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Strategies for Successful Mega Trades

Oct 13, 2024

ICT Mega Trades for Stocks - Lesson 3

Introduction

  • This lesson focuses on "Mega Trades" in the stock market.
  • Mega trades are significant, long-term trades, typically lasting 6-9 months.

Understanding Mega Trades

  • Mega Trades: Not short-term; aim for prolonged duration and significant profit.
  • Closely related to quarterly earnings shifts in stocks.
  • Earnings have a major impact on stock movements.

Quarterly Shifts and Earnings

  • Earnings are reported quarterly and impact stock movements.
  • Anticipating earnings can help predict big market moves.
  • Important to overlap mega trade conditions with quarterly earnings effects.

Seasonal Tendencies

  • Stocks generally make a low at the beginning of the year, rise into spring, consolidate into fall, then offer buying opportunities around fall.
  • Best times for stock movements: early year and fall.

Market Direction and Indices

  • General market direction (NASDAQ, S&P, DOW) affects stock momentum.
  • Stocks often accelerate when the broader market moves higher.
  • Prefer swimming with the current; follow the market's general direction.

Fundamental and Technical Analysis

  • Fundamentals: Earnings, sales growth, new products, etc.
  • Technical Analysis: Relative strength, sector leadership.
  • Use technology and resources like Investors Business Daily (IBD) for analysis.

Screening Stocks

  • Use systematic approach to screen stocks fundamentally.
  • Investors Business Daily provides a reliable resource for fundamental analysis.

Relative Strength Analysis

  • Look for strong sectors, industry groups, and outperforming stocks.
  • Analyze market indices divergences (e.g., NASDAQ vs. DOW) for buy signals.

Key Strategies for Mega Trades

  1. Anticipate new earnings leaders.
  2. Plan for seasonal tendency overlaps.
  3. Assess major stock indices (NASDAQ, S&P, DOW) for directional bias.
  4. Perform fundamental screening for profitable stocks.
  5. Conduct relative strength analysis.
  6. Explore options trading strategies.

Practical Application

  • Use Investors Business Daily for fundamental sorting.
  • Look for higher lows in stocks during index SMT divergences.
  • Focus on stocks in strong sectors and industry groups.

Examples and Tools

  • Utilize tools such as IBD Leaderboard and stock comparisons on sites like barchart.com.
  • Use resources like InvestorGuy.com for sector analyses.

Conclusion

  • Mega trades focus on buying opportunities due to the predisposed upward trend in markets.
  • Understanding market stages and utilizing tools like IBD can help find high-performing stocks.
  • The process involves blending fundamental and technical analysis.
  • August lessons will cover options and Greeks in more detail.

These notes provide an overview of lesson 3 on Mega Trades, focusing on strategies to identify and execute significant stock trades by leveraging earnings reports, seasonal trends, market direction, and both fundamental and technical analysis.

Full transcript