Archive for October, 2006
Trading Multiple Positions
October 31, 2006 at 10:28 am
Brand new traders are best served by sticking to one trade at a time, but as a trader gains experience, there are certainly some advantages to trading multiple positions.
One of the biggest benefits of swing trading multiple positions is that it diminishes the importance of any one trade. No longer will that one trade define your success (or lack thereof) in the short term. This is a big psychological edge which can set you free mentally as you aren’t required to watch and react to every single tick on your pet stock. You can set your conditional orders and let the trade develop on its own without micromanaging it, and in the meantime you’re able to scan for new stocks you may soon want to trade.
If you’re a beginning trader, you’re probably better off taking one trade at a time so that you don’t get overwhelmed. Trading the market takes some getting used to, and that learning curve shouldn’t be rushed. Take your time and go at a pace which you’re comfortable with as you learn to improve your execution methods and develop a routine for monitoring the market.
Once you’re past the beginning stages as a trader and comfortable with your executions, I would encourage you to learn to trade multiple stocks even if you have a relatively small account. While focusing your funds in one stock will mean an opportunity to accelerate account growth, spreading your capital too thin can doom you to underperformance. Find a middle ground which will give you the best of both worlds. And when the time comes that you can’t find trades which fit your risk/reward profile, simply step aside and remember that cash is a position!
We trade multiple positions on a regular basis over at TheStockBandit.com. If you’d like to learn more about how we manage them, come check out the free trial and watch us for 2 weeks. We’re confident you’ll like what you see.
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
How Competitive Are You?
October 26, 2006 at 9:40 am
Trading is as competitive of an environment as you’ll find anywhere on the planet. With millions of participants, literally trillions of dollars at play, and some of the brightest minds on earth manning the front lines, you’d better show up with your game face on if you want to win in this game!
I’ve been watching the Soul of a Champion series on the new Versus network (formerly OLN), and it is awesome. It stirs up emotions within me every time I watch and hear these stories of great champions in their respective sports. Their drive to succeed and the road which took these athletes to the level they are at is pretty inspiring.
How competitive are you? How driven to achieve your goals are you?
Whether we’re talking about trading or something different on a personal level, you’ve got to have goals in place in order to have a direction each day. How bad do you want it? How hard are you willing to work? What are you driven to achieve? These questions are constantly in front of us as we check our progress, and I think they’re healthy and motivating questions to continually ask ourselves as traders. Ignoring them would be a mistake.
I’ve found that hard work not only improves my skills, but it’s an ongoing source of confidence, which is a requirement for trading. Doing my homework and constantly reviewing my results adds to my confidence level in each trade I make. To put cash at work when there’s an element of fate involved that may be out of your control (like trading), it does take confidence. I set my goals high and I hope you do too!
Set the bar high for your trading. If you want to see how we’re managing trades in this market environment and find an added element of confidence, come take the free trial and see what we’re all about. Our growing community offers a lot of tools to help you reach your trading goals, and we’d love to trade with you!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
By the way, subscribing to this RSS feed will mean you won’t ever miss a post!
Multiple Timeframe Charting
October 23, 2006 at 8:15 am
I often run across a stock with a tradable pattern, but a second look will often change my mind.
This week I ran across SVU, a stock which has been rallying steadily since August. More recently, it had a breakaway gap to the upside and has since consolidated to create a very nice bull flag pattern. Here’s the chart:
(Click for full size.) Chart Courtesy of TeleChart.Ordinarily, I would be a buyer of a stock like this upon an upside breakout from this tight pattern at $33.25. However, zooming out to a longer timeframe reveals quite a bit of resistance from the past 2 years in the $34-35 range which could make a breakout somewhat short-lived as the stock encounters overhead. Here’s a longer-range chart:
(Click for full size). Chart Courtesy of TeleChart.Previous highs mark places where sellers are lurking, and staying aware of such zones can often help you select better trades to take.
There are a lot of stocks out there to trade, so there’s no need to be married to any particular one of them. At TheStockBandit.com, we do the heavy lifting for you by reviewing hundreds & hundreds of stocks every night to cherry-pick the best setups. If you want to save some time locating the highest-quality chart patterns, come trade with us!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
By the way, subscribing to this RSS feed will mean you won’t ever miss a post!
5 IPO’s and How to Trade Them
October 18, 2006 at 12:53 pm
Earlier this week in the Free Newsletter (sign up in the sidebar at TheStockBandit.com) we discussed trading IPO’s, but let’s go a little deeper.
IPO’s are making a comeback these days in the market. With the indexes climbing steadily higher, new issues are garnering attention as sexy trading vehicles once again. Back in the day, trading IPO’s was a wild ride which everyone wanted in on. The trading world was fully aware of what was due to begin trading on a given day, and you were sure to find some heavy action in those stocks once they opened and for the first few days of trading.
Times have changed, and so have the ways which IPO’s are being traded. It’s a given that today’s IPO’s are a far cry from those of 1999 and early 2000, so naturally that means they require different trading methods.
I’m a big proponent of monitoring the “personality” of stocks before I trade them. How else can you set your expectations for how a stock will move, where to place your stops, and how aggressively to trade them?
There are still some great moves out there taking place in IPO’s, but generally I’m finding the best moves are secondary rather than the primary (or initial) move.
The way we trade IPO’s at TheStockBandit.com is to let them make their initial moves, settle down a bit, and get set up for a secondary move. I like to see IPO’s trade for a few days so that I can get a feel for how they’re moving and what kind of volume they have (what is the overall interest in this stock?) and then take them for a trade on a secondary move.
Many IPO’s will have some initial excitement and then begin to consolidate. Volume falls off and the stock moves horizontally, creating a base from which a secondary move can launch. The majority of the time these bases come in the form of a bull flag pattern, a cup and handle pattern or a bullish ascending triangle, and that makes it very clear what the pivot point should be for getting long. Let’s look at a few examples of IPO’s which fit the description.
CVLT (Click image for full size.)
RVBD (Click image for full size.)
HBI (Click image for full size.)
DIVX (Click image for full size.)
BARE (Click image for full size.)There are a ton of ways to profit in the market, and swing trading IPO’s as they emerge from traditional chart patterns is one of them. We trade some of these at TheStockBandit.com, and even if you’re on the free trial I’ll show you what I’m seeing in the charts and outline my trade parameters along the way. If they fail, my bail out will be close by thanks to the pattern, so it’s no big deal. And if they work, well it’s blue sky above and there’s no telling how far they might run!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
By the way, subscribing to this RSS feed will mean you won’t ever miss a post!
Cash IS a Position!
October 16, 2006 at 9:30 am
In a day and age of nearly instant executions and dirt-cheap commissions, it’s extremely easy to overtrade. Throw into the mix the number of days when we get narrow trading ranges and pending news (like major afternoon earnings announcements or Fed days), and boredom becomes a huge factor to contend with as a trader.
With so many great trading tools at our disposal, we can easily start feeling an obligation to put them to use and just be active. I know there have been plenty of times when I have not seen the high-quality setups I prefer to trade, yet I stayed at the PC because there wasn’t anywhere else I needed to be. Next thing I knew, I was pushing buttons left and right to create some activity and interest for myself. The result? It’s not hard to guess – the majority of those times I paid for it and wondered why I felt such an obligation to “be positioned.”
After some thought, I finally realized that CASH IS A POSITION! Moving to cash when I didn’t see the optimal trading conditions for my style was in fact taking a position. My position was safety when my certainty level was below what it needed to be in order to trade.
Let me encourage you to do the same thing! You don’t always have to be trading something (even if you’re a scalper). The current market environment may be a perfect example for you. If you’re feeling like the market is too extended in the near term to place new buys, yet you are not willing to start short selling, then remember that cash is an alternative and just step aside. You can still keep an eye on the market, but it may also be a perfect time to tend to other matters so that once your trading activity picks up you are fully focused on the task at hand.
There are times when either the market is giving signals of uncertainty or you may just feel out of sync with things, and during those times it’s best to just move to cash and wait for some clarity. Be bold enough to take a position in cash when your signals are telling you that the sidelines are the place to go!
By the way, subscribing to this RSS feed will mean you won’t ever miss a post!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stock Trading, Day Trading, Swing Trading, Position Trading, Stock Market[/tags]
Perma-What?
October 11, 2006 at 11:53 am
Perma-Bull: Someone who is always bullish on the market.
The market won’t trend higher at this rate forever, that is a given. Eventually I’ll get aggressive on the short side, but not until we get some signals that suggest it’s time – like a dip that isn’t bought!
However, one side benefit of it moving up so much is that the universe of tradable stocks has grown. Volume and price are the two keys for me when it comes to building a watch list of potential trades in my charting program, and we’ve seen an increase in both during the last couple of months. Many stocks are now at higher prices than they were just two months ago, and therefore they are able to fluctuate more. Additionally, many stocks which had been experiencing a lull in activity from May to July have seen a significant increase in volume. This is quite a contrast to bear markets which shrink the tradable universe of stocks through lower prices and less liquidity (volume).
My lower threshold for volume is typically around 200k/day, and I rarely trade stocks below $10.00. I will occasionally make exceptions for each of these if I see a standout chart, but it’s rare. In the past couple of months, I’ve seen an increase in the number of stocks which meet these criteria. That’s a good thing because I’m a picky trader, and having more stocks at the price and volume levels I require is certainly advantageous. Although a larger universe of tradable stocks does translate into more homework, it also means I can continue to focus on the best chart patterns available and trade the cream of the crop.
By the way, subscribing to this RSS feed will mean you won’t ever miss a post!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stock Trading, Day Trading, Swing Trading, Bull Market, Stock Market[/tags]
I’m Really Pumped About This
October 9, 2006 at 2:05 pm
Last night at TheStockBandit.com we announced The Bandit Bulletin, a premium interactive trading blog which I’ll be writing on trading days for members. In the Bandit Bulletin, I’ll be helping members take their trading to the next level with intraday trading ideas, chart reviews, educational articles, detailed market commentary, and much more.
At TheStockBandit.com, we’re all about education, so this should be a huge benefit for those looking to learn as they look over my shoulder on a daily basis.
I get quite a bit of email from members with questions of all kinds every day (and I’ll continue answering it of course), but through The Bandit Bulletin everyone can learn simultaneously. The relaxed atmosphere of a blog just allows for an easy way to learn and interact with each other, so it should definitely be fun! It will also no doubt add a whole new dimension of service and greater value to the membership price (it’s included!).
Even free trial members can participate, so if you haven’t tried out the service with our risk-free 2 Week trial, what are you waiting for? Come on over and experience the award-winning service as well as my new members-only interactive blog!
(There’s also a Virtual Tour available if you’d like to check it out.)
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Come trade with us!
