Old familiar friends are great sources of happiness for many people. Familiar stocks can be great sources of profits with multiple chances for winning trades.
IBD Chairman and Founder William J. O’Neil often warned of letting winning stocks drop off your radar. “Some of my best trades were stocks that I was already familiar with because I had traded them before,” he said.
Those words also ring true for swing trading. You can squeeze out more profits from a single stock while reducing risk by sitting out periods of consolidations and corrections. That can lead to multiple winning trades in a year.
Also, when your hard-earned money is in a stock, it has a way of focusing your attention on its behavior. You get a sense of the stock’s personality: its volatility, its action around moving averages, how well it follows its industry group or reacts to news on rivals. Also, if you’ve put time and effort into researching the stock, much of that research can be reused and just refreshed.
A stock that has been on IBD’s SwingTrader product three times, so far, is MarketAxess (MKTX). The first time was from March 29 through April 5, when the product was still in beta (not shown on chart above). A bullish reversal prompted the entry on March 29 and a bearish reversal prompted the exit on April 5. The trade eked out a 1.5% gain.
Attention remained on MarketAxess. A full month later, on May 5, another reversal presented itself (1). An entry was made at 124.40, less than one point above where it was previously sold. Sure it was a higher price, but a month with little progress was avoided. Half profits were taken on May 12 at 130.78 when the stock reached its 5% profit goal (2) and the remaining shares were removed May 24 at 136.75 when the 10% profit goal was reached (3).
MarketAxess made progress over the next 8 days and then pulled back to its 50-day moving average line in the following three weeks. It corrected 6% before staging another bullish reversal (4) on June 28 where the stock made its third entry on to SwingTrader at 139.48. This was another case where profits were taken at the 5% profit goal (5) and the remaining shares were sold at the 10% level (6) on July 11.
The first gain of 1.5% may not have been much, but it helped secure two trades over 7.5% over the next few months.
Subscribers and trialists to SwingTrader can view the full details of these real-time trades, as well as the complete history of trades, in the Past Trades section of SwingTrader. Free trials are available.