12. Grading Stocks | PowerX Optimizer

Emphasis should be placed on the Profit & Loss charts, both of which should be climbing steadily for at least the last 18 months.

Trendability and Gappiness are somewhat less important.

The P&L charts are a graphical representation of the profit of a $10k trading account over time.

Grading System

Grade Flag Description

A+ Yes :-) Ideal, but still do your own research.

A Yes :-) Good, but has one or two weaknesses.

A/A- Maybe :-| Okay, might be worth a gamble.

A- No :-( Poor, not something to swing trade right now.

None No :-( Bad, should probably be avoided.

Never No :-( Awful, will probably never be a good trade.

Any deviation from the following criteria will result in a pick getting marked down, the greater the number of deviations the lower the grade.

Profit & Loss Charts:

Both should be climbing smoothly from the lower left to the upper right with little sideways movement.

Short periods (<6 months) of sideways movement are okay.

Stock Price Chart:

Trendability - No dramatic spikes in price.

Few periods of sideways movement or choppiness.

Gappiness - No large gaps - overnight changes in price.

Small gaps within trends can be ignored.

Trading Report:

The trading report shows the actual trades and Profit/Loss that is displayed in the P&L chart. The trading

report can be used to double-check data when the P/L chart might appear to be flat.

Price:

The stock should have been trading above $5 for at least the last 12 months, as penny stocks have a

nasty habit of crashing and burning.