Stocks & Commodities V. 24:8 (98): At The Close by Marge Sherald
What do you think of when you think “cocoon”? Is it
small, fetal, round, cozy … formative? When trader Kenneth Branch uses the term, more often than not he
uses it in regard to trading, in reference to the growing forces within the markets. He looks for tradable financial instruments while they are still in the forming stage, covered by a “protective covering” of sorts until they are ready to burst forth in full flower. As he explains it, in the cocoon stage of market development, “there is a supply of any given security that may be purchased at low prices” before most of the market finds out about it. And it’s worked for him, because the tradables he finds
at that point can be had at attractively low prices.
Branch has taken a different approach to trading than most.
He was convicted of drug-related charges at 18, and it was during his 12-year stay in federal prison that he began to study the markets, in particular reading Stan Weinstein’s "Secrets For Profiting In Bull And Bear Markets". For six years he manually charted index and stock activity, and from there he began to recognize technical patterns, subsequently developing daily trading models based on indicators. After his release
at 30, he started Lanham, MD–based Cocoon Trade.