Another nice 26% winner

A week or two ago I wrote about my position in $OCUL you can see that post HERE

If you would like to see where I learned to trade momentum stocks please check out THIS page.

I sold most of my $OCUL position yesterday for another nice 26% profit. I held this position for about 2 weeks and it was a relatively stress free swing trade. Below you can see the daily chart.

ocul_winBasically my initial purchase of this stock was based on the base it had formed around $30 – $31 per share. I love charts that show a long tight base while still maintaining RSI > 70 on the daily and weekly charts. I love the risk reward because charts like that allow me to set a really firm mental stop loss. Basically, if the stock breaks downwards from its solid base (you can see the base more clearly in this post) then I sell my position quickly and limit my downside risk. So you can see in the case of $OCUL the base continued after my buy in on the 12th feb. The candles on the daily became even tighter and volume dried up – this made this trade stress free because of the limited volatility. The base also continued with the stock closing above the 4ema AND maintaining strong RSI > 70. My patience paid off and on the 23rd Feb the stock resumed its upward march!

This tight base pattern has become one of my favorite patterns to trade because of the high percentage of winners it seems to produce. The key to success using this strategy seems to be patience – sometimes it will take a week or two to make the upwards move.I have been ina couple of losing trades recently that failed to breakout of the base but the losses were miniscule compared to the gains from the winners.

$VRX and $COLM are two other stocks that I am currently holding positions in because of a similar chart pattern to $OCUL. Although for $VRX I am in at a much lower cost than the base, and I also already taken partial profits. This means that I am protected and if this base fails miserably then I have still made a large profit from the trade overall.

If you would like to see where I learned to trade momentum stocks please check out THIS page.

Russell

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