Introduction:

Learn to Trade Momentum Stocks is a practical guide for beginners who want to profit from fast-moving, high-growth stocks. It teaches a simple and effective momentum trading strategy using tools like moving averages. The book emphasizes risk management, clear entry and exit rules, and disciplined execution. Ideal for anyone looking to build confidence and consistency in stock trading.

Chapter 1: The Power of Trend Following

• Momentum trading capitalizes on stocks that exhibit strong, sustained price movements.

• Kratter asserts that this approach remains consistently effective, leveraging the herd mentality of investors.

• He emphasizes that, unlike other strategies that may become less effective, momentum trading has consistently shown a dependable ability to generate profits over time.

Chapter 2: Where to Find Momentum Stocks

Ideal candidates are companies with rapid revenue growth, often categorized into:

• New Technology Companies (NTC): Companies introducing innovative technologies.

• Formula Companies: Businesses with a replicable business model, like Ulta Beauty.

These companies typically exhibit annual revenue growth rates exceeding 20%.

Chapter 3: Exact Buy & Sell Rules

Kratter advocates for the "Golden Cross" strategy:

• Buy when the 50-day moving average crosses above the 200-day moving average.

• Sell when the 50-day moving average crosses below the 200-day moving average.

This approach aims to capture significant upward trends while minimizing losses.

Chapter 4: Position Sizing & Risk Management

• Risk management is crucial.

• Kratter recommends risking no more than 1% of your total portfolio on a single trade.

• This can be achieved by setting stop-loss orders and adjusting position sizes accordingly.

Chapter 5: Long-Term Holding for Big Gains

• For long-term gains, Kratter suggests holding onto stocks as long as they maintain upward momentum.

• Periodically re-evaluate to ensure the trend persists.

Chapter 6: How to Short Momentum Stocks

• Shorting involves betting against stocks that are declining.

• Kratter advises caution, emphasizing the importance of identifying stocks with strong downward momentum and setting appropriate stop-loss orders.

Chapter 7: How to Get Started

• Kratter encourages readers to begin paper trading to practice the strategies without financial risk.

• He also invites them to join the Trader University community for ongoing support and education.