The One Minute Millionaire Diamond Mine
 The Wealth Factor
 Stock Market Strategies
 By Dr. Stephen Cooper
     
 
 

Anatomy of a Stock Trade

Talking and doing have always been two completely different things. This week I will bring you along on a trade that is currently ongoing so you can get a good look at the “Doing” part of things.

The trade is a call option on QQQ. It was opened on 9/21/03. Take a look at the chart first, and then we’ll talk about it.



You will notice that four bars back, price moved above the red line of resistance that I’ve drawn on the chart. On the following day, price was still above this line, even though there was a small drop. Here is where the trade was entered. The idea here is that when price breaks up through resistance and into new territory that there is a tendency for this movement to continue. Confirmation to enter the trade comes from the second day above the line. After entering long, if the price closes below the red line, we would be concerned that the breakout was false and consider exiting the trade post haste. The last bar on the chart is today (9/23). This morning, as I prepared to exit the trade with a small loss, I saw that QQQ was moving up. By the end of the trading day, it had again moved above the red line of resistance, convincing me to remain in the trade.

The option I purchased expires in March of 2004, so I have plenty of time to work with one.

Next week we’ll look in on this trade together and see where it has gone!

   
 

Dr. Stephen Cooper is the Director of OnlineOption.com, a training and support Web Site for both beginning and advanced traders. Over the past four years, Dr. Stephen Cooper has been the primary Stock Market Trainer for Mark Victor Hansen and Robert Allen’s Enlightened Millionaire Institute. He has taught thousands of students his proven trading strategies. He is the author of The Online Option Trader, Windows to Wealth, and The Truth About Money. He has also authored 10 interactive chart analysis tutorial CDs and contributed to several newsletters and publications.