007, the so-called value trade has lost 2% per year over the past decade, according to Goldman Sachs data. It's down 10% this year alone, badly lagging an S&P 500 that has climbed 8.7%.


The decline of the value strategy has mirrored the rise of passive investing and quantitative trading. Total assets in performance factor-based exchange-traded funds have quadrupled in the past five years, approaching $600 billion earlier this year, while quants now manage more than $1 trillion, Goldman says.


These methods are less sensitive to valuations than traditional active management. Rather than simply loading up on the cheapest stocks and cutting the cord on expensive ones, they're more agnostic toward price, which has made it more difficult for the value strategy to function as it has.


Another explanation Goldman offers for the flagging value trade is that we're in the late innings of the current economic cycle, a period normally characterized by subdued gains for the strategy. It argues that because investors are increasingly worried about a stagnating economy, they've been hunting for growth, not value.


Further, the narrow distribution of stock valuations at the end of the last economic cycle "helped set the stage for the exceptionally poor returns to value during the subsequent decade," Goldman says. That boosted the valuation of the strategy, capping its future upside.


So is this the end of the value trade as we know it? Goldman doesn't think so, despite its recent struggles. After all, the value strategy is highly cyclical — it has just been trapped in a particularly vicious part of that cycle for longer than usual.


"As long as humans make investment decisions, we believe value will continue to be a good long-term investment strategy," a group of Goldman equity strategists led by Ben Snider wrote in a client note, "though returns may be harder to capture in the future than they have been in the past."


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Day Trading Strategies for Beginners.


Day trading – the act of buying and selling a financial instrument within the same day, or even multiple times over the course of a day, taking advantage of small price moves – can be a lucrative game. But it can also be a dangerous game for those who are new at it or who don't adhere to a well-thought out method. Let's take a look at some general day trading principles and common day trading strategies, moving along from basic tips you need to know to advanced strategies that can help you learn how to day trade like a pro. [If you're looking for a more in-depth option, Investopedia Academy has a three hour video course taught by a 30-year veteran of the industry.]


Day Trading Tips You Need to Know.


Not just knowledge of basic trading procedures, but of the latest stock market news and events that affect stocks – the Fed's plans for interest rates, the economic outlook, etc. Do your homework; make a wish list of stocks you'd like to trade, keep yourself informed about the selected companies and general markets, scan a business newspaper and visit reliable financial websites on a regular basis.


Assess how much capital you're willing to risk on each trade (most successful day traders risk less than 1-2% of their account per trade). Set aside a surplus amount of funds that you can trade with and are prepared to lose (which may not happen) while keeping money for your basic living, expenses, etc.


Day trading requires your time – most of your day, in fact. Don’t consider it as an option if you have limited hours to spare. The process requires a trader to track the markets and spot opportunities, which can arise any time during the trading hours. Moving fast is key.


As a beginner, it is advisable to focus on a maximum of one to two stocks during a day trading session. With just a few stocks, tracking and finding opportunities is easier.


Of course, you're looking for deals and low prices. But keep away from penny stocks. These stocks are highly illiquid and chances of hitting a jackpot are often bleak.


Many orders placed by investors and traders begin to execute as soon as the markets open in the morning, contributing to price volatility. A seasoned player may be able to recognize patterns and pick appropriately to make profits. But as a newbie, it is better to just read the market without making any moves for the first 15-20 minutes. The middle hours are usually less volatile while the movement begins to pick up towards the closing bell. Though the rush hours offer opportunities, it’s safer for beginners to avoid them at first.


7) Cut Losses with Limit Orders.


Decide what type of orders you will use to enter and exit trades. Will you use market orders or limit orders? When you place a market order, it is executed at the best price available at the time; thus, no “price guarantee.” A limit order, meanwhile, does guarantee the price, but not the execution. Limit orders help you trade with more precision wherein you set your price (not unrealistic but executable) for buying as well as selling.


8) Be Realistic About Profits.


A strategy doesn't need to win all the time to be profitable. Many traders only win 50% to 60% of their trades. The point is, they make more on their winners than they lose on their losers. Make sure that the risk on each trade is limited to a specific percentage of the account, and that entry and exit methods are clearly defined and written down.


There are times when the stock markets test your nerves. As a day trader you need to learn to keep greed, hope and fear at bay. Decisions should be governed by logic and not emotion.


Successful traders have to move fast – but they don't have to think fast. Why? Because they've developed a trading strategy in advance, along with the discipline to hold to that strategy. In fact, it is far more important to follow your formula closely than to try to chase profits. There's a mantra among day-traders: "Plan your trades, then trade your plan."


Day Trading Like a Pro: Deciding What to Buy.


Day traders seek to make money by exploiting minute price movements in individual assets (usually stocks, though currencies, futures and options are traded as well), usually leveraging large amounts of capital to do so. In deciding what to focus on – in a stock, say – a typical day trader looks for three things: liquidity, volatility and trading volume.


Liquidity allows you to enter and exit a stock at a good price (i. e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the expected price of a trade and the actual price). Volatility is simply a measure of the expected daily price range—the range in which a day trader operates. More volatility means greater profit or loss. Trading volume is a measure of how many times a stock is bought and sold in a given time period (most commonly, within a day of trading, known as the average daily trading volume - ADTV). A high degree of volume indicates a lot of interest in a stock. Often, an increase in the volume of a stock is a harbinger of a price jump, either up or down.


Once you know what kinds of stocks (or other asset) you are looking for, you need to learn how to identify entry points – that is, at what precise moment you're going to invest. There are three tools you can use to do this:


Real-time news services. News moves stocks; subscribing to such services tell you when potentially market-shaking news comes out. ECN/ Level 2 quotes . ECNs are computer-based systems that display the best available bid and ask quotes from multiple market participants, and then automatically match and execute orders. Level 2 is a subscription-based service that provides real-time access to the NASDAQ order book composed of price quotes from market makers registered in every NASDAQ-listed and OTC Bulletin Board securities. Together, they can give you a sense of orders being executed in real time. Intraday candlestick charts. Candles provide a raw analysis of price action. (More on these later.)


Day Trading Like a Pro: Deciding When to Sell.


Before you actually jump into the market, you have to have a plan for getting out. Identifying the point at which you want to sell an investment is called Identifying a price target. Some of the most common price target strategies are:


In most cases, you'll want to exit an asset when there is decreased interest in the stock as indicated by the Level 2/ECN and volume.


Day Trading Pro Tips: Charts and Patterns.


Previously, we mentioned three tools for determining entry points – that is, deciding the opportune moment you're going to buy a stock (or whatever asset you're trading). The most technical are intraday candlestick charts. We'll focus on these factors:


There are many candlestick setups that we can look for to find an entry point. If properly used, the doji reversal pattern (highlighted in yellow in Figure 1) is one of the most reliable ones.


Figure 1: Looking at candlesticks - the highlighted doji signals a reversal.


Typically, we will look for a pattern like this with several confirmations:


First, we look for a volume spike, which will show us whether traders are supporting the price at this level. Note that this can be either on the doji candle or on the candles immediately following it. Second, we look for prior support at this price level. For example, the prior low of day (LOD) or high of day (HOD). Finally, we look at the Level 2 situation, which will show us all the open orders and order sizes.


If we follow these three steps, we can determine whether the doji is likely to produce an actual turnaround and we can take a position if the conditions are favorable.


Day Trading Pro Tips: How to Limit Losses.


Trading on margin means that you are borrowing your investment funds from a brokerage firm. When you trade on margin (and bear in mind that margin requirements for day trading are high), you are far more vulnerable to sharp price movements. Margins help to amplify the trading results – not just of profits, but of losses as well, if a trade goes against you. Therefore, using stop-losses, which are designed to limit losses on a position in a security, is crucial when day trading.


A stop loss order controls risk. For long positions a stop loss can be placed below a recent low, or for short positions above a recent high. It can also be based on volatility: For example, if a stock price is moving about $0.05 a minute, then you may place a stop loss $0.15 away from your entry in order to gives the price some space to fluctuate before it moves (hopefully) in your anticipated direction. Define exactly how you will control the risk on the trades. In the case of a triangle pattern, for example, a stop loss can be placed $0.02 below a recent swing low if buying a breakout, or $0.02 below the pattern. (The $0.02 is arbitrary; the point is simply to be specific.)


One strategy is to set two stop losses:


A physical stop-loss order placed at a certain price level that suits your risk tolerance. Essentially, this is the most money you can stand to lose. A mental stop-loss set at the point where your entry criteria are violated. This means that if the trade makes an unexpected turn, you'll immediately exit your position.


However you decide to exit your trades, the exit criteria must be specific enough to be testable – and repeatable.


The Bottom Line.


Day trading is a difficult skill to master, requiring as it does time, skill and discipline. Many of those who try it fail. But the techniques and guidelines described above can help you create a profitable strategy, and with enough practice and consistent performance evaluation, you can greatly improve your chances of beating the odds. There is one final rule we should mention: Set a maximum loss per day that you can afford to withstand – both financially and mentally. Whenever you hit this point, take the rest of the day off. Stick to your plan and your perimeters. After all, tomorrow is another (trading) day. If you want to learn proven, profitable strategies you can start using today, from an experienced Wall Street trader, then check out Investopedia Academy's "Become a Day Trader" course.


Day Trading Strategies for Beginners.


A Beginners Day Trading Guide.


Check out my 2016 Trading Statistics.


Learn my Day Trading Tips and Techniques.


You need to understand basic day trading terminology & concepts to build your foundation. You can follow me on Youtube to get Free Education! Join the community of thousands of followers on YouTube and begin studying the free content we post on a daily basis. This is the beginning of your education. You need to study the markets, analyze charts, and learn the strategies professional traders are using every day.


A day trader is two things, a hunter of volatility and a manager of risk. The act of day trading is simply buying shares of a stock with the intention of selling those shares for a profit within minutes or hours. In order to profit in such a short window of time day traders will typically look for volatile stocks. This often means trading shares of companies that have just released news, reported earnings, or have another fundamental catalyst that is resulting in above average retail interest. The type of stocks a day trader will focus on are typically much different from what a long term investor would look for. Day traders acknowledge the high levels of risk associated with trading volatile markets and they mitigate those risks by holding positions for very short periods of time.


Day Trading with Cash vs. Margin.


Trading on Margin is when you trade with borrowed money (click here to details). For example, a day trader with a $25k trading account may use margin (buying power is 4x the cash balance) and trade as if he had $100k. This is considered leveraging your account. By aggressively trading on margin if he can produce 5% daily profits on the 100k buying power he will grow their 25k cash at the rate of 20% per day. The risk of course is that he will make a mistake that will cost him everything. Unfortunately, this the fate of 9 out of 10 traders. The cause of these career ending mistakes is a failure to manage risk.


Trading with Cash is an option, but because it requires 3 days for each trade to settle most traders will trade with a margin account but choose not to use leverage. This is a risk management technique.


All Day Trading Strategies Requires Risk Management.


Imagine a trader who has just taken 9 successful traders. In each trade there was a $50 risk and $100 profit potential. This means each trade had the potential to double the risk which is a great 2:1 profit loss ratio. The first 9 successful trades produce $900 in profit. On the 10th trade, when the position is down $50, instead of except the loss the untrained trader purchases more shares at a lower price to reduce his cost basis. Once he is down $100, he continues to hold and is unsure of whether to hold or sell. The trader finally takes the loss when he is down $1,000.


This is an example of a trader who has a 90% success rate but is still a losing trader because he failed to manage his risk. I can’t tell you how many times I’ve seen this happen. It’s more common than I bet you’d think. So many beginners fall into this habit of having many small winners then letting one huge loss wipe out all their progress. It’s a demoralizing experience, and it’s one that I’m very familiar with! We will discuss in detail how to identify stocks and find good trade opportunities, but first we will focus on developing your understanding of risk management.


Every Day Trade Needs a Max Loss (Cap your Losses)


Over my years as a trader and as a trading coach I have worked with thousands of students. The majority of those students experienced a devastating loss at some point due to an avoidable mistake. It’s easy to understand how a trader can fall into the position of a margin call (a debt to your broker). The money to trade on margin is easily available and the allure of quick profits can lead both new and seasoned traders to ignore commonly accepted rules of risk management.


The 10% of traders who consistently profit from the market share one common skill. They cap their losses. They accept that each trade has a pre-determined level of risk and the adhere to the rules they set for that trade. This is part of a well defined trading strategy. It’s common for an untrained trader to adjust their risk parameters mid-trader to accommodate a losing position. If for instance they said the stop is $50, when they are down $60 they said they’ll hold just a few more minutes. Before you know it, they are looking at an $80-100 loss and they are wondering how it happened.


Learn Day Trading From A Verified Trader!


I made $94,119.54 Day Trading in just 3 months.


Learn the Top 2 Day Trading Strategies.


The Momentum and Reversal trading strategies are the #1 and #2 best trading strategies out there. These two day trading strategies are being used by thousands of our students who have participated in the Warrior Trading Day Trading Courses. In fact, in a survey of 100 of these students, over 80% are now trading profitably thanks to these strategies (click here for survey details) These strategies can be the basis for your $200/day trading plan.


We teach all the details of these strategies in our day trading course, but we also cover them in summary in several blog posts and in chat room Q&A sessions. You can read more about my Momentum Day Trading Strategy and my Reversal Day Trading Strategy. In short, both of these strategies are going to give you the framework for what type of stocks to trade, what time of day to trade, how to find stocks to trade, how to set your stop loss to have a max risk, and how to find your entry based on traditional chart patterns including Bull Flags and Rubber Band Snap Backs.


Momentum Day Trading Strategy.


Adopt a Trading Strategy & Master your Emotion.


Most of our students adopt either my Momentum or Reversal Day Trading Strategies. Once you choose the one that is a good match for your skill level, your risk management tolerance, and the time of day you plan to trade, you are ready to get started. Students in our Day Trading Course can download our written trading plan documents and I’m able to actually oversee them while they are trading.


Make a plan to trade this strategy in a Simulated Trading account for 1 month to test your skills. Your objects will be to achieve a percentage of success (or accuracy) of at least 60%. You also must maintain a profit loss ratio of at least 1:1 (winners are equal size on average as losers). If you can achieve these statistics, then you are positioned well to trade live. During the 1 month of practice, try to take 6 trades per day.


Reversal Day Trading Strategy.


Strategies for Maintaining Composure While Day Trading.


I admit that it’s extremely difficult to achieve the level of composure to sell when you hit your max loss on a trade. Nobody wants to lose, but the best traders are great losers. They accept their losses with grace and move on to the next trade. They never allow one trade the ability to destroy their account or their career. I personally focus on accepting small losses, and not letting them get me frustrated. Learning this characteristic will keep them in business as a day trader for a long time.


Your most important objective will be to follow your Max Loss rules so you never have a loss that exceeds a predetermined amount. The most important skill you need to learn is to cap your losses.


Big Winners & Small Losers requires Scaling.


Learning how to scale in and scale out of your day trades is a critical still every trader must develop. When I have winning trades, I scale out of the positions to take profits and adjust stops to break even as quickly as possible. I never hold a position that has achieved my profit target and hope for a bigger winner. The reason is because all too often the price can drop and you will end up giving up that profit. Instead, as soon as I’ve reached my first profit target (if I’m risking $100, then as soon as I’m up $100), I’ll sell 1/2 my position and set my stop at breakeven. This method of scaling out ensures small profits on all trades that move in your favor, giving you a better percentage of success.


One Students Success Story.


Hitting the Daily Goal & Profit Loss Ratios.


Lets say you take 6 trades/day with a $100 max loss and $100 profit targets. If lose on 2 and you win on 4 (about 65% success rate), and down $200 on losers, and up $400 on winners, giving you a net profit of $200/day. Ideally we want students to be risking $100, to make $200. That would give you a 2:1 profit loss ratio. Again, with 6 trades and a 2:1 profit loss ratio, your 2 losers would still be down $200, but your 4 winners would be $800 in profits, giving you a $600 net profit. With the same percentage of success, if you can increase your profit loss ratio you will make a lot more money!


Once you’ve hit your daily goal, decrease your position sizing so you don’t lose the goal. Finish the day green, and do it again tomorrow.


Maintain Your Accuracy By Being Disciplined.


As long as you can maintain accuracy of at least 60%, and maintain profit loss ratios of at least 1:1, you can be a profitable trader. Over time accuracy will improve and you will find yourself hitting winners right out of the gates. Some days you may even trade at 100% success with winners on all 6 trades you take.


If you plan to succeed, you must follow your trading plan. That means ONLY taking trades that fall into your strategy. Sometimes beginner traders start to gain confidence and then venture outside the strategy that works the best. This causes their accuracy to drop and profit loss ratios to go negative.


Focus on short term goals! You goal today is to take 6 trades, with 60%+ accuracy and 1:1 profit loss ratios. Rinse and repeat. That’s the ticket to success. Before you know it you will have 3-4 months of consistent trading under your belt.


Day Trader (Ross Cameron) on The Huffington Post.


Increasing position sizes.


For most students, once his or her accuracy has improved the next step is increasing positions sizes to maximize profits. If you’ve been trading at 65% success with 1:1 or 2:1 profit loss ratios for at least a couple of months you should be starting to feel pretty confident. Now it’s time to increase your position sizes. Since you’ve been working with a $100 max loss, you’ve probably rarely exceeded 2000 shares.


Now if we increase your max loss to $150, you can start to venture into larger size positions, and bigger daily goals. Remember that your daily goal is 2x your max loss per trade. So if your max loss is $100, your goal daily is $200. Max loss is $150, daily goal is $300. Personally, my max loss is $500 and my daily goal is $1000. I know some students who have a max loss as high as $5k/day. Even though it’s hard to imagine right now, that’s the potential of a strategy that is scalable! All the strategies we teach are scalable so whether you trade with a $5k account, a $50k account, or a $500k account, these strategies can be utilized.


What’s Next on your Day Trading Journey?


Now that I’ve taught you my 7 steps to trading success you are probably wondering what’s next! I would encourage you to join a live webinar with me so you can learn even more about my trading strategies. You can click here to join my next webinar, and make sure in the meantime you keep watching on YouTube! I put out tons of free content to help beginner traders getting started.


In Response to these awards, Warrior trading has been constantly pu in the spotlight as being an established educator in the finance sector.


Hope to see you all in the chat room!


We’ve Gotten Real Results from Real People Just Like You.


$31,202.73 in profits since joining Warrior Trading. If you really want to learn from the pros, I can say from experience that Warrior Trading offers top notch training from very skilled, highly disciplined and successful instructors.


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Up to $5000 in one day. When I first started trading I would have a profit of $3000 in a good month. After I took Warrior Tradings day trading course I now do between $1500 to $5000 most days.


The guys at Warrior Trading has made a course that does not only contain a great strategy but it's also explained so it´s easy to understand.


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I'm a Veteran trader Finance Degree from OSU and always still learning books audible and purchased Warrior Trading Program so much new and useful information that I bought monthly chat to watch them apply principles they teach and to get some new fresh Ideas.


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Warrior Trading is without a doubt the most professional trading service/family I've ever been involved with. I have been trading off and on for over 15 years and full time for the past year and a half.


The transparency of Warrior Trading is one aspect that attracted me to them. They show you it all. They show you their losses as well as their gains. They are about showing you how to make a profit from the markets.


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Trading is hard, but warrior trading makes it easier. They keep a consistently friendly atmosphere, which you will find that after trading for a few years, you will appreciate.


Traders like consistency, and when you log on to Warrior Trading you can expect the same service as the day before. There are no surprises. These things are valuable.


They quietly establish an edge, make their money, and leave until the next day. Ross and his team are good guys, and if you were to subscribe to all the different services out there and compare them for 3 months, you would see WT at the top of the list.


I've always been passionate about trading but never really imagined this passion would have turned in a real, full-time job. In fact, I've never found any service which I really felt that would help me become a professional trader.


That is, until I met Warrior Trading. In particular, Ross has been really inspirational while I'm on my path to become a full-time day trader.


I always wanted to trade stocks but I saw all those numbers go up and down and I would always say to myself " I'm never going to get this". I looked at the free Youtube videos and I was hooked. It was the best investment i ever made.


Now I know how to day trade and the scare part about it is gone, I mean, I listened to them and paid for their paper trade and now i feel confident on what I'm doing with stocks.


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The courses are a must for whoever would like to make day trading a career.


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My worst loss prior to the course was close to $15k. Ross helps you understand how the losses happen, the psychology behind it and how to prevent it ! I feel a lot more comfortable trading, because now I understand what stocks to pick, when to get in and out and how to manage my risk!!


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The #1 Trading Strategy for Today's Market.


The market has been on a tear this year. In fact, the market has been on a tear for the last 8.5 years, with all of the major indexes at all-time highs, along with countless numbers of stocks doing the same.


Fortunately, there are plenty of investors capitalizing on these gains, while many others are handily beating the market and doing even better.


But far too many investors are underperforming the market. And this should not be.


So what's the best trading strategy to take advantage of today's historic bull market?


There are lots of different trading styles out there: Growth, Value, Momentum, Income, and more.


Some of these are more conservative while others are more aggressive.


But which one works best?


Let's take a look.


Growth traders are primarily focused on stocks with aggressive earnings growth or revenue growth (or at least the potential for aggressive growth), which should propel their stock price higher in the future.


You'll often find smaller-cap stocks in this category because these are typically newer companies in the early part of their growth cycle. But you'll also find plenty of mid-caps and large-caps with stellar growth rates too.


However, there's more to picking growth stocks than simply looking for those with the highest growth rates. In fact, companies with the highest growth rates have been known to perform almost as poorly as those with the lowest growth rates.


How can this be? It's because sky-high growth rates are unsustainable. And they can be priced for perfection.


For example, a company earning 1 cent a share that is now expected to earn 6 cents, has a 500% growth rate. But if it receives a downward estimate revision to 5 cents, that's a significant drop. Even though it still has a 400% growth rate, the estimates were just reduced by -16.7% and the price is likely to follow.


If you've ever wondered how a stock with a triple-digit growth rate could possibly go down, that's how.


By concentrating on Zacks Rank #1 and #2 stocks, growth traders can easily find companies exhibiting strong growth rates that are also displaying upward earnings estimate revisions, setting the stage for growth to continue.


Value investors and traders favor good stocks at great prices. This does not mean they have to be cheap in price though. The key is the belief that they're undervalued. That they are, for some reason, trading under what their true value or potential really is. The value investor hopes to get in before the market 'discovers' this and moves higher.


This deviation from their fair value is what creates exceptional upside opportunity.


Those interested in value will typically look at valuations like P/E ratios, PEG ratios, Price to Book ratios, and more.


Of course, some stocks are cheap for a reason. Or they may appear undervalued on one metric, but not on another.


Too many so-called value stocks have low valuations because they don't have compelling enough earnings or growth rates to speak of. Why pay up for a company if there's nothing to pay up for?


So it's not enough to just look for the stocks with the lowest valuations. They might be low for a reason. Or worse, they might be damaged in some other way, causing other investors to ignore them. These types of stocks are not value stocks. And they are definitely no bargain.


The key for value stocks is a combination of both earnings and valuations. When a stock has a Zacks Rank #1 or #2 that means earnings estimates for a stock are rising.


Given this new information, other investors will view these stocks as being undervalued relative to its future prospects and thus create buying demand for these stocks.


For the next week, you can follow all real-time buys, sells, and market insights from all Zacks' private portfolios.


Just what do we mean by free? No cost. No credit card needed. No obligation to subscribe to anything.


This unique 7-day test drive is the best way to sample the power of the Zacks Rank. Deadline to get started: Sunday, October 29.


Momentum traders look to take advantage of upward trends in a stock's price or earnings. They believe that these stocks will continue to head in the same direction because of the momentum that is already behind them.


We've all heard the old adage, "the trend is your friend". And who doesn't like riding a trend? In fact, studies have shown that stocks making new highs have a tendency of making even higher highs.


Rather than simply looking for price trends, the Zacks Rank is about cause and effect.


The cause of the move is positive earnings estimate revisions. This upward shift in earnings estimates prompts more and more investors to take an interest in the company with the effect being that shares start on a bull run. Volume increases, as does the stock price.


But just relying on price movement alone doesn't alert investors until after the move has already begun, costing active traders opportunities to maximize profits.


Conversely, by focusing on earnings estimate revisions, the Zacks Rank can identify stocks that are likely to move up in the future, before the breakout has occurred!


The Zacks Rank helps traders get in ahead of the price action. And the momentum effect is quite strong among Zacks Rank #1 and #2 stocks because as earnings estimate revisions rise, prices race to keep up as future estimate revisions are anticipated.


Investors looking for income producing (dividends) stocks are well served by looking for both growth and income, i. e., companies with stable earnings growth that pay a solid dividend.


Oftentimes, these companies are more mature, larger-cap companies that no longer have the kinds of spectacular growth rates like some of the younger or smaller companies, or like they themselves had when they were younger and earlier in their growth cycle.


Many of these companies are generating huge amounts of cash, but because of their size, may not have the growth opportunities they once had.


For example, an idea that generates $1 billion in profits for a $1 billion company represents a 100% growth rate. But that same $1 billion idea applied to a $10 billion company only represents a 10% growth rate.


In other words, it's much harder to move the needle on earnings, the bigger the company gets. So, many of these companies will pay out a portion of their earnings to shareholders in the form of dividends.


The Income investor will want to look at a number of fundamental factors like the company's balance sheet, its competitive advantage, and its management. But the most tangible proof that a company is worth holding for the long-term is earnings. Look for companies with steady and consistent growth over time as they will be in a better position to raise their dividend over time as well.


There may be fewer dividend paying stocks in the Zacks Rank #1 group, but there will be plenty of #2's, and you might even consider some #3's for the larger-cap companies.


Special Situation Strategies.


In addition to the four main fundamental styles of trading and investing, there are other special situation strategies that key in on very specific signals and events.


Some are lesser known styles like the practice of analyzing the buying and selling of corporate insiders, or following the money flow of institutional investors.


Others are even lesser understood, like the methodology of trading in front of an earnings report (expecting a positive surprise), or focusing only on international stocks.


Some, however, are very popular and have broad appeal -- like using ETFs for sector and industry bets, trading with options either with or instead of stocks, and the application of technical analysis for timing the market and capturing its twists and turns.


And the #1 Trading Strategy Is.


. the strategy that's right for you!


No one style or strategy is better than the other. They're just different from each other.


The number one trading strategy is the one that that picks the kinds of stocks you want to get into.


Because if you find yourself getting into stocks that are not in alignment with who you are or want to be as a trader, you'll find yourself dropping that strategy the moment the market hits a rough patch. Or talking yourself out of winning trades altogether, because you're uncomfortable being in stocks that don't fit your style.


Beating the market isn't just for the pros. Anybody can do it with the right strategy.


So step one is identifying which strategy is right for you.


And for the next 7 days, I invite you to see how all of our different Zacks strategies perform and view our private trades through our unique Zacks Ultimate arrangement.


It's completely free. No credit card needed. And there's no obligation to subscribe to anything.


Why am I offering this? Because there's simply no better way to show you the power of the Zacks Rank and to decide which one of our winning strategies is the right one for you.


• Growth stocks that power higher.


• Value stocks as they start to climb upward.


• Momentum stocks with solid uptrends.


• Income stocks with the best payouts and long-term outlooks.


• Earnings surprise stocks before they report earnings.


• Our best stocks under $10 with big upside potential.


• Selected insider trades (the legal kind)


• Our special Technology Innovators portfolio.


• My own options trading service.


Don't miss this unique 7-day test drive to transform your portfolio. Deadline to take advantage of this offer is midnight Sunday, October 29.


Thanks and good trading,


Kevin Matras serves as Executive Vice President of Zacks and all of its leading products for individual investors. He is also the Editor of his personal portfolio service, Options Trader.


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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25% per year. These returns cover a period from 1988-2016 and were examined and attested by Baker Tilly Virchow Krause, LLP, an independent accounting firm. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zack Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.


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