The purpose of this post is to show you the process that I go through in identifying an investment opportunity, and if successful, how to garner the profits that you’ve earned. The company in this example is Activison Blizzard, a stock that I identified back in 2013. I chose this opportunity based on a number of factors. First that the stock had gone through a basing pattern, in this case for 4 years. I’m looking for a breakout from that basing pattern. I have a program that identifies stocks that have hit new highs, This occurred on February 18th of 2013.

Secondly, I use point and figure charts to determine the potential target price. You can explore point and figure charts by clicking here.

I won’t get into the technical aspects of point and figure charts. Suffice it to say, the basing pattern gave me a target price between $67-$70, which would indicate a huge reward to risk ratio, the stock had not traded below $10 in the last 4 years previous to the breakout in August of 2013. I have a downside of 3 and an upside of 54, not too bad.

Lastly, I’m a believer in trend lines, basically establishing a line between to low points in an upward trend. While a stock is moving upward you need to watch the price and volume action. You want to see more volume on days where the stock moves up and shrinking volume as the stock moves down (this confirms the positive action of the stock in question).

It turns out that Activsion Blizzard has been one of the best performing stocks over the last year or so. I chose this stock because I identified it as a good paper trade 4 years ago. I retired from the securities industry back in 2002, however, I’ve stay in touch with what is happening in the markets and feel that I can help people with their investments in Mexico.

I present this case study because I feel that the markets are in a topping process or a bubble. How would I advise you to protect this investment if you hired me? First, I would be tracking your invidual portfolio on a daily basis. Since the last correction in Activision was at $56.75, I would advise you to to put a sell stop order at $56. This would preserve your profit and would allow for further upside movement. It’s really all pretty simple, however, if you’re not accustomed to doing this by yourself, it’s nice to have some assistance.

Remember, this is a time of maximum financial risk and you need to have some strategies in place. You just can’t sit on your hand and expect that things will take care of themselves.

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