Aggressive Stock-Picking, Week 3: How to Play the Unusual Volume Game

Step 9. Paper-test your results. Calculate whether if you had bought the stock at the close of the next trading day, would you have you picked the best stock? What about three days after the close, or five days after?

Homework Hints

Search Stockpickr for other portfolios that include the term "unusual volume" or simply "volume." You may find both professional and non-professional portfolios. Read the "Reason for picking" box for each stock and see if your reasons match other investors' reasons.

You can also compare your stock picks with the latest "rocket stock" picks, by doing a search for "rocket stocks" on TheStreet.com.

• Weekly Rocket Stocks: Each week, James Altucher highlights those stocks he thinks will go up high and fast - just like a rocket. Check out his Rocket Stocks lists for the past three weeks.
• Stocks With Unusual Option Activity: Unusually active option activity can often indicate that a major event in a stock is about to take place, or that unsophisticated investors (using options in lieu of leverage ) are potentially making an irrational bet. This can cause, or be the cause of, a stock to rise on unusual volume.
• Analyst Upgrades: An upgrade, particularly from a major investment firm, can move a stock upwards very quickly. If more than one analyst upgrades the stock at the same time, so much the better.
• Biggest % Gainers: A stock rising on unusual volume is a great candidate for quick, huge percentage gains, as if it were a "rocket stock."

If your stock appears on several of these lists, this gives you additional reasons for your trade decision.

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