So you got a grasp of the methods, eh?  Let’s test your knowledge a little deeper:

Answer with explanations (don’t cheat and read the small print):

A)   What is the opposite of Love?

Apathy.  It’s also the most important emotion a trader must possess.  Remember I Don’t Care Pierre?  That kid probably grew up to be a top trader!

B)  If you can comfortably trade 1,000 shares of EBAY priced in the mid 30s, how many shares of RIMM priced in the low $200s would you trade?

Probably 200-300 at most, but if you said 1,000, then you obviously don’t know the rhythm of RIMM or the term allocation.  A .20 move in EBAY is like a 2point move in RIMM, allocate accordingly.

C)   Where is the stop loss and target on a 3 minute mini pup breakout?

A break or candle close under the 3 minute 5 period moving average is the trail stop and the upper bollinger bands is the target.

D)   What happens when a perfect storm fades?

Since a Perfect Storm is the strongest breakout pattern, if it fails, then it obviously means the bears are stronger.  The stock will collapse, the key is to get out first and reverse the trade since you just paid for the inside information by being long.  Who better knows how WEAK a stock is that someone who is long, right?

E)    What are the two resolutions of a make or break formation?

A pup breakout or a mini inverse pup breakdown

F)    What are converging time frames?

At least two dirrerent time frame charts have stochastics and trends in the same direction

G)  If a stock has a daily mini pup, when should you consider entering the trade long?

When the 60 minute stochastics crosses back up first then the 8/13 minute stochastics cross back up, time the 1 and 3 minute stochastics for entry

H)   What do you do when the 1 min stochs forms a hi band mini pup on a long position?

SELL into the buyers on the inside ask with reserve orders, especially at stinky 5s and 2.50s levels

I)      What is your target and stop loss on a 3 min 5 period ma base and mini pup on a dumper?

Target is the 3 minute 15 period moving average with a trail stop on 3 minute 5 period moving average break with candle close or penetration

J)      Where is the stinky 5s upper range resistance to sell your longs on a stock that ramps through 57.52?

Sell into 57.60 with reserve shares especially on a 1 minute mini pup

If you answered most of the above questions with the following answers, then you are ready to move on to PACING,  click here