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by Multi-Millionaire Stock Trader

PAUL SCOLARDI

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Welcome Super Traders!

To improve your trading psychology and strategy, it’s wise to review the rules on afrequent basis. That’s why I always include my rules and strategy as required readingon the bottom of every watchlist!

There, you’ll find …

• An explanation of my three types of trades

• The rules for each trade type

• And my general trading rules

Why do I do this? Because I want to make sure that you stay disciplined and follow therules. They can help you maximize gains with winners and minimize losses with tradesthat don’t work.

• Day trades involve a same-day entry and exit

• Swing trades can take longer; sometimes several weeks to a month

• Chart trades can work out in just a couple of days to a couple of weeks

To ensure the greatest potential for success, it’s vital to follow the rules for each typeof trade!

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Required Reading: Three Types of Trades and Their Rules

1) Day trades are labeled TRADE in the buy alerts.

A day trade is where you hold a position from as little as one minute to one day. It’susually based on a current news item or theme.

If I say daytrade/scalp, this refers to a $0.10–$0.50 per share profit (or more if it movesfast), long or short. It could potentially be a very fast trade. If the trade goes against you,it’s usually a good idea to sell right away and minimize losses, but this can be situational.

2) Swing trades are labeled SWING in the buy alerts.

A swing trade is where you hold a stock until an event or target range occurs as long asthe thesis doesn’t change. This type of trade isn’t based on a chart.

When my alert goes out, I usually give my downside loss risk and upside target range.Once the stock hits my target, I will either sell a partial or whole position depending onmarket factors at that time.

3) Chart trades are labeled CHART in the buy alerts. This is where the Superman chart rules STRICTLY apply.

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All entry and exits positions are made from the 12-month daily chart. (The 2-yearweekly and the historical monthly are used to see the potential strength of themove. Also, a stock can have 2–3 weeks of rest on the 2-year weekly).

A stock is considered in play if it closed above the 4-day EMA and RSI above 70on the 12-month daily chart (here’s how I set them up).

When I buy a stock, my downside would be the 4-day EMA, which would be thearea I’d sell for a loss if it closes below that level. If the stock drops below the4-day EMA intraday and I think it’s fatal or won’t rebound, then I may sell at thatpoint intraday.

Gather information from the close. As long as it closes above the 4-day EMA withRSI above 70 then the trade is still on (though 4-day EMA is more important).When the stock spikes above the 4-day EMA I take at least half off.

One close below the 4-day EMA can be allowed if the quality of the stock/story isvery strong. For low float stocks, volatile stocks, thinly traded stocks, and in badmarkets, a judgment call can be used to use the 9-day EMA. However, if that is thecase, your potential stop loss would be the 9-day EMA.

One key chart pattern I use is the 2-3 Days of Rest pattern. This is a stock that hasmet the above criteria, remains above the 4-day EMA and RSI above 70 althoughthe stock rests and even pulls back.

On the second or third day of rest, the stock is likely to continue to move upwardfor a trade. I may enter the stock on the second or third day of rest for a tradetargeting a move above the most recent high. Remember, though: it’s not foolproof!

Superman Chart Rules

Superman Chart Rules

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Superman Chart Rules

Another chart pattern I use is the Slow Stochastic pattern. This is when a strong stock with a substantial catalyst (earnings, growth, recent contract, etc) has been crushed down for no apparent reason other than the market itself.

These plays cannot have a negative catalyst associated with the stock. When you pull up a chart you should have the option to add Slow Stochastic to it.

If you see that Slow Stochastic is buried below 20 and that the stock price has been buried below the 4-day EMA, it’s a stock that you need to put on your watchlist when the market is bad.

For example, GPRO, AAPL, LNKD, etc. — usually when the market is bad they fit these criteria. So what we look for is no negative news, and that these stocks reclaim the 4-day price, as well as the slow Stochastic hits 20 and above.

These can have colossal moves to the upside and take out previous highs. Your risk at that point is the 4-day EMA.

For more information on all of the above, go here:

• How to Set Up Superman’s Daily Chart View

• Chart Terms Definitions

• Position Size Thoughts and Links

• For the most current updates, follow me on Twitter!

Superman Chart Rules

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Trading Rules

• New members, here are some important rules to always follow when trading:

• Read and learn my rules.

• Not all trades will work or are ever 100% accurate.

• USE STOP LOSSES. MINIMIZE LOSSES, MAXIMIZE GAINS.

• Learn the differences between day/swing/chart trades, and apply the rules accordingly.

• Choose quality over quantity. If it’s slow, spend time researching — don’t force trades!

• No large positions or gambling. No chasing stocks. I personally take half profit when a stock is up to protect my gains. Do not hold into an event (earnings, news, approvals) unless you’re prepared for the worst-case scenario.

• DO NOT BLINDLY FOLLOW ME OR ANY OTHER PERSON. FOLLOW THE RULES AND HAVE DISCIPLINE. Following these rules (or a similar set of your own) is what I’ve found to be the key to building wealth while maximizing gains and minimizing losses.

If you don’t follow the rule, then you’re on your own — and there will be a higher probability that you’ll lose your hard-earned capital. Make your own decisions and be responsible for your own trades. This isn’t investment advice; I’m simply showing you my personal trading strategy.

• Do your own due diligence and be responsible for your own positions. Have a trading plan for each position.

A trading plan consists of:

(1.) an entry that’s not chasing too far above your stop loss. (2.) A stop loss in case the trade doesn’t work, and (3.) A profit-taking plan if the trade does work.

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I’ll be back soon with more trade alerts, market commentary, plus tips and tricks to help youstay disciplined and follow the rules.

Got questions?

I want to hear from you.

Send me an email at support@swingtrades.com.

Paul Scolardi, aka SupermanProfit Lock