TRADING STRATEGIES
RALLY FLAGS
Rally Flags:
Are your ultimate goal. They are stocks with long term break out potential to much higher levels. Calculate rally flag profits
every year, not every day or week. They take time to realize their full potential. Don't get involved if you can't or won't give
them the time they need.
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Rally Flags:
The ideal position I see with it is to accumulate your minimum target base of shares using 25% of your capital or less. I say
25% because I consider XYZ to be one of my rally flags (explained concept above) Have another 25% in reserves for the
next/other rally flag. If XYZ runs before you invest that $ in the next rally flag then put those reserves into XYZ. Sell only
that 2nd 25% at a point where you get your entire initial investment back, then your 1st 25% are free for the long term.
You will pay more for your 2nd wave but the lower price of 1st wave will average 2nd wave down a little. After a few rolls
with this concept you have a huge block of XYZ for free that cost you nothing and you can sit on an indefinite time waiting as
long as possible for XYZ to achieve it's ultimate high with absolutely no risk. Do this 2-3 times w/ different flags in a year and
you can see where you can ultimately wind up in a year. A long term portfolio with your cash only being tied up for the short
term between rolls.
Clarification:
Buy = Base investment + 2nd Block = Total Investment
Buy = $1,000 + $1,000 = $2,000 bought at an average price of .05 = 40,000 shares
Sell = 25% of Total Investment Shares / Total Investment $’s = Target Price
Sell =10,000 shares / $2,000 = .20 Target Price
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Updated 1/5/99
Rally Flags: this is a fast track version of the previous:
Your investment capitol will be from profits on Rollers! Idea is to decrease the time of investment capitol is tied up
inbetween rolls.
The ideal position I see with it is to accumulate your minimum target base of shares using 25% of your capital or less. I say
25% because I consider XYZ to be one of my rally flags (explained concept above) Have another 25% in reserves for the
next/other rally flag. If XYZ runs before you invest that $ in the next rally flag then put those reserves into XYZ. Sell only
that 2nd 25% (2nd block of shares) at a point where you get your entire initial investment back, then your 1st 25% are
free for the long term. After you sell the 2nd 25% you now have the base shares free & your initial investment back. From
this point you can start/add to another Rally Flag or add to the base investment buying on dips below your last sell target.
On a run you would add 25% of your investment capitol at hand, again to the base investment. Selling at the point where
you sell the last 25% added to recover all investments to this point. Giving you your initial free shares and the shares you
purchased on the dips. After a few rolls with this concept you have a huge block of XYZ for free that cost you nothing and
you can sit on an indefinite time waiting as long as possible for XYZ to achieve it's ultimate high with absolutely no risk. Do
this 2-3 times w/ different flags in a year and you can see where you can ultimately wind up in a year. A long term portfolio
with your cash only being tied up for the short term between rolls.
Clarification:
Step I
Buy = Base investment + 2nd Block = Total Investment
$1,000 + $1,000 = $2,000 bought at an average price of .05 = 40,000 shares
Sell = 2nd Block of Shares / Total Investment $’s = Target Price
Sell =20,000 shares / $2,000 = .10 Target Price
Step II
Free Shares = 20,000
Buy = Dip + 2nd Block on run = Total Investment $’s
$1,000 + $1,000 = $2,000 bought at an average price of .10 = 20,000 shares
Sell = Dip + 2nd Block of Shares / Total Investment $’s = Target Price
Sell =10,000 shares / $2,000 = .20 Target Price
Continue to add to all Rally Flags throughout the year
HERE'S AN ASSIGNMENT
We need to find a "1/2 flagger" to let the smaller traders get a shot to roll it into a "full" rally flag. Until their first rally flag
pops they are in risk of failing like those 7 of the 10. Find a stock less than 2 cents, 6-10 mill + in daily vol. A previous run past
.12 at least TWICE in the last year. Med-high RB traffic, In the rumor stages re; a future event sometime soon. Check it's
history see if same size/bigger event in the past caused a previous run. Look for "anticipation" by RB posters. and all the other
things I told you to look for. Bring it back here, post what you know, get a concensus of pro's and cons then make an
informed decision. Start moving your rollers towards the flags.
TRY TO FIND STOCKS;
That are less than 5 cents if possible. I'm speaking in general terms. There a millions of exceptions to this, but like I said
"generally" speaking. Penny stocks over 50 cents move up slow, don't gain too much, then drop back down slow. 50+ penny
stocks usually start out @ 1-3 cents and have a huge base at those lower numbers. It's tough to buy in that low w/o profit
taking all the way over 50 cents limiting a real breakout. Many new buyers look at the starting price and figured they missed
the real run up and mentally are wary of the stock. Strong PR may help but it usually takes several weeks/months to build that
new base over .50 to set the stage for the next higher levels.
Stocks over 15 cents can run over .30 but it's usually so quick it's tough to catch the start in time. They run up fast and fall
even faster because big blocks are usually involved. Big blocks in and out account for the fast ups and downs. Unless you have
a pre-set sell order in at your target you may miss out. If the stock falls short of your sell price by the time you get the change
in you've lost most of your profits and end up chasing it down for even more losses, but most investors believe the hypsters
saying it's just MM shake out, wait for the next run which never happens and sell from impatience or need to free up cash for a
fractional gain or loss. Stocks in this range usually run on rumor of an event before the PR and by the time the PR hits it's old
news and no run occurs, this sucks the confidence from the holders who bail out of discouragement wiping out all the efforts,
new base and momentum of the run bringing it back down to square 1 where it sits until the process starts all over again.
Investors who bought in and missed the high sell point are now stuck.
Stocks under 5 cents. You can control huge blocks for minimum price. Buy in stages on the way up if needed but keep the
average price of your shares low because you got that first 1-2 blocks at the bottom. The greed factor here is unbelievable.
That's what feeds the frenzy and the run. A spike of a couple of cents and the hypsters are picking out Lear Jets, everybody
thinks they've stumbled on to the next 2 cent AOL and often run those stocks to high teens low 20's before the sell off
continues. They are more likely to believe the hypsters re; MM shake-out and HOLD. Slowing down the drop in time for you
to see it and exit IF YOU KNOW WHAT YOU'RE "REALLY" SEEING. The stock will keep dropping until it's new base,
usually much higher than the one before it started it's run.
Keep your eye open for stocks under 5 cents with semi-small floats, pending PR's and no recent run behind it, high RB board
traffic, big block buys going thru sporadically then increasing late in day. Those are our best opps for big gains. JMHO
REMEMBER THE MOOD;
On the SHCC board last week prior to the release of the PR? "Thats" what we're looking for. The frenzy of anticipation. Look
for frequent posts stating the price in an upward trend. That creates excitement. Look for posts listing big block buys too. Also
look for 2-4 posters giving details of the pending event/PR and listing the source of their info. Look for posts naming stock
pick sites picking the stock to run. People put much credibility in those "picks" and want to jump in and join the "pending"
band wagon. Next week there will be stocks under 10-20 cents that will double. They are sending signals today and tomorrow,
next week will be too late to get in. Most of the picks today are already in the run, but they told us this last week. They're out
there. You want to start making consistent money on 1-2 runners a week? Then find the stocks "about" to run, not only those
currently running. Look for the indicators I listed above. Facts are important but the Penny's are "hype" driven a week before
the fruition of that hype. The week before is the time to find those stocks and buy. The day before or on of PR is the time to
sell, If you bat for singles, disregard the hypsters and don't get greedy this is a sure and consistent way to make money.
Daytrading is almost an impossibilty. But "week" trading is safer and just as profitable in the long run. Hit the boards and look
for stuff "about" to happen, not just stuff 'happening" Keep hunting. I check out every lead. and I always try to give a worst
case scenario to start from. If my worst case is still "good" then we may have an opp
special thanks to MB
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