Stock Trading Education Episode 2-29-16

Trading EducationThe week of February 29, 2016 was a great 5 days of trading…

Unless you were trying to pick a top. Trading mastery requires learning from both success and failure. There was plenty of both this week.

Stock Trading Education Episode 2-29-16

If you need some help please leave your comments below.

Have a great weekend.


Monday’s Trading Education:

Did you begin day trading before 2010?

If you did, you are going through some rough adjustments the last 18 months. Gone are the  nostalgic stock trading days of loading up on a good position with your first entry. Taking on size at support is a recipe for getting stopped out and being angry.

It’s time we face the music and admit those trading days are over, we need to learn how to work a position and get better at entering the same trade twice. Whether its algorithmic trading, global chaos or simply the new stock trading norm, if you don’t make changes to how you work an order you will be dusting off your resume.

Figure it out sooner than later, after all- who the hell wants to get a real job…

Trading Podcast Download

How to Convert Trading Ideas into a Daily Game Plan

A trader with a game plan is a trader who is prepared.

When I learned the significance of a game plan my trading took on a new level of focus and profitability.

Everything came together but not in a small, incremental way. It was an avalanche.

Take good notes this is an important lesson.

Download the Podcast Today…

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Tuesday’s Trading Education:

Stock Traders Need Structure to Succeed

Stock traders are in need of some aspirin…

We are experiencing a shift in how to earn a living as a trader. The pieces are moving but too many traders are not adapting. I have witnessed this multiple times, you shouldn’t begin believing you are unlucky to start now. When stock quotes changed from fractions to decimals we felt the same way.

But eventually adapted, and thrived.

You need to see things the same way to succeed at trading, especially if you’re a day trader. The market is not going to adapt to you. Pay attention to the leaks in your trading, figure out where you can make little changes. Make one at a time, don’t make them drastic, all-at-once type of changes.

Mark Douglas said it best in his ground-breaking book Trading in the Zone. Stock traders need structure to succeed in a random environment.

Trading success comes from your definite plan, not from the market. I have outlasted thousands of traders because I paid attention and adapted. My core philosophy of tracking order flow and momentum will never change, how I interact and manage trades does.

Wednesday’s Trading Education:

Day Traders Pay Day Finally Arrives

Day traders got a gift yesterday, it was a day to get paid…

If you messed it up, it’s because you missed the little things.

In the mentor room I spent a lot of time discussing how shorts were trapped. The close into the low on Monday with strong volume, and the higher open yesterday was a perfect trap.

Why does that happen? That’s the wrong question…

The right question is what do I do about it… If you were short, you waited for the opening range to form looking for the market to break lower. (see chart of the open range). This was the correct trade management. Where day traders got into trouble is when the VXX broke lower and the $SPY broke higher.

Day traders needed to forecast the price action that screamed “iceberg!!” The problem wasn’t the short, the problem was not getting out. Once bearish traders were trapped, we now had two sides with a desire to buy, shorts who were covering and new longs.

I spent 15 minutes describing this one set up pre market. Make sure you go deeper in your analysis. The entry is not where your profits are hiding. Learning to build a great argument is how you get paid, and become a pro.

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$SPY CHART 3-1-16

Thursday’s Trading Education:

Stock Market Seeks Believers | Angry Bears Confused

Day traders are a little stymied right now…

Especially bearish traders. And traders who use overbought or oversold indicators. I can’t tell you how many subscribers ask me why I don’t use stochastics or MACD. This type of market is exactly why. It is an extremely difficult topic to teach and mentor.

Overbought can remain overbought for days or weeks.

Here is the biggest problem you don’t see that is costing you a small fortune:

  • You think the market is overbought.
  • You put on a short-sale.
  • You lose a little with good discipline.
  • It moves a little higher, you put on another short-sale.
  • You lose a little and are proud because the market is going higher, you were short, but only lost a little.
  • Next the market is REALLY overbought and you short heavier because it HAS TO reverse at this level.

You take another loss and feel a sense of accomplishment because you “Managed Risk!”

What you fail to realize is the line of least resistance is still up and you did not earn easy money. You lost twice. You lost money and you didn’t make money.

Learn to read the tape. Stop guessing.

Stock Trading Webinar | Advanced Technical Analysis

Friday’s Trading Education:

SPY Chart Pattern Shows Reversal Day Ahead 3-4-16

Trading EducationToday’s stock market opening action presents a unique trading scenario…

Stocks are “well-bid” now for three consecutive days and closed on the highs. This type of price action is nearing a saturation point. This means institutions step off the gas and let stocks breathe for a day or two.

The type of open day traders get will dictate the trade for the morning. If we get a push higher off the open, yoo should be looking to book profits into the $202 area. You should not be looking for a strong close today.

If we get a lower open and the first push off the open is lower, you look for an entry signal long and look for yesterday’s high as your target.

The market sets up a nice swing like this every 3-5 days. Sometimes its obvious, like it is today.

When you learn to make the transformation from chart reader, to tape reader, you will have the guts, and skills, to call exactly what you expect to see happen on the open.

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