Sunday, February 12, 2017
Thursday, February 9, 2017
Reasons why I sucked at the beginning & what gets me into trouble
If you couldn't tell from my blog posts, I have a deep passion for stocks. This passion is what got me involved in the stock market and eventually to technical analysis. It is also the reason for my failures. My failure at the beginning of my career and the downs of my current trading. Trading is one career path that no matter how hard you work, success is not guranteed.
I have been active in the market for 3 years now. The entire first year I was terrible and experienced nothing but losses. But I didn't care. I wanted to get this down. Even if I wasn't any good, I still loved to do it.
As I progressed and continued to learn, I developed a deep understanding of how the market works. I was able to build on my book knowledge and fully grasp why certain things were happening in the market as well as see patterns correctly. I finally started to see some profit and consistency.
But amazingly enough, I still sometimes struggled, even with all this knowledge and understanding. How could this be? If you know so much about the market hows it possible to not achieve the success you want, how is it not possible to be right "most" of the time?
There is an important element to this game. And its your emotions. I became an action junky. My love for trading became an addiction. Instead of focusing on the perfect trade, (a very strong case of multiple variables and time frames to support a trade) I would trade everything and anything when I thought I saw a good pattern. This leads to death by a million cuts.
In trading, everyone always preaches, "let the trade come to you". But what does this really mean? In lamest terms, its simply letting the trade opportunity present itself rather than seeking it. If you've ever made a boredem trade this is an example of seeking a trade. If you've ever been scrolling thru charts/chatrooms thinking "I have to find something to trade" well you guessed it, you're seeking a trade. Today I had a great example of letting a trade opportunity present itself. It was CLF. I put this on watch for the pattern you see below. I knew it had earnings this week so I figured, if it beats this has room to move.
I walked into my office late today because I had an appointment for work. I opened up my platform and checked out the chart. Immediately, an opportunity presented itself to me. I didn't have to rationalize taking this trade. It had all of the variables I was looking for. Daily breakout, intraday flag, holding support, limited risk, high probability to name a few.
Whats Changed Recently?
I've really narrowed down my trading over the past few months. I have mostly swing traded, but do look to take a daytrade a few times a week. A major shift in focusing on what I am good at and understand has been put into place. Instead of trying to be a gunslinger being in everything, I take my time before entering. Things have slowed down for me. Charts don't seem to move as fast. My heart isn't pounding tick by tick. I've become much more comfortable when in a position.
I did this by shifting my mind. I'm looking for premium hands, what I am good at. I'm not just looking for a random pattern. If I have a full understanding of the pattern, I take it. If I'm iffy, I'll shift to my insurance work.
We are all different. We all have different styles. We each have our own strengths and weaknesses. Some take profits too quickly, others hold way too long when the trade is over. Whats important is figuring out what your strengths are and focusing on them. The pattern and action you understand, is less likely to shake you out or make you stop out early. I can ramble on and on about this, but I'll save more in-depth talk about each subject perhaps for another blog post.
This is the first blog post that I can sit here and type, I think I am starting to understand myself when it comes to trading.
I have been active in the market for 3 years now. The entire first year I was terrible and experienced nothing but losses. But I didn't care. I wanted to get this down. Even if I wasn't any good, I still loved to do it.
As I progressed and continued to learn, I developed a deep understanding of how the market works. I was able to build on my book knowledge and fully grasp why certain things were happening in the market as well as see patterns correctly. I finally started to see some profit and consistency.
But amazingly enough, I still sometimes struggled, even with all this knowledge and understanding. How could this be? If you know so much about the market hows it possible to not achieve the success you want, how is it not possible to be right "most" of the time?
There is an important element to this game. And its your emotions. I became an action junky. My love for trading became an addiction. Instead of focusing on the perfect trade, (a very strong case of multiple variables and time frames to support a trade) I would trade everything and anything when I thought I saw a good pattern. This leads to death by a million cuts.
In trading, everyone always preaches, "let the trade come to you". But what does this really mean? In lamest terms, its simply letting the trade opportunity present itself rather than seeking it. If you've ever made a boredem trade this is an example of seeking a trade. If you've ever been scrolling thru charts/chatrooms thinking "I have to find something to trade" well you guessed it, you're seeking a trade. Today I had a great example of letting a trade opportunity present itself. It was CLF. I put this on watch for the pattern you see below. I knew it had earnings this week so I figured, if it beats this has room to move.
I walked into my office late today because I had an appointment for work. I opened up my platform and checked out the chart. Immediately, an opportunity presented itself to me. I didn't have to rationalize taking this trade. It had all of the variables I was looking for. Daily breakout, intraday flag, holding support, limited risk, high probability to name a few.
Whats Changed Recently?
I've really narrowed down my trading over the past few months. I have mostly swing traded, but do look to take a daytrade a few times a week. A major shift in focusing on what I am good at and understand has been put into place. Instead of trying to be a gunslinger being in everything, I take my time before entering. Things have slowed down for me. Charts don't seem to move as fast. My heart isn't pounding tick by tick. I've become much more comfortable when in a position.
I did this by shifting my mind. I'm looking for premium hands, what I am good at. I'm not just looking for a random pattern. If I have a full understanding of the pattern, I take it. If I'm iffy, I'll shift to my insurance work.
We are all different. We all have different styles. We each have our own strengths and weaknesses. Some take profits too quickly, others hold way too long when the trade is over. Whats important is figuring out what your strengths are and focusing on them. The pattern and action you understand, is less likely to shake you out or make you stop out early. I can ramble on and on about this, but I'll save more in-depth talk about each subject perhaps for another blog post.
This is the first blog post that I can sit here and type, I think I am starting to understand myself when it comes to trading.
Monday, February 6, 2017
Thursday, February 2, 2017
My favorite swing set-up
I've looked at thousands of charts over the past 3 years. One simple set-up has become my absolute favorite swing set-up. This is because it provides a very high probability trade with super low risk. What if I also told you it provided confirmation? Not in your typical sense of a flag break out but in a different way. Confirmation that support held.
NVDA has been a huge momentum name over the past year. Its been running like crazy and finally topped out at the end of December. From there, a pullback/consolidation was natural. on the first leg of the pullback, it held the $100 mark putting in a low at 99.38 on January 3rd. A relief bounce occurred after but the rally was sold off into resistance. It then sold off 5 more days. On the 6th day, January 18th, NVDA pivoted below 99.38 for about 3 seconds before putting in a low at 99.11 and quickly reclaiming its pivot.
Here is a look at the 30 minute chart. A big reason why I decided to take an entry.
Another big reason was thanks to Kunal for the heads up.
That quick dip below the pivot is enough to suck in some shorts as well as stop out everyone that used 99.38 as a stop. Then that strong bounce showed major strength and support. That is plenty of confirmation to get into this stock. My entry was in the 101s and my stop was below that 99.11. I ended up selling in the 115s. That is 7 to 1 risk reward. Not to mention an extremely high probability.
I was able to scale around my core position. Selling for a few dollars, buying the dip. NVDA traded around support and resistance levels perfectly on its flag breakout.
I can say out of all the set-ups and trades that I have taken, this is by far my favorite and most profitable one. There are many examples of this set-up, I will look to add an additional blog about ones from the past.
NVDA has been a huge momentum name over the past year. Its been running like crazy and finally topped out at the end of December. From there, a pullback/consolidation was natural. on the first leg of the pullback, it held the $100 mark putting in a low at 99.38 on January 3rd. A relief bounce occurred after but the rally was sold off into resistance. It then sold off 5 more days. On the 6th day, January 18th, NVDA pivoted below 99.38 for about 3 seconds before putting in a low at 99.11 and quickly reclaiming its pivot.
Here is a look at the 30 minute chart. A big reason why I decided to take an entry.
Another big reason was thanks to Kunal for the heads up.
That quick dip below the pivot is enough to suck in some shorts as well as stop out everyone that used 99.38 as a stop. Then that strong bounce showed major strength and support. That is plenty of confirmation to get into this stock. My entry was in the 101s and my stop was below that 99.11. I ended up selling in the 115s. That is 7 to 1 risk reward. Not to mention an extremely high probability.
I was able to scale around my core position. Selling for a few dollars, buying the dip. NVDA traded around support and resistance levels perfectly on its flag breakout.
I can say out of all the set-ups and trades that I have taken, this is by far my favorite and most profitable one. There are many examples of this set-up, I will look to add an additional blog about ones from the past.
Sunday, January 29, 2017
Wednesday, January 25, 2017
SCREW YOUR INTRADAY CHART!
One of the main things I always preach about with trading is, that its all about the DAILY. If you think you can short cut things in the market, you are dead, dead wrong. The key is always to align on multiple time frames. Look at the daily chart and form your bias. If a stock is in an intermediate & long term up trend, do you think it is wise to go short when the stock is on support after pulling back for a few days?
If you think you have a great trading opportunity just because you have a nice intraday pattern, well you could be right, but that depends on the daily. Your intraday chart means squat by itself. Trading, whether its day-trading or swing-trading, is dependent on building a case. The more "evidence" to take a trade the better. Your "evidence" of the intraday (5 minute, 3 minute, 1 minute, whatever you use) is just as good as a murder case without the murder weapon. You need that extra evidence to even make a case in the court of law. If you try to make a case without the murder weapon, you will lose the case. Same goes with trading.
When I take a day-trade now I always ask myself, would I swing trade this. If the answer is yes, I will look to take the trade. Pretty simple stuff. Wait for the daily to set-up. Look for an intraday pattern. Take the trade.
Here is a simple flow chart I use to help decide if I should take a trade:
Still think you can get away with just trading the intraday pattern? Well I have an example for you.
Everything looks great on this bear flag right??!??
Sorry you are mistaken.
Always remember. DAILY DAILY DAILY. Would I swing this chart?
If you think you have a great trading opportunity just because you have a nice intraday pattern, well you could be right, but that depends on the daily. Your intraday chart means squat by itself. Trading, whether its day-trading or swing-trading, is dependent on building a case. The more "evidence" to take a trade the better. Your "evidence" of the intraday (5 minute, 3 minute, 1 minute, whatever you use) is just as good as a murder case without the murder weapon. You need that extra evidence to even make a case in the court of law. If you try to make a case without the murder weapon, you will lose the case. Same goes with trading.
When I take a day-trade now I always ask myself, would I swing trade this. If the answer is yes, I will look to take the trade. Pretty simple stuff. Wait for the daily to set-up. Look for an intraday pattern. Take the trade.
Here is a simple flow chart I use to help decide if I should take a trade:
Still think you can get away with just trading the intraday pattern? Well I have an example for you.
Everything looks great on this bear flag right??!??
Sorry you are mistaken.
Always remember. DAILY DAILY DAILY. Would I swing this chart?
Monday, January 16, 2017
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