e gamble is this: if you are right, you catch the initial “pop” of momentum as there is usually a jump in price as the stock changes trend. Catch the beginning of a trend move, and you can make big bucks, real fast.

I don’t speculate. I trade on evidence that I can see, and measure. Trading should be winning on probabilities and evidence, not gambling.

Trend is you

How do I know that this can happen?

Simple: It has happened to me! Let me show you the play-by-play…

Summary of trade:

* Name of Company: Cemex (ticker:CX).

* Opening Trade: Bought 20 contracts of CX on January 31, 2005 at $2.40 a contract (March 2005 expiration, Strike: 35).

* Closing Trade: Sold 20 contracts of CX, two days later, on February 2, 2005 at $4.00 a contract for a profit of $1.6 a contract, or 40%.

* Between the time I bought and sold my options, the stock moved $1.32.

This was my first time my options “popped” in such a short period of time. A “freak of nature” type of incident? I don’t think so! So why did this happen? Now I do admit, however, while I would love to have all my trades profit this quickly, there is always a little luck when it comes to how quickly things move. But what was not due to luck were the reasons that I entered into this trade in the first place.

Three factors led me to believe that this setup looked ripe for the plucking.

First: The trend is always your friend.

This is a simple, yet, often overlooked statement. Higher highs, and higher lows indicate an up-trending graph (I’ve circled the higher lows in the graph). The reason why this rule is overlooked is because people try to speculate - a stock can be beaten down for so long that traders will start speculating when the stock will start to recover and start moving upwards. Sometimes it does, sometimes it doesn’t work this way. The gamble is this: if you are right, you catch the initial “pop” of momentum as there is usually a jump in price as the stock changes trend. Catch the beginning of a trend move, and you can make big bucks, real fast.

I don’t speculate. I trade on evidence that I can see, and measure. Trading should be winning on probabilities and evidence, not gambling.

Trend is you

ruary 2, 2005 at $4.00 a contract for a profit of $1.6 a contract, or 40%.

* Between the time I bought and sold my options, the stock moved $1.32.

This was my first time my options “popped” in such a short period of time. A “freak of nature” type of incident? I don’t think so! So why did this happen? Now I do admit, however, while I would love to have all my trades profit this quickly, there is always a little luck when it comes to how quickly things move. But what was not due to luck were the reasons that I entered into this trade in the first place.

Three factors led me to believe that this setup looked ripe for the plucking.

First: The trend is always your friend.

This is a simple, yet, often overlooked statement. Higher highs, and higher lows indicate an up-trending graph (I’ve circled the higher lows in the graph). The reason why this rule is overlooked is because people try to speculate - a stock can be beaten down for so long that traders will start speculating when the stock will start to recover and start moving upwards. Sometimes it does, sometimes it doesn’t work this way. The gamble is this: if you are right, you catch the initial “pop” of momentum as there is usually a jump in price as the stock changes trend. Catch the beginning of a trend move, and you can make big bucks, real fast.

I don’t speculate. I trade on evidence that I can see, and measure. Trading should be winning on probabilities and evidence, not gambling.

Trend is you

ades profit this quickly, there is always a little luck when it comes to how quickly things move. But what was not due to luck were the reasons that I entered into this trade in the first place.

Three factors led me to believe that this setup looked ripe for the plucking.

First: The trend is always your friend.

This is a simple, yet, often overlooked statement. Higher highs, and higher lows indicate an up-trending graph (I’ve circled the higher lows in the graph). The reason why this rule is overlooked is because people try to speculate - a stock can be beaten down for so long that traders will start speculating when the stock will start to recover and start moving upwards. Sometimes it does, sometimes it doesn’t work this way. The gamble is this: if you are right, you catch the initial “pop” of momentum as there is usually a jump in price as the stock changes trend. Catch the beginning of a trend move, and you can make big bucks, real fast.

I don’t speculate. I trade on evidence that I can see, and measure. Trading should be winning on probabilities and evidence, not gambling.

Trend is you

t. Higher highs, and higher lows indicate an up-trending graph (I’ve circled the higher lows in the graph). The reason why this rule is overlooked is because people try to speculate - a stock can be beaten down for so long that traders will start speculating when the stock will start to recover and start moving upwards. Sometimes it does, sometimes it doesn’t work this way. The gamble is this: if you are right, you catch the initial “pop” of momentum as there is usually a jump in price as the stock changes trend. Catch the beginning of a trend move, and you can make big bucks, real fast.

I don’t speculate. I trade on evidence that I can see, and measure. Trading should be winning on probabilities and evidence, not gambling.

Trend is you

e gamble is this: if you are right, you catch the initial “pop” of momentum as there is usually a jump in price as the stock changes trend. Catch the beginning of a trend move, and you can make big bucks, real fast.

I don’t speculate. I trade on evidence that I can see, and measure. Trading should be winning on probabilities and evidence, not gambling.

Trend is your friend. A very simple rule, but very important. This example exemplifies this lesson. The second lesson, which we will go over next time, is a bit more juicier as it involves a look into candlestick formations and these little guys can reveal when a set up is prime for profiting.

To read the next part of the article, please visit my webpage http://www.stockshaker.com, where we talk about profiting in the stock market, as well as other great topics like: making money online, travel, food ... stuff that matters.