February 4th, 2019
This just in from a newer member following my trade strategies during the worst months of 2018.
I want to take a minute and share what a huge help Scott has been for me. My account value is at an all time high since I joined in October 2018. Throughout this difficult period on the market, my profit this week alone is up an additional 10%. Besides his alerts, including calling the market bottom in Dec.,2018, he has showed me his techniques for taking profits, finding entry points and so much more. Thank you Scott for all you have taught me. If you are new and you need help, this is the best place to start.
Here’s some suggestions to help during a severe market corrections
KEY TIP! Trust the information that I’m providing to get the most out of our services.
This page was created for the purpose of sharing specific answers to questions/concerns from members to help clarify certain issues. Have questions of your own? Contact me here.
Market order or limit?
Often times good trades get missed because of using a limit order, because of being greedy on the buy side. For the most part I suggest market orders. Sure there is a place for limit orders at times, such as more thinly traded stocks with wide spreads however if you’re looking to enter a stock that has a high probability of breaking out the last thing you want to do is totally miss your entry because of a few pennies or get a small partial fill on your buy order. When the setup looks exceptionally good, get in the game.
Should I take a big or smaller position on stocks alerted?
Understand there are always variables. Sometimes you’ll want to put the pedal to the metal and other times be more conservative. Market conditions, strength of an individual stock and/or your own individual risk tolerance will all play a significant part. If not 100% confident you may want to consider starting small, then possibly adding to a position as you see clearer signals, showing the likelihood of a stock going higher.
My thinking is if you enter a position, consider worst case scenario. If for example a 12% gap down would devastate your account (your risk tolerance) you likely have too much at risk.
Deciding to go large.
That being said when I see what I consider to be an exceptionally strong stock, one that I’m seeing strength AND consistency in action confirming my expectations, I’ll load up or add to that position understand that I have a better probability factor and higher upside potential.
Diversifying can increase your probability factor (with more safety)
Be diversified and try not to over analyze stocks alerted, selecting only stocks perhaps that you believe are best. I typically like at least 3-4 open positions (with cash on the side) and an absolute maximum of 6 positions.
Being focused with real commitment are essential to your success. I would highly encourage you to focus on stocks I’m focused on (stocks that are consistently confirming) and if at all possible visit with us in chat where I often walk members through step by step, to make it as clear as possible what specific stocks alerted that I expect to perform best. It’s a significant advantage.
Be open to learning. Traders that are new with us understandably at times have a difficult time adjusting to new ideas and sometimes choose to hang onto some old ideas, worse yet holding onto (losing) stocks bought prior to joining us. Be careful here. And some just seem to have the tendency to try to guess which stocks I’ve alerted that will outperform only to end up somehow with perhaps a couple that didn’t confirm strong, as other stocks that they decided to not take scream up higher. Don’t let this be you. Be open to different (new) stocks and strategies provided. On those stocks that you may be a little apprehensive about, let me suggest to perhaps try smaller amounts when entering. You’ll likely feel much more at ease till you build more confidence and it’s certainly far better to have a little skin in the game on stocks that I expect to well outperform than none at all.
If you’re currently trading using these techniques below, I would highly suggest to reconsider them.
Some common misconceptions.
#1 Often traders will buy the exact same quantity of shares on stocks no matter at what price.
- The quantity of a stock purchase should be based on total dollar amount invested and not by quantity of shares. There’s a huge difference between buying 1000 share of a $100 stock versus buying 1000 shares on a $10 stock.
#2 Always use a limit order when buying a stock.
- Now sometimes this does make good sense, say if you’re placing a limit buy order on the hopes of getting filled on a pullback near good support or entering a more thinly traded stock. Most times however I use market orders to get filled on my positions. I don’t want a partial fill on a stock that I’m expecting to move up considerably higher. It’s that simple. One additional note, especially if you’re placing limit orders, always confirm your order. There’s nothing more disappointing than being in a huge percentage gainer only to find out when it’s time to sell that you’ve only got filled on 100 shares instead of the 1000 that you thought you bought.
#3 Trailing stops.
- Though I believe tight trailing stops can be a great tool to help assure profits on stocks that you’re up quite a bit on, I do not suggest using them too soon after the buy, before the stock has had a chance to lift off. Why? You should already have a stop in place as to the maximum amount of risk you’re willing to take on that trade, in most instances, 1.5% Lets say your stock starts going up (especially if it’s one that I’m expecting to outperform most) and after it’s up say 4-5% you move your stop up tighter because you want to make sure you’ll at least get that out of the trade. If that’s all the trade is likely to give you, that’s fine, however if the probability is that this stock is more likely to go say 10-20% or more, you’re not going to be happy watching it take the rest of that journey without you on board.
Understand that not every stock that I mention on social media is related to stocks that we’re currently trading or that I necessarily plan on alerting to members. These post are at times about stocks being actively traded by members in chat or simply stocks of interest that I may or many not consider actually sending out an alert on. Please use your own discretion.
A must read if you’re adding to your a position.
Bottom line is this; consider each buy as a separate position, whether the buy was made at a higher price than your original amount OR lower (on a pull back) and watch your profits most likely, increase.
Glad you’re liking the services.
His response in kind.
Thanks for the quick and thorough response. It definitely helps. I appreciate it!
Some great tips from one of our chat members. Good stuff! 🙂
Thanks for the good picks. I just had some thoughts on what new guys could do:
1) Keep a log of your trades.
2) Know how much risk you are taking on each trade and have solid stops. As a beginner you should use hard stops until you have the self control to take a mental stop when price hits a certain area.
3) Trading is work! If you think it’s easy, you’re in for a harsh reality check. When you start to think that you own the market, you are destined to fail. Must be humble when u take gains
4) If you have 5 losing trades in a row, take a break for a week before you blow up your account.
5) Conversely, if you have 5 winning trades in a row, go to your broker and get a check made out and take your sweetheart out for an expensive dinner!
Trading scared? It could be a case of post trauma”. Anyone I’ve know that has traded for any amount of time has experienced this and it usually doesn’t just go away! One of the most difficult things to do is to come back after a major loss. Could have been a week ago or even years ago, doesn’t really matter. But you need to get those things going through your head (imaginations thinking that you know the stock is going to continue to go down because it’s going down, even when it’s not) out, before you can have any serious success again at all.
So how to get out of it?
You need a good plan (be conservative) and then stick to the plan.
Basically trust the charts and to trusting in me to assist you.
This member gets it! Nicely done Wendy
03:01 pm Wendy T: got stopped out on NUGT but did well on PBR,CLF,YELP, and RMTI. Because of your heads up a few days ago on RMTI, I made $$twice on it.
Some ways to help prevent being caught in a catastrophic situation that could result in serious losses.
#1 Don’t overload into one stock.
#2 Don’t hold through earning releases on stocks.
#3 Have a good amount of cash for reserve for new opportunities.
Below are quotes that I’ve given over the years that have proven to work.
Keep focused on the longer term trend and you’ll not so likely get shaken out of winning position by second guessing any short term, 5 minute action.
- >>>> Pro Tip How to reduce risk …and increase your confidence. One of the best ways I know of to reduce risk without getting stopped out multiple time in a volatile stock/market is to reduce your size. Try buying in small portions and add when (if) you’re seeing better confirmation, either on a pull back and/or possibly if it then confirms higher with a potential breakout signal. You can increase your level of confidence because you’ve lessened your level of risk. For example, let’s say you typically put in 10K on a stock with 1.5% risk. Now say you put in 1/2 that amount or 5K. This can put you in a position where you now have more wiggle room, say 3.0% (versus 1.5%) without risking any more actual dollar amount. So now you’ll be less likely to get shaken out of a good setup based only on the short term action, provided the overall trend of course in intact. Important: This is not a suggestion to hold stocks that are technically broken (questionable) and/or to not use stops!
- Most traders will decide to take a break after a succession of losses. Consider instead, doing so after a succession of big wins, to help assure profit.
- Ever make a big mistake trading your stocks because you made an impulse decision to sell, based mostly on the news? It’s one good reason I read the headline portion only. Any more after that is usually just others opinions to make a good story and not likely in your best interest. Watch the news, trust price.
- A person will tell me “Scott, you’re great but the market is tough right now. I’ll come back when it’s a better time.” The person leaves. The next day, it’s “a better time” but that person isn’t there to take advantage of it. It really is often darkest just before dawn and much power in perseverance.
Don’t get too caught up in and/or disappointed just because a stock doesn’t confirm a certain expectation and/or setup from that day. Sometimes the move happens (surprisingly) the day after.
- “When in doubt, Zoom out”
- Understand the 3 day sell off rule isn’t really a rule at all. It’s simply a point in time where a stock could, maybe possibly, might give a signal to reverse based on if this and/or that.
- Selling stocks based on a (potential) pullback? Even if right, a pullback on the indexes in itself shouldn’t change your plans on trading individual stocks. Some of our best performing stocks (best percentage gains) have come while indexes pullback.
- When considering to add to any position that’s moving down, I ask myself “If I didn’t own this stock, would I be a buyer here”? If the answer is an (immediate) yes, I’ll then seriously consider adding.
- Every morning you’ll see expectations posted via the public media, often based on factual data. To an extent much of it really means little, until after the open. Having a plan is good. Having your trades planned based on your own expectations as if you can know can throw you off course quickly. Have a plan AND an open mind to all outcomes.
- Are you concerned/worried each day about what stocks and/or markets have done in the past; perhaps a market correction? I really like how the apostle Paul said it …”Brethren, I count not myself to have apprehended: but this one thing I do, forgetting those things which are behind, and reaching forth unto those things which are before”
- 06-18-19 BYND Focus is good. Too much focus on continually trying to profit from higher flyers like this, too often leads to bad. Don’t let this be you. Take the easy trades and don’t be afraid of missing any (key word “potential”) rallies. Many will be holding this from high levels when it finally does pullback, counting on a bounce as if it’s a given; only to watch it continue considerably lower. It’s always the same story, just a different stock.
- Best way to avoid the noise is to avoid it. OK Maybe not 100% doable since you do want to keep updated about what’s going on and open minded BUT don’t continually dwell and keep 2nd guessing your (winning) position based on others opinions that change like the wind. Focus is essential.
- One way to tell hype versus real strength is when a stock keeps getting what appears to be good news but price (action) doesn’t reflect that news. So these type often will go higher (short term) but not able to hold those gains and get sold into once again, only to head lower.
- I don’t spend my time continually micro analyzing the VIX and/or overnight futures ES More times than not it will only take you off track. I spot check them for sure but that’s it. There’s no need to follow every tick on these. Just a distraction.
- I’ve never been big on the will it hold question. Stocks pullback all the time and too often the assumption is that it didn’t hold, so one should sell the stock. It’s a bad plan. Stocks pulling back should be expected as part of the process
- You selling a stock for a ridiculously small profit because you think it might go down, that’s most likely (based on probability) going to run up say 20%-30% or more can cost you more in loss of profits than the losses you’re taking on stocks.
- Member sent me this. From a list of some mistakes that he learned from in the past. I don’t think that I could have said it better. “The misses (sold too early) would be worse than my biggest actual money losses”.
- Setups on stocks not working? Some will, some won ‘t. so what. Next! It’s going to happen. Don’t get all caught up and frustrated on that not all of your them are working out as hoped. Always (continually) focus on narrowing your focus onto the ones that are.
You want to trade a group (diversification) of stocks however you don’t want to trade them all as a group. Every stocks is different. So just because the indexes are going up, there may be one say that’s lagging behind and might just be prudent if you’re up on that one to take at least some profit on it while it’s there to be taken. Just one take.
- I used to be the person that would sell near rock bottom. And then watch that stock start going back up and the more I watched, the more I realized knowing that it was going to keep going up. Did I buy then? No. I got mad. I got really mad. And then just stopped looking at it. That attitude never made me any money. Don’t let this be you. Take advantage.
- I’d suggest to NOT trade all of your stocks based on the indexes, especially when it comes to short term action. Good trading is about understand and having a good grip on both the short term and longer term time frames, no matter what your timeframe of trading is.
- It’s important not to automatically take news at face value. Always think about how it fits in with the bigger picture, not just in the moment (short term) reaction from the markets.
For me the word expectations works better than a target. A target is very specific and have seen many trades not go so well by having one. I’m willing to hold a stock that exceeds my expectation for a bigger gain. There’s a difference.
- I’ve seen too many traders raise their stops too quickly on a stock that’s just starting to breakout. And they then decide to sell it on the way down for a 1% profit because they’re sure otherwise they’d only end up taking a small loss of perhaps 2%; only to watch that stock go up another 15% or more, within only a few days. Don’t let this be you.
- One number that I don’t hear a lot about from traders, that I at times find very helpful is the opening price the day before. On a decent setup, getting an opening price (even just slightly above) the previous day open price can be a good intial tell of confirming a move higher.
- Some say profit is profit. I say if you keep selling stocks for a profit say for 2%- 4% when the probability is saying that the stock is likely going to go up 20% or perhaps higher, then there’s something wrong. Take some time to study and to know which stocks are likely to outperform. Get understanding of the technical analysis. And don’t forget to include information on the potential future growth of a company. Follow (observe) others that are experienced in these areas. This extra research can be very valuable, to help keep you assured about your position and more likely to consider holding what are likely to be the better stocks for those bigger percentage gains.
When you’re in an exceptionally good stock, it can certainly get more difficult as it goes higher to handle going through volatility. i.e. BYND PD ZM etc. I would suggest that if you still think it’s likely that the stock could have substantial upside potential, lesson the position. Assure profit and put yourself in a win, win situation while at the same time reducing stress! 🙂
- No one is that good to be able to avoid every pitfall. Question is what to do once you’re there? Late 2018 was a reality check for many and the biggest mistake I saw people make, was simply not getting back into the game, to take advantage of the fall. Don’t stay mad about corrections, take advantage them.
- I rarely buy stocks AH however I do have one exception. When I see a quality stock after their earnings report moving up with volume that looks likely to breakout AND (here’s the key that helps keep my downside risk lower and emotions in control) that’s still under the key pivot point of resistance to confirm the expectation, I’m in.
- I learned early on that most of my profit didn’t come from big percentage gainers but by taking smaller gains of 12-15-20% and turning my profit over again and again.
- It’s fairly rare that you’ll see a stock and/or index do a perfect 45 degree move higher all day long. When it does it’s usually a good time to take profit before the close. Point? Don’t over concern yourself with intraday pullbacks. I get it, they’re not so much fun but if you expect them as part of the process for stocks to move higher, they can be considerably easier to deal with when they do occur.
- Many trading strategies get talked about but one thing I see so many people not have isn’t about a strategy; it’s about the lack of persistence. All the time I see people give up just when things are ready to turn around. Do a study on the word “persistence” It may change your life.
- Don’t make so much of stocks not closing near the highs, as if it’s bearish within itself. It’s important to continually consider the longer term time frame.
- Why are you always thinking that you know the end result every time there’s a pullback as if it determines the close? Food for thought 🙂
- Even better stocks, with excellent fundamentals and expectations of good growth can go through significant pullbacks and/or time of corrections that can last for days or several weeks! Be careful not to get so focused on them, that you forget to lock in big percentage gains when there to be taken (higher) versus that real possibly selling much lower because you feel the that you have to.
- I watch my stocks like a hawk after the buy but after it starts taking off, confirming the setup I have no need to watch EVERY SINGLE MOMENT Relax 🙂
- Sell signal? When I’m at at profit point high enough to tell my wife about how much profit I’ve made, it’s always been a good time to sell
- It’s not just having the news and/or the right data, it’s how one interprets the information.
- Think twice when you hear things about huge quantities of calls being bought on the VIX or other stocks for that matter. Why assume they know more than anyone else?
- Be very careful about continually increasing your position size (with margin) on stocks as they go higher. It’s a painful way to quickly increase your losses.
- One red flag to pay attention to that you might be going into a correction is if you are getting stopped out more than usual. Don’t ignore the red flags when you see them and wait for stocks to go considerably lower to sell. Preserving your capital is too important.
- If I was to sum up in one word what I’m mainly looking for in a good setup, it would be “Consistent” confirmation of the setup be the stock up or down.
- Simple but powerful!Trading options:The positive: Small can become big quickly The negative: Big can become small quickly You control the small or big at the start…
- Contrary to (in the moment) popular opinions, down is not always a bad thing. It can in fact give you good opportunities to increase profit.
- Stocks/Market It’s bullsih, till it’s bearish. It’s bearish, til it’s bullish. One’s time frame along with one’s own risk tolerance, etc is important
- NUGT and UVXY Two places that I do not ever position in just prior to FOMC Rate Decision
- Careful when you’re focus shifts too much on the news (in a losing position). An exit plan can eliminate of lot off loss, stress and fear.
- After a stock has had a considerably run higher (a significant percentage gainer) be careful about wanting to buy the dip too quickly on the first pullback. These can and often do continue lower than we first anticipate.
- I think probably the most common mistake made by traders happens during short term, intraday pullbacks by 2nd guessing their position.
- It’s not just the chart(s), it’s about how much do you really trust them and/or the person that created them to help guide you. If you were flying an airplane by night, I’m thinking you’d likely be very focused and trusting 100% on your instruments and the person in that tower to guide you home, yes? 🙂
- News When it come to the news; most of the time all you really need to do is read the headline. Price (action) will tell the rest. $STUDY
- Stops alone are not enough. Get enough of them and it can add up quick. Remember each time you buy a new stock that you take on that additional risk of another set up that could potentially fail. Careful not to overtrade.
- Conviction of your position is important. I’m not suggesting to be reckless but you have an advantage when you’re buying good stocks that have the longer term advantage based on fundamentals and trend, to buy/add lower when/if the opportunity presents itself.
- There is much more that happens when holding onto a losing position than just losing money. You also lose clarity of your mind that’s NEEDED to take advantage of other good, profitable opportunities. Let it go.
- Find something better to do with your time before the open besides watching every little up and down tick premarket 🙂
- Losses are part of the cost of doing business when trading. There are however ways to help reduce them. Here’s one way. When thinking about a position, consider what’s most likely if the stock pulls back after you enter it. Is it a stock you’d more likely want to add to or is it one you’d want to make sure to stop out ASAP because it would most likely mean the trend is broken and would most likely then go down significantly lower? Understand that this is not to suggest to not use stops or to average down on a stock based only on it going lower. That’s never a good plan. It’s about positioning in quality setups to help being stopped out (less) to begin with. Make sense?
- Every signal is established (confirmed) after some fact. Question is how long are you going to wait to react to keep your loss as small as possible or take advantage of a buy opportunity (while the stock is still reasonably low) based on those facts.
- What many too often forget is that yes a Doji indicates a change in direction. What it doesn’t tell you in though is which direction.
- Stop assuming that the open or the close or the pullbacks during market hours is the end. It’s just part of the process.
- I often offer what many would consider to be exceptional trade opportunities but it’s not attained by by starting the day off anxiously looking for it. I start my day off by observing and defense.
- One signal that gives me very good confidence in my position when I see it. Doesn’t happen everyday but when it does, it rarely fails. Basically what you have is a major indicator that is close to signaling positive; could be the Slow Stochastic for example. Then the following day the stock (or can be an index) pulls back (in the red) yet at the same time that indicator turns positive! It’s subtle but strong and should give you much more confidence to hold that position or perhaps consider adding to when it’s lower. This works best of course when overall market conditions are favorable.
- For me being well diversified does not mean having the same dollar amount in every position. I’ll often add more to ones that consistently confirm expectations on a pullback and/or confirmation of a breakout.
- When NOT to trust the chart! You don’t want to buy/hold a stock through earnings based on the chart or buy interest the day prior to the event.
- Careful about always changing your game plan, in the middle of the game (day)
- There’s a significant difference between (potential) resistance and (confirmed) resistance.
- When swing trading, careful making too much out of ONE 5 minute candlestick. It’s only ONE part of the pattern/setup.
- See many traders thinking they can know where a stock will top out and plan to buy again (lower) only to miss the next move (higher) It’s important to understand also however that this applies mainly to longer term bullish market conditions.
- Sometimes doing less is more and sitting is more profitable than trading.
- When a stock gets to the point of moving so high (so fast) where I have absolutely no interest in buying it at that level, it’s probably a good time for me to start selling. “Assure profit”.
- Stops are good. Positioning smart on a good setup is better.
- Conviction in your position is a plan.
- Often traders miss out on bigger percentage gainers because of getting too caught up in one day that the stock isn’t (apparently) moving up.
- re: January 18th, 2019 TSLA ACB NFLX etc. Don’t get so caught up in watching what’s popular, that you miss out on what’s profitable. i.e. SQ CRON JDST etc.
- It’s not always the big things (mistakes) that hold us back from attaining bigger percentage gains/profits but can be rather a succession of small mistakes that keep adding up. Example. Over analyzing every small move on a stock, feeling compelled to sell it on the first slightest retracement because it MIGHT go down more. TIP Careful using signals that day traders are using to sell for the same as signals for swing trades.
- If you’re selling a stock ridiculously early ONLY to finally feel good about making a profit, you’re likely on your way to having more losses. Careful here.
- Careful when considering technical signals and/or points of resistance that day traders use, as a signal to sell all on a swing trade.
- Problem with trading a stock you’ve never traded and are unfamiliar with is you may not realize what you’re into until you’re in it.
The VIX Many reference to this as a volatility indicator for the markets. I don’t need it for that, I have the major indexes that tell me such. I see it far more beneficial as a fear indicator and not so much for viewing the volatility on stocks/market.
- Diversification in various stocks and sectors is good; not only for long term investors but indeed also for traders.
- Much of trading is to do with our own mindset rather than what’s actually happening (or perhaps going to happen) with stocks/markets. Example? The way I see it is that I don’t need to call the bottom here, I’m simply trading stocks as though it is, unless proven differently. Based on recent action, seen in the latter part of December, 2018
- One thing that can help keep you in a winning trade, when maybe it doesn’t look all that exciting as you had expected. Sometimes we want our stock we bought to move a such and such a way, over a certain period of time, basically wanting it on our own terms, when in fact we’d do better to simply hold and stick to the intial plan.
- Basing decisions on probability with a plan to take profit …or loss if a trades goes against you will always far surpass the results of those guessing and/or hoping for everything to somehow turnout alright.
- One thing that helped me tremendously my first year trading stocks is that I didn’t sell only because my stock went lower. Instead I asked myself the question “If I bought where I wish I had, would I be selling?” If the answer was an immediate no, I held.
- It always look so easy on the daily charts end of the day and why I’m continually observing the overall (bigger) picture.
- It’s not a matter of predicting (guessing) what a day might bring but more so about being open to any possibilities (while at the same time considering the best probability) and making decisions based on the evidence as it’s given.
- What’s far better than spending your time speculating during premarket on what might happen after the open? A plan.
- A plan is only as good as one is willing to execute it.
- If you’re one of those that keeps getting tempted to buy any bounce on a losing stock, STOP looking at it.
- Problem with selling into the rally to take a smaller loss; is first it may not bounce and second, most can’t get themselves to do it.
- It’s important to understand that in bearish stocks; resistance is more important than any (potential) support. It’s a matter probability. In a bull market buy near support. In a more bearish market, consider selling and/or shorting at resistance.
- The only good setup is the one that follows through. Never think that you can know what a stock is going to do. Why stops to help keep your downside risk to a minimum is so important.
- You can’t possibly time every breakout to perfection. Often just better to be positioned lower to reduce your downside risk and/or to avoid potentially chasing the stock.
- Patterns take time to develop. The more times confirmation is made on each move, the more confident you should be in your positioning. Howbeit ideally while the stock is still relatively low.
- You don’t need lots of news to trade better, just news that’s Pertinent. Pertinent: having a clear decisive relevance to the matter in hand
- One of the issues I’ve seen so many swing traders have is they continually read charts from other (not so good) swing traders that are making calls based on the same short term resistance points that day traders are using.
- Novices too often get caught up in the moment based on short term action. Pros have a plan.
- Are you making hasty decisions at times? Clarity is essential. Trading always looks so easy on the daily chart. Too much focus on the 5 min chart can throw you off so I routinely check the bigger picture (daily charts on individual stocks) along with the VIX etc. during market hours, for clarity.
- To me a good setup, I see it and then add lines to give it more clarity. A good technical setup (at first glance) should be obvious
- Major indexes versus individual stocks. It’s not so unusual for the major indexes to move up while some stocks go down or to watch indexes go down while some stocks move higher. Why I focus more on individual stocks, versus putting too much focus on short term direction of the indexes
- When you get to the point of thinking that you’re so good that you can actually know what a stock is going to do at any given point in time, you’re already in trouble. You just don’t see it, yet.
- FOMC Pay good attention to stocks that are showing exceptional strength just prior to the FOMC Rate Decision at 2:00 PM. These stocks often do well no matter what.
- Re: October, 2018 market correction. There was more than one person just a couple of weeks ago that told me they would be back when things got better in the markets. Well, the market changed course within as little as one day after that. Don’t let this be you. I understand it’s not easy but stay the course because it is really is true that most do give up, just before the dawn.
- One of the beautiful things about using tight stops is if a trade goes against me but I realize (given it was a good setup) it was just my timing that was off, I have no hesitation getting back into the trade later. With a big loss you’re just not that likely to re enter.
- Be very careful thinking that you know what a stock is going to do. Conviction in your own position is good. Overconfidence however is high risk.
- In bearish conditions, here’s another way that can help to make your losses smaller. Sell into rallies. Not so easy to always do but can have a positive effect on your account. You don’t need to watch your stock continually break down through potential support levels, only to eventually end up selling, lower.
- Don’t get all caught up in the name of a stock (ticker) as if you need to win it. There’s other stocks to trade.
- It doesn’t always take big volume (sell pressure) to bring a stock lower but sometimes simply a lack of buy interest.
- As a novice trader, I would too often watch stocks go up without me because I was mad. Don’t be mad at the market after a correction. Take advantage of it. :
- Corrections (sometimes extreme and without warning) are part of what happens in stocks/markets. If you’ve done well increasing your account, especially over an extended period of time, you may want to start using less margin and not more to help reduce the likelihood of your downside risk. Assure profit.
- The next time you have a good succession of wins consider putting less of those profits back into trading. Why? The more time, the better the likelihood (eventually) of a market correction. It will always be a matter of when, not if and often times will come with little if any warning at all. If you’re continually putting all of your profits back into trading after stacking up some good wins, that size that you’re trading with at that point could be substantially higher, so in essence in itself can greatly increase your risk, especially if you’ve increased your use of margin. So be content with your profits and lock in a nice portion of it and help to KEEP more of your profits by putting them to the side. Some may have a difficult time doing this with monies available to trade with being right in front of them. If that’s you, then maybe consider putting those monies into say a regular savings and/or checking account. Just a suggestion. Do what works best for you.
- Holding losing stocks not only increases your losses, it stifles clarity (not to mention cash) to take advantage of new trade opportunities!
- Selling a losing stock (especially for a small loss) hurts only for a moment. Holding it can keep you in agony for months. Have an exit plan.
- There’s a huge difference having conviction on a stock versus being in denial (and holding) onto a losing stock. Know the difference.
- I don’t decide ahead of time as to which stocks I’m going to buy the next day. You never know what a day might bring for an opportunity, on any stock!
- Sometimes the setup you see isn’t the one that plays out and/or in the time frame you expect. It’s important to keep an open mind AND a plan.
- Always do your utmost to not take a loss on a stock that was a winning trade.
- In times of uncertainty in the market; some days, not losing more is winning. More cash on the side (with patience) is good.
- Many traders think that a stock/market is going down based only on the previous close or from the high of the day. Think bigger.
- Be careful not to place too much emphasis on any one part of the market. Meaning a major index, bank stocks, 5 minute charts , etc.
- Don’t confuse buying higher with chasing. It’s often safer to buy higher after seeing a good consistent pattern developing on a stock.
- Many traders are often quick to sell for a small gain, yet will hold onto losing stocks (with huge losses). Should be other way around.
- Be very careful about wanting to buy a stock based only on it being lower, without bullish evidence helping to confirm the expectation.
- Though the major indexes such as SPY DJIA etc. shouldn’t be ignored, they often have little to do with how a stock is going to perform short term. So don’t put too much focus there.
- The best way to avoid being affected with trades by news/noise is not to listen to it too much to begin with.
- Pullbacks don’t necessarily mean losses but simply profit delayed, for larger profits to be made higher.
- When a stock I own gets to the point so high, where I have absolutely no interest in buying it; it’s probably a good time for me to start selling it. “Assure profit”.
- “Profit is profit” There’s some truth to this but this phrase is just way too often taken out of context, simply because a trader has sold their stock(s) ridiculously early.
- Level ll I primarily use this to help me on precision entries. After the stock has moved higher (confirming expectations) it can be more of a distraction. I’m then focusing more on the 5 min chart (3 days out) along with the longer term chart (daily) for support, resistance, volume etc.
One of the ways I like prepare for a correction/pullback in stocks/market is simply by locking in some gains on the way up, into any significant rally to help assure more profit. This helps to create a win, win situation no matter what the direction of the stock/market after. And now I have the opportunity to make additional profits into any extended rally (as a longer term swing trade) or the option to sell the remainder of my shares for a reduced (but still very profitable) amount.
- Careful perhaps mistaking a bounce for a reversal setup. A bounce can be short term. A reversal setup (is a pattern) that most often happens over time.
- Common mistake I see traders make on breakouts is to be quick to call out (what they think is) resistance based on one day
- Some traders do better by simply making the buys, setting their stops and going about their other business. Work what works best for you.
- Solid buy signals are essential but waiting too long can often mean your entry is considerably higher putting you in a higher risk position.
The tendency to sell a stock too quickly (because of a short term pullback) is much greater when you’re overloaded in that position. You may want to consider scaling in (buying in portions) to help reduce your intial risk and/or scaling out (sell in portions) of a position to help assure profit as you go.
- When the technical analysis is telling me to be out of a stock, the last thing I’m thinking of is getting others opinions. I sell immediately and then ask questions (figure out my next step) later.
- Always double check your buy/sell orders. I know of one trader that lost $17,000.00 in a matter of just hours, thinking he had this instead of that. So be sure to check the ticker, quantity and if long or short and if trading options the expiration date of those options.
- One of the worst things a trader can do to him/herself is to stay in a losing stock, continually hoping for what they know it highly unlikely and then only to take the bigger loss lower. Always have a defined exit plan.
- A (so called) weak close on stock/market does not automatically mean it’s bearish. Keep an open mind to the bigger picture, the trend.
- It’s all about waiting (being patient) for the right set up, to be positioned before the move. I’ll follow a stock for days, weeks or even months waiting for the better setup.
- When the trend is on your side, time also is on your side.
- It’s not so much about calling the exact top but rather about locking in nice gains when they are there to be taken.
- Having a mechanical stop loss order at the open (or just prior to the close) is almost like asking to be stopped out.
- If the news and/or fundamentals coincides with what I’m seeing on the chart, all the more confidence in the chart.
- Better to be focused on a few quality stocks than to be chasing every new stock that is breaking out.
- Better to be willing to take what a stock is willing to give instead of what you think it should give. Be careful about preconceived notions on targets or continually raising your expectations (targets) higher on an extremely bullish stocks.
- You want to buy stocks low but to buy based only on it going lower, without some bullish evidence can be very high risk. Sure bottom fishing can be a good way to go but would suggest tight stops.
- Probability says that after a stock breaks out above the $90.00 mark, it’s likely heading for $120.00 and then some.
- Solid buy signals are essential but waiting for too much follow through may only ensure that your entry is at a much higher point and therefore at higher risk.
- Make decisions based on the evidence seen (one day at a time) because one never does truly know what the next day might bring.
- One technical indicator; be it volume, support, resistance, candlestick does not necessarily negate the bigger move (trend) as a whole.
- Careful about getting caught up in every little move (micro analyzing) on strong trending stocks. It’s too easy to miss out on the more significant move.
- You being focused with consistent action will always outperform chasing the latest (hyped) stock that comes along.
- Be open and ready for anything, when the evidence compels to do so
- Being up on a stock is not the time to be afraid. Understand that there will be pullbacks however as long as the trend is intact, be patient. Let your runners run and lock in portions of profit on the way up.
- When a stock goes so high that you can hardly even believe it, it’s most often a good time to start locking in those nice profits.
- UVXY This is an aggressive short term trading vehicle only and should never be held for the long term. Typically for 1-3 days maximum.
- It can be a bit too late to decide to take profits after a stock has already pulled to start locking in gains. Look to lock in some profit along the way (in portions) into the rally. “assure profit”
- Be careful trading beat up stocks, thinking they’ll join the ranks of better stocks. They are often times down there for good reason.
- It’s easy to lose perspective when your focus transitions to analyzing the news. Price action trumps all. Believe what you see and act on it.
- “I missed it” (referring to an entry point) Sure there are times when it’s relevant, however too often it just means that the stock is likely going, higher.
- When you start excessively looking for good news about your stock to feel better about your losing position you may want to seriously reconsider your position.
- Once you’ve taken a substantial profit on a trade, don’t be too anxious to get back in on a pullback based on fearing that you’ll miss the next run up. Be content with your gains and be patient for another entry if the opportunity presents itself.
- Good trading is not only about conviction; it’s also about knowing enough to realize when you’re off course, then to act accordingly.
- Rarely is it a good idea to buy stocks prior to the open or after hours, however it can be the best time to lock in some nice gains. 🙂
- When you’re locking in gains into a rally, you don’t need to spend so much time being concerned when a stock starts to pull back. “assure profit”
- Technical indicators are basically non relevant when it comes to determining potential earning results on companies. I would suggest not holding through earnings on stocks.
- One significant percentage gainer can cover a multitude of small losses and then some.
- Your own conviction in any trade is vitally important and the last thing you want to be doing is second guessing your position but be ready to change in a heart beat if new evidence presented indicates contrary to your initial analysis.
- Be careful about making impulsive decisions and thereby changing key elements of a proven trading strategy based on a one time event.
- Big percentage gainers are not so much one day events but most often attained by careful planning and being positioned before the move.
- You don’t need to work hard to catch every move, every trading day. Be patient and choose your timing when it’s easy. Watch for those clear signals.
- Consistent percentage gainers are achieved by careful planning & then patience for the follow through to occur, not by impulse buying.
- After an extreme sell off in the market you’ll often times also get a significant bounce; however choose positions (quality stocks) carefully. Some stocks will rise with the tide but not all will continue higher. Be selective.
- Beware of hyped stocks that seem to compel so many to attempt to make easy money, with no reasonable basis.
- There is no rule (that’s the good news) that states that you need to make up your losses in the same stock that you lost it in.
- I’ve seen many traders make their decisions based on hope. I’ve rarely ever seen it turn out good.
- It doesn’t always take heavy sell pressure to bring a stock down but simply a lack of buy interest
- Active traders increase profitability by focusing on the longer term outlook along with short term price action.
- If you find yourself continually seeking articles/news to feel better about your losing position, it’s most likely a losing position.
- There is one thing that frustrates me more than taking a loss and that is a missed opportunity.
- Believe what you see, not only what you hear. Avoid the noise.
- In weak market conditions, focus on stocks showing strength.
- A (so called) weak close at the end of the day on a stock does not automatically mean that it’s bearish.
- If you made $6500 in 4 days and then lost $1500 the next day, was it a good day? Your own perspective (even when winning) makes a difference.
- Having a clear mind prior to the open (non biased towards expectations) is essential. Believe what you see, not what you think you’re going to see.
- Any correction in the market should be taken seriously, not waiting till things get considerably worse before deciding to sell.
- We all want to buy at the bottom. Better however (even if you have to buy higher) are good stocks in strong sectors with the right setup.
- There is a time to buy a stock because it’s lower setting up. And then there’s a time to just not be there, breaking down.
- Over analyzing moves on the futures can easily take you off course, changing your game plan based only on short term action.
- Acceptable losses: Always draw a definite line in the sand as to how much risk (money) you’re willing to take on any trade, ideally an amount that you can still get a restful night sleep with.
- I’ve known traders that have taken big hits and waited a year to make a profit because they wouldn’t take a small loss. That’s not good trading, it’s investing, at it’s worst.
- If you’re continually breaking even on trades then you’re likely trading scared (afraid to lose) often selling on the smallest pullback. Careful here, rethink your plan and stick to it. I would also suggest smaller portions until you’re feeling more comfortable, having some success.
- Stops are good, being patient (waiting for the better setup) is better.
- Do not be afraid of stocks going in the right direction up, being quick to sell. Be afraid of those that are not (that you’re holding onto)
- See too many traders willing to hold onto losers, not anxious to sell but hoping everything will turn our alright and too quick to sell good positions. It should be the other way around.
- Keep focused on the charts; not on every fluctuation of your profit/loss, especially during market hours.
- Preserving capital is crucial and going into denial can be catastrophic. Believe what you see. Trust the charts, then act accordingly.
- I’d rather be wrong (out with a small loss) with a stock that comes back strong; than thinking to be right only to end up taking a bigger loss.
- Too many traders think if they didn’t catch rock bottom that it’s chasing. Nonsense and fact is often times better (safer) to buy after it’s higher (confirming)
- A good setup is only as good as the follow through after your entry.
- Try not to watch your P/L during market hours. It’s likely you’ll make decisions based on it versus what a stock is actually doing.
- When a stock is clearly signaling to sell based on the techincals, I’m not thinking about all the possible reasons as to the why. Sell, ask questions later.
- News Flash. Staying up all night watching futures does not necessarily improve your trading ability. In fact can hurt it.
- On Aug. 24th 2015 “Markets in Turmoil” I didn’t call the bottom but simply traded it like it was unless it was able to prove different.
- It’s not unusual to find a good entry on stocks after an earnings report and with just as good of a percentage gain or more than taking the chance of holding through, with much less downside risk. There is for the most part no real advantage to hold through these types of events.
- Charts alone are not enough. Everyone has the same information but it’s what one decides to do with it that makes the difference.
- More important than me thinking that I know what a stock is going to do, is to know what I’m going to do if it doesn’t.
- One of the worst enemies of a trader is noise (often disguised as other helpful traders) It’s essential to guard what you’re hearing.
- You don’t need to wait for a stock (your account) to get annihilated before believing it’s likely. Make decisions based on probability.
- Common downfall I see with so many traders is they can get so obsessed with one losing stock, that they lose ability to take advantage of other good trades.
- You’re going to have a tough time making good profits (even in a bull market) if you’re continually thinking (imagining) that stocks could go down, all the way up.
- Setting targets are often not to ones benefit. At times traders will not sell unless the stock hits that P/T and then end up selling it considerably lower.
- Contrary to popular belief, stocks/markets don’t typically peak on bad news but most often on good news.
- Stocks don’t know what your buy point is, so focus more on price action and not every moment on your profit/loss. I check mine EOD
- Careful about getting hung up on a stock, as if you have to win it. Good setups for the most part aren’t that complex. Know when to let it go and move on.
- When basing your trades on what’s most probable, you don’t need to wait then for your stocks to go substantially lower (or higher) to make a good decision.
- By not striving to sell at the very top (leaving something for someone else) more often than not will get more profit, not less.
- It’s too difficult to focus on finding new (good) trade opportunities if you’re continually holding onto losing stocks.
- I don’t care what others think a stock is going to (as if they know) Careful when the masses continually raise targets.
- When news is in play, I don’t base my trades on it but rather on how the stocks/markets react to the news.
- Setups: One of the key pieces I look for is consistency. That does not happen in one day. Setups take time to develop.
- Denial is often the 1st reaction when a trade goes against you and one reason why we protect, locking profits on the way.
- I’m not anxious to buy the stock of the day as if I might miss something. I’m focused on the next winner (now under the radar)
- Stocks moving to new highs is not a time to fear but a time to take advantage of while the opportunity is here.
- Stocks don’t move on our time frame. If you wait until you feel comfortable, it may not be the time.
- One of the key essentials that I’m looking for to better confirm the expectation on a stock? “Consistency”
- Holding onto a losing stock not only increases your losses on that particular stock but also prevents you from seeing other (better) trade opportunities.
- Never let a winning trade turn into a loss.
- You don’t need to wait till your stock drops like a rock to make a decision to sell. Go with what’s probable. So what if 1 or 2 out of 10 gets a bounce?
- If you’re seeking an entry in a volatile stock, waiting for the MACD to cross positive; you may have waited too long already.
- Careful about overloading on positions. Your good outlook on a stock may change quickly, prompting you to make decisions you otherwise wouldn’t have if you’re overloaded.
- Too often traders wait until they’re ready, versus taking a good trade when the setup is ready. Don’t let this be you.
- A (good) setup on a stock is only as good as its follow through.
- One of the main reasons small businesses go out of business, is the lack of back up capital. Same with trading. Preserve capital.
- Sometimes it’s not the confidence of the expectation higher on a stock but the when. Starting in a smaller position can help alleviate such anxieties to give you more confidence while waiting, provided the overall setup (trend) of course is intact.
- Averaging down to show a lower cost basis might make you feel better for a while but it is what it is. Use stops
- See so many traders out there quick to call resistance on stocks (based on very short time frames) only to see them breakout soon after! Don’t let this be you.
- Continually breaking even is not good trading. It’s most likely that you’re trading scared and most likely to end up finally losing. Be careful here.
- Be careful about being quick to change your longer term outlook based on short term action.
- Part of my trading plan is not having a plan, meaning be ready to change your mind in a heartbeat when the indicators compel to do so.
- Over scrutinizing premarket activity on stocks will often throw your game off, thinking you know what a day will bring. Don’t do it 🙂
- One technical indicator does not necessarily negate the trend. The more indicators that are in sync with each other, the better. Understand that most good setups take time to develop. Be patient and then when the time is right, strike at the opportunity, quickly.
- When it comes right down to it, I suppose the one most important element that I’m looking for in price action, is consistency.
- Good risk management does not include looking at your profit/loss via your trading platform, every time your stock pulls back during market hours.
- Understand when considering stocks that are in a downtrend, that resistance becomes more important than (potential) support.