HOMEWORK ALERT – Complete your homework before starting Class 4

Welcome to your ACTIVE - DTC: #3 Quiz

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1. How many technical characteristics must a stock have to be worth trading for Momentum or Gap and Go Strategies?
2. Trader A says that by trading stocks with high relative volume we ensure that thousands of other day traders are also trading these same stocks.  Trader B says that High Relative Volume is not the result of a News Catalyst, but always the result of a technical breakout.  Who is correct?
3. Trader A says that trading low volume stocks is asking for trouble.  Trader B says that low volume stocks are more likely to be manipulated by a small number of traders or HFT traders.  Who is correct?
4. A follow through day is considered:
5. What is a Stock Buyback?
6. Which best describes an activist investor?
7. In 2010, over ___ percent of trading in the market was HFT trading.  Trades executed by computer programs and designed to profit from the market.
8. Large Cap stocks are preferred by large investors because they can trade with large amounts of capital.  That makes large cap stocks often dominated by High Frequency Trading Algorithms.  These Algo's can, make stock price action unpredictable and at times, flat out erratic.  What type of stocks are comparatively more predictable, and as a result, more popular among retail traders with smaller accounts?
9. We look for stocks that will likely be trading on high relative volume.  What causes high relative volume?
10. In the past when we've seen stocks go from $2-50 within a period of hours or days, what do these stocks all have in common?
11. Do parabolic stocks (stocks that go from $2-50 for example), require a news catalyst to make that type of move?
12. Would we consider OPK a stock worth looking at for a day trade?

13. Would we consider AVGR for a day trade?

14. When a stock is on our gap scanner, and we check the news and see it's a buyout or a merger, would we still consider it for a day trade?
15. Why do companies conduct reverse stock splits?
16. What are important qualities of a stock we're considering trading?
17. We like to trade stocks that are obvious because that means other traders will also be watching the same stock and it will be more likely to trade in a predictable manor.  What indicates the stock may be "obvious"?
18. As a small cap momentum trader, there will be periods where the market is extremely hot and we'll see 50-100% movers several times a week.  Then there will be periods where the market is very slow and we'll see maybe only one or two 20-30% moves each week.  What is the best way to handle the ebb and flow of these cycles?
19. During a hot market cycle, we can get spoiled because buying stocks high, or chasing them, may pay off.  How can we balance the desire to maximize on hot streaks while at the same time preventing the creation of bad habits that will then hurt us during cold markets?
20.  True or false:  By trading only the strongest stocks we can minimize our risk of loss.  Trade the best, leave the rest.