Why I Am NOT Surprised When I Hear People Making 50 Percent Profit On a Trade - Overnight

Why I Am NOT Surprised When I Hear People Making 50 Percent Profit On a Trade - Overnight
By Kunal Kalsani

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).

International Trade Impact
...

The American Demand for Office Furniture and Trends
...

Does a Pop-Up Display Make Sense for Your Next Trade Show?
...

Make $10,000 Virtually Overnight! Yeah - Right
...

Career Success Is 75 Percent Confidence And 25 Percent Ability
...

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 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.

The guy behind the practical guide to stock market riches, Stockshaker.com: The Super Hot Stock Market-Bull-ying the markets one day at time!

http://www.stockshaker.com

Article Source: http://EzineArticles.com/?expert=Kunal_Kalsani
http://EzineArticles.com/?Why-I-Am-NOT-Surprised-When-I-Hear-People-Making-50-Percent-Profit-On-a-Trade—Overnight&id=465214

.