Sandy Chaikin's 5 Steps To Finding Triple-Digit Winners

Oftentimes traders allow emotion to drive their decision whether to buy or sell a stock. Anything from panic to elation to ingrained sentiment can compel traders to make inconsistent and questionable decisions with their portfolio.

In a webinar led by Chaikin Analytics co-founder Sandy Chaikin, who committed to learning how to invest in stocks after losing 40% of her retirement savings in the financial crisis, she described the five steps she adopted to standardize her trading decisions and optimize her investment strategy. These are her rules that she sticks to, and in doing so have helped her go from a novice to a savvy investor since she first started investing in 2012.

1. Trust proven tools

Chaikin emphasized the importance of finding a research tool that you trust. For her, that’s the research platform her husband created, Chaikin Analytics, including its Money Flow indicator, Stock Discovery Engine, and, most importantly, the rules-based Chaikin Power Gauge stock rating, which analyzes 20 fundamental and technical factors to consistently grade the potential performance of 5,000 stocks.

2. Know what to buy

Chaikin also outlined her criteria for determining stocks that she called “classic bulls,” meaning they make for great buys. When looking at stocks to buy, Chaikin places the most weight on a bullish Chaikin Power Gauge stock rating, how bullish the recent price trend is, Relative Strength index (RSI), and Money Flow, which measures institutional buying and selling pressure in a given stock. She also identifies the strongest market cap category, which was small cap stocks in 2016... because she liked finding hidden stocks in the mid-to-small cap range with bullish readings in those areas. Today, she favors mid- to large-cap stocks, since they are now outperforming small cap stocks.

3. Find strong stocks in strong industry groups

Following her criteria for determining bullish characteristics, Chaikin also emphasized the importance of investing in stocks in strong industry groups for maximum performance. The key takeaway was that even average stocks in strong industries tend to outperform strong stocks in weak industries.

4. Know what to avoid

While knowing what to buy is critical in, Sandy Chaikin follows the same criteria as for her “classic bull”.... But in reverse, namely: bearish Chaikin Power Gauge stock rating, bearish price trend, weak Relative Strength, and negative Money Flow.

5. Know when to buy and sell

The final step in Chaikin’s investment strategy is to know the proper timing in buying and selling by recognizing key signals. Again, much of this step is aided by the tools available in Chaikin’s own platform, and her own rules. She pointed to buy signals which trigger within the platform when specific criteria is met. The 6 pairs of signals indicate oversold, momentum breakout, or reversal points as well as Money Flow strength. When determining a sell signal, Chaikin utilizes the platform’s charting tools to see when a stock falls below a long term trend line or crests upper volatility, and certain criteria are met such as a neutral or bearish Chaikin Power Gauge rating and weak Money Flow.

For more, visit www.sandychaikin.com.

Chaikin Analytics is a sponsored partner with Benzinga. This article was written in conjunction with Chaikin Analytics, and may have been subject to their approval.

Image credit : Chaikin Power