Archive for January, 2006
Trade-Ideas Pro
January 12, 2006 at 11:05 am
Among the trading tools that I use, Trade-Ideas Pro is right up there among the most important. The folks who run Trade-Ideas are dedicated to providing an excellent product at an affordable price, while making continual improvements and enhancements.
Every morning before the market opens, I fire up my Trade-Ideas Pro and it couldn’t be simpler. I load a couple of watch lists and in about 20 seconds I am ready to trade. I run a few Trade-Ideas windows for different purposes and timeframes, and throughout the day T-I provides me with not only new trade ideas (no wonder they named it that!), but it gives me excellent information regarding the strength or weakness of my existing trades, allowing me to better determine my exits.
One of my favorite features among the dozens offered is “Relative Volume.” It’s important for me to be able to monitor Relative Volume as a new swing trading position is hitting highs so that I can see just how strong a stock may be. Hitting highs is one thing, but a stock hitting highs on something like 5.4 times the normal volume for that time of day tells me I should stay in because of the increased activity and interest in that stock. A lower reading like 1.2 Relative Volume says that volume is only 20% higher for that time of day than normal. I view a reading like that as a signal that the stock may not make a lasting move, and that it may be time to take some profits off the table. The Relative Volume is a tremendous help to me when determining whether I should expect a continued move or if it’s time for me to move on.
To my friends at Trade-Ideas, keep up the great work on the excellent trading product! To everyone else, if you aren’t using Trade-Ideas Pro, you should be!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Triple Bottom Pattern
January 11, 2006 at 4:14 pm
Chart patterns work the same on an intraday basis as they do on a daily chart. Today I was watching GRMN, which had been weak all day and was nearing the lows of the day. I actually was waiting for a breakdown to short sell the stock, but once the lows held, I noticed a familiar pattern – the triple bottom pattern. Immediately I bought the stock and set my stop loss for the low of the day. Momentum began to build as the shorts started to get squeezed, and I had quite a nice winner on my screen. While I didn’t catch the entire move up, I did catch a big piece of the move and it was great for my P&L.
Triple bottom patterns aren’t just found on daily charts – they can also be found and traded on an intraday basis.Be sure to apply well-known chart patterns to your day trading as well as your swing trading. Being a flexible trader with a willingness to change directions when your original thesis is proven wrong can pay off very nicely!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Silence is Golden
January 11, 2006 at 8:32 am
I used to commute to a day trading office until about 2 years ago. It was good for a while but my needs changed. While I did enjoy interacting with other traders on a daily basis, it was harder at times to concentrate on the market with the sounds of a busy office. The occasional sounds coming from upset traders banging on their desks or yelling was plenty annoying. Others seemed to do more visiting than they seemed to trade. Making the move to a home office saved me some time and gas money, but it really made me a better trader.
Learning to rely on yourself as a trader is an important and ongoing lesson. While I would encourage a beginning trader to surround himself with more experienced traders, there are a number of advantages to flying solo once the learning curve passes.
I turn on CNBC some mornings just to catch up on some headlines while I am getting set up for the trading day, but once the bell rings, I rarely leave the TV on. I find the endless opinions (valuation schmaluation) to be distracting and not useful for my style of trading. Plus, their idea of “breaking news” is often too late. Instant messenger is another line of communication I typically cut off for the trading day. In the past, I’ve spent trading days chatting with other traders, but in the end I’ve found it more distracting than helpful. At times a good call was made that I might have missed, but having one more window to focus on seemed detrimental to my tape reading and trading results. Now my typical day is extremely quiet with nothing but a snoring dog and an occasional phone call which can easily be dismissed. Much better!
Cut the noise and simplify your approach with just a few nightly swing trading stock picks. Sign up for your 2-week free trial and find out which stocks I’m focusing on today!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
TradeKing
January 10, 2006 at 9:48 pm
Thanks to the kind folks over at TradeKing for featuring my blog this week on their Financial Pulse page! If you haven’t checked out their list of blogs you owe it to yourself – it’s quite a resource!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
When to Trade Aggressively
January 10, 2006 at 9:11 am
As important as it is to be able to manage your trades properly, it is equally important to have a money management system for your trading. This includes knowing when to trade small and be picky, as well as when to trade big and be aggressive.
When conditions are right, trade aggressively with good money management.
For me, there are 3 occasions when I trade aggressively:
Trade aggressively when you’re ahead. Losing streaks in trading call for trading less frequently and cutting down position sizes. It only makes sense, therefore, that profitable times are the best times to press and get bigger. Profits come as a result of being correct in your trades, so capitalize on being in sync with the market by increasing your size. When you’re seeing things clearly and gauging momentum correctly, take every signal you get. Trading bigger and more often when you’re ahead will allow you to make much more money when you’re right than the times when you’re wrong.
Trade aggressively in the midst of a clear trend. The market doesn’t trend all the time, making it important to be able to recognize an uptrend or a downtrending stock.
Trade aggressively when good setups are plentiful. When there’s a lot of good chart patterns showing up in your stock screens, it’s usually because the market is giving a stronger indication of an impending move. When a sector or the market in general is on the verge of a breakout, it can be tough to determine which stocks will be leaders in the next move. This makes it important to enter more positions than usual as good chart patterns confirm. You may wish to trade on margin to accommodate the additional positions during such times.
Find out when I get aggressive and when I lighten up with a free trial to my stock newsletter and learn to add some money management principles to your trading!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Small Mistakes = Small Consequences
January 9, 2006 at 7:49 am
One of my favorite trading books is Reminiscences of a Stock Operator by Edwin Lefevre. Based on the trading of the famous Jesse Livermore, Reminiscences is full of trading lessons from cover to cover. Although it was written 83 years ago, it still applies to today’s market. Learning from the successes and failures of one of the all-time great traders is hard to beat.
Among the many lessons embedded in the book, one common theme is that a trader should keep his mistakes small. Livermore developed a “probing” system in which he would enter small positions to monitor their activity before he built up to a full position. This way, if he was wrong, it only cost him a little.
Chapter 10 begins with some great advice:
“All stock market mistakes wound you in two tender spots – your pocketbook and your vanity.“
This is so true! No trader wants to take a loss. It costs money and diminishes pride to know you were wrong. The mistake of losing money is compounded into a shot to your confidence which is so important to keep intact as a trader.
Lefevre goes on to say:
“Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and to the soul.”
I can certainly relate to that. The times when I know I could have gotten out of a bad trade at a better spot but didn’t because of a bad decision is always a shot to my pride. Such a feeling can be very detrimental to subsequent trading results, as the need to “make it back” leads to forced trades and compounded errors.
Make it a point to keep your mistakes small this year. Take small losses – they are easily overcome with winners, and you’ll keep your confidence intact!
Find out how I trade for a living by keeping losses small and locating winning stock picks to overcome them with a 2-week free trial to my stock pick service.
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Starting Over
January 5, 2006 at 8:50 am
NO, no...I said get 'in sync' with the market!
It’s a brand new trading year. In some ways that’s a good thing, in others maybe not. The slate has been wiped clean, and regardless of whether you did well or poorly in 2005, it matters no more. A fresh month and a fresh year means starting at square one for me.
I like to start the year out by doing my best to hit singles for a while. Making incremental gains is part of my style anyway, as I trade for a living. However, booking regular gains early in the year helps me to build my confidence and get back into the groove of trading after taking some time off over the holidays. This way, I can grow my account and my confidence. It also lets me build a pad of profits and get in sync with the market before pressing it. Once my confidence is where I want it and things fall into place, then I can get bigger and trade more aggressively.
Hit singles while the year is young. It’s a long year, so get synchronized with the market before stepping out boldly. There’s no reason to start the year off behind!
Start your year off right with a free trial to my stock newsletter – it could be the best trading decision you make in 2006!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
