When Trading Less is Earning More…
The Stock traders earning the most money this year, are those trading less…
I should probably clarify, I have no idea who is making or losing money. What I can tell you with conviction, is that day traders who can’t discern between a great idea, and everything else, are trading too often. A lot of stocks are in 4 week trading ranges. The institutional edge on the charts is slim pickings.
Be patient to enter, be patient when you do.
This is a common theme in my coaching calls. The angst of over trading is felt most when the stock market serves up 2 days of easy profits. Day traders are looking at their P&L and saying “That was awesome, but now I am even for the week…”
To get past break-even requires losing less, and holding winners longer. I can hear you thinking, “no s**t genius.” My reply would be, simple yes, easy no.
Trading less is winning right now. There will be a time for being aggressive, day trading is about cash flow until then.
Podcast: How to Predict the Coming Trading Day with Conviction
Trading Psychology | The Psychology of Winning Traders
How to Break a Trading Slump
$HD earnings are out this morning and the stock is gapping higher. On the surface, the volatility is good, but is the move higher over with the gap?
A gap and sideways is frustrating. There is no other way to say it. You salivate at the potential price action, but then you get a dud. Then you force trades.
This vicious cycle is expensive.
This brings up a good topic- How to Break a Trading Slump…
If you are a member of our mentor room, you know I am very open about my early trading struggles. It’s the reason I am so passionate about helping. I already went through the tough times, my mission is to help you reduce and then eliminate the rough patches in your trading career.
If you’re struggling, you can quickly break it by getting back to basic criteria. Forget all of the amazing indicators and simply get back to tape reading. Specifically the most recent price action.
The recent move higher has frustrated a lot of people day trading because most of the stocks going higher are in down trends, so the sell-short is the correct trade. If this is you, try this simple fix:
For a long, trade only in the direction of:
- The current net change must be positive.
- The current change from the open must be positive.
- The current last price must be above the previous day’s high.
- The stock must be “well-bid for the last 2 days (higher-highs, higher lows)
This is one of my favorite slump busters. I am confident it will work for you. Go back and look at charts of the stocks you traded the last 5 days and I am willing to bet you will see a different picture.
To help you find stocks that meet this criteria (for longs), here is my scan, give it a try.
Stock Trading Education Video Training: Mentor Room
19 Mentoring Minutes that Instantly Make You Profitable…
Struggling Traders Pay for Losses Instead of Continuing Education
Continuing education is a monster part of trading for a living. Could you imagine going to see a doctor or lawyer who hasn’t kept up with regulations or changes?
Yet that’s exactly what most traders do. They stop learning and they pay the price.
A good trading education starts with learning what to look at, but ultimately, it’s the screen time and really understanding the right questions to ask.
- “What just unfolded?
- What did I miss?
- What didn’t I see?”
- I got filled, what do I plan to do if it moves in my favor? If it moves against me?
- When should I trade for cash flow versus hold trades longer? How do I know the difference?
Stock Trading is not a 9-5 Job…It’s Time to Stop Whining
The more prepared you are to answer these types of questions, the more distinctions you can make in price action, the more consistent your trading results will be.
It’s time to stop whining about trading a tough stock market.
If you’re a frustrated trader I have some news for you. This is the new normal Deal with it. Day traders need to admit the market is lacking a bias. This causes weak conviction.
This means you need to be a stock picker. Is this news? No. Look at the chart of the $SPY for the last 18 months. There are spurts in price action but for the most part it’s a trading range. The market has not been obvious, save for a few pockets as opposed to a few quarters.
Why the tough talk? Because too many traders are complaining. “I bought the high and it went lower…I shorted the low and it went higher…”
That happens to all of us. You stop focusing on the losing trades and ask yourself why you don’t earn more on the winners.
Trading is challenging, but very rewarding when you finally have a trading plan that makes sense for you. If you want a guarantee, get a job.
For me. I like it here in front of my charts. It’s not always easy but I didn’t sign up for easy. I signed up to be in control.
How about you?
$SPY Trading System
Are you using moving averages?
Here is a simple plan that flat out works, in any time-frame… I will demonstrate using the $SPY from 2-25-16.
Easily one of the biggest problems using a moving average system is the trigger will lag actual price. By their very nature, moving averages are slower. For this system we are going to use multiple moving averages and add a twist, we will add the close of the candlestick, as an extra trigger.
** I will give you the components and the plan. I will leave it up to you to complete the picture. Let’s have a discussion in the comments…
- Starting at 12pm on the $SPY chart below, use the 50 sma (heavy dotted line, as you main trend, nothing else in the stock market matters. This is your bias.
- The 20 sma is your momentum, and your trigger for entries and exits.
- the 5 ema (*note exponential here) is your slow entry and exit trigger, for half of your position.
- The close of the candlestick on the opposite side of the 20 sma is your fast entry and exit trigger.
- 5 minute chart.
- 50 sma.
- 20 sma.
- 5 ema.
- 5 minute candlestick.