| TraderAide.com The Trader's Assistant |
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| Baskets and Crapolio Strategy |
| As I have suggested in the past, everyone should have a basket of stocks that they follow and become familiar with. When things are slow, you can usually find your own stocks to trade from within that basket. It will also help you trade those stocks if and when I call them or they have breaking news. I have put together a sample basket made up of Mostly Widely Held issues and eBusiness-25 stock list form this morning’s USA Today. …. BEAS BRCM CHKP CSCO GLW DELL DCLK EMC ISSX JDSU JNPR LVLT MACR MERQ NTIQ NTRT NTAP NET OPWV ORCL RNWK SEBL SUNW TIBX VRSN AOL T AGR.B C XOM GE INTC IBM JNJ LU MSFT PRE VZ WMT That list has some stocks on it that I would not include in my own basket. Stocks like LU JNPR and such usually have very large volume but very narrow range even on news. But I do see some folks trading them all the time so I have to assume someone is making a buck on them. There are also some stocks conspicuously missing like QLGC and the like. But as I have said before "your" basket should be personalized by you according to your trading plan and style. Another way to come up with a good basket of stocks is to start with the Naz-100 and then start paring it back. 100 stocks is too many to follow, imho. Keep in mind you are looking for stocks that trade in large volume with large ranges. The way I did my basket was by charting every stock in the index for both volume and range. In those days quality was not that big of an issue. Today I think it has to be. Another way of coming up with a basket, which was the now famous Crapolio Strategy, was by coming up with a list of stocks that were called in this room or were constantly running up on good news and then running back down. I tracked these stocks and came up with what I thought was the bottom of the pullback from the last big news even and bought half a lot of the shares. If they pulled back further and I still had faith in them popping on the next big news event, I cost averaged and then had a full lot. When the next big news hit and I could get in fast enough I bought more on the call or the news. That gave me a rather nice position in the stock and I sold into the momentum as they ran up. Some of the best money I made on the Crapolio was when they gapped up over night on news. Obviously this was my own version of Swing Trading. IT IS IMPORTANT TO UNDERSTAND, THESE WERE "NOT" BROKEN DAYTRADES. Each stock were chosen and charted and watched over a period of time before they were added to the Crapolio. However, this strategy is to be considered highly risky and should only be used with money you can afford to lose. |
| Recommended Reading: Books in addition to those above |
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