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The path to trading success is built on a series of failures, or mistakes. This is no different than in life, where we often learn more from our poor decisions than our good decisions....
Preserving capital is a major concern for traders. To do this, many successful traders recommend keeping your maximum trade risk to 1% of trading capital (or less if possible) per trade. The 1% rule is protective for your portfolio, and it is a good practice to avoid blowing out your account. Using a 1% risk means that you would have to lose on ten trades in a row in order for you have a 10% draw down in your account....
The worst aspect of a trader's personality is usually the ego....
Market breadth is a valuable tool for assessing intraday market direction. Market breadth (TradeStation Symbol: $ADD) measures the difference between NYSE advancing issues and declining issues. If there are more advancers than decliners, the breadth will have a positive number. If there are more decliners than advancers, then breath will be negative...
Sometimes when we are tracking a stock to buy, it gaps up before we get a buy signal. This can leave us a bit frustrated. Fortunately, many stocks that gap up do not take off right away. Instead, they pullback to test support, providing us with an opportunity to enter. These stocks often get ignored because traders think they missed the gap play....
A primary base is the "first" consolidation pattern that leads to the beginning of a new trend. Primary base breakouts often occur in new, "hot" stocks with a new product or service that hits the marketplace....
I recently lectured at the International Trader's Expo (New York) on trading Power Trends in stocks. In my first presentation, I gave 3 stock picks to the audience, and I explained my reason for believing the 3 stocks had further upside....
The Put/Call Ratio (PCR) is a useful tool for highlighting potential areas where the market may turn up or down. The PCR compares the volume of put options to call options, and the indicator is used as a gauge of market sentiment. The PCR should always be used in the context of price and not a sole indicator. The Put/Call Ratio can be found at the CBOE website under daily market statistics, and it is also available as an indicator on many charting platforms....
Earnings season can be a volatile period for stocks which either disappoint on earnings or beat earnings estimates. This volatility can create opportunity, and stocks that gap up are a good example. A stock that gaps up may appear to high to buy, and the trader may feel like the opportunity was missed. On the other hand, upside gaps make it easy to identify which stocks are on the move....
Shorting stocks involves a higher skill level than buying stocks, so shorting ETFs can be a safer way to take advantage of market downtrends. ETFs are diversified, so they are less volatile than stocks, and there is less chance of being stopped out....
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