Archive for October, 2008
World Series Series, Part 5 – Avoid the Squeeze Play
October 27, 2008 at 7:05 pm
This is Part 5 of a series, be sure to check out Part 1, Part 2, Part 3 and Part 4 as well. New posts will be made during game days of the World Series.
Losing is Losing, Or Is It?
In baseball, there’s no official clock but there are innings and outs. That makes it simpler to gauge how many opportunities are remaining to make up runs when trailing. You’re either going to win or lose, and in the case of the latter, it doesn’t matter if it’s by one run or eight.
So it’s not surprising that late in the game, the team which is on the verge of losing is apt to taking some extraordinary risks like the squeeze play in an effort to erase the deficit. After all, if it fails, they’ll be no worse off.
However, in trading, it’s a vastly different story.
Stay Patient
Losing small is way different than losing big. Small losses can be made up quickly, forgotten fast, and put in the rearview mirror with even one or two decent winning trades. On the other hand, big losses leave lasting bruises on a trading account. They scar the ego indefinitely, and they’re sure not easy to overcome.
It’s a basic fact that you get paid for taking risks in the market – there’s no denying that. However, that doesn’t mean unnecessary risks should be taken. Whether it’s right after taking a tough loss, at the end of a poor trading day, or the last day of the month, there’s no way to justify trying to be a hero. Attempting to make up the difference with a last-minute save is often the best way to compound the problem, not solve it.
Instead, stay patient. Hit singles for satisfaction. Wait for only the highest-quality opportunities to come along. There will no doubt be many sub-par chances to put money at risk each day, but you’re going to make real progress with your trading by focusing on the best ones. It requires patience to wait for them, which isn’t always fun or glamorous. But winning is fun, and your decision to trade the best setups is going to increase the odds that you’ll be victorious.
The goal is to live to trade another day, week, or month. If your survival as a trader comes down to the outcome of just a single trade, then you’re toast – whether that’s today or some other time. Always play the game with your head on straight, and remember that losing small is far better than losing big.
Trade well out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
World Series Series, Part 4 – Play Shallow When Necessary
October 26, 2008 at 6:00 pm
This is Part 4 of a series, be sure to check out Part 1, Part 2, and Part 3 as well. New posts will be made during game days of the World Series.
Bring it In, Back it Up
Nearly every batter a defense faces will mean repositioning. Outfielders may shift to their left or right, or infielders may come in a little closer or play a little deeper than normal. It all depends on what they know about the guy standing at the plate. Is he explosive with the ability to send outfielders sprinting for the warning track, or is he more prone to hit an infield chopper and ground out?
As traders, we often need to make similar adjustments. It might depend on the general market conditions. Is it a quiet environment, or a volatile one with wide-ranging days? Or it may depend on the individual stock’s personality we’re considering a play in. Is it prone to trending smoothly, or does it tend to gap frequently and make holding overnight positions far more difficult?
Stay Objective
Our ability to properly assess any situation we face will make a huge impact on our ability to trade it successfully. Recognizing the conditions we’re trading in and staying disciplined enough to adjust accordingly will keep us in the game. It’ll minimize our errors, and it’ll maximize our success when we’re at our best.
They key here is to stay objective and honest about what we’re seeing. Having the presence of mind and the maturity to accept whatever that may be means keeping a level head. It means we’ll recognize volatile situations with frequent gaps and know that we need to reduce our trade size and shorten our timeframe to day trading. And if that isn’t our preferred timeframe, then we wait for that which is. At other times it means we don’t attempt to dart in and out quickly as much, instead realizing that smoother trends exist which offer us much more by way of swing trading on a multi-day basis.
So as you come across quality setups in which you’re considering making trades, remember the conditions you’re trading in and blend your style with the market’s action. Shorten or lengthen your timeframe as needed, and you’ll be far better positioned to profit from the moves.
Trade well out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Market View Video October 26, 2008
October 26, 2008 at 10:30 am
The downside pressure resumed last week as the major averages took hits of 3.5%. However, some hope remains in place for the bulls that support may be in the process of being established in this area – that is, until it gets broken!
Literally anything is possible in this tape right now, and we must be aware of that as traders. There’s no room for predictions in this game, so our focus remains on the charts and it all starts at the top with the indexes.
So before you go placing trades this week, stop by to check out the Market View video over at the main site for a closer look at the overall market as you start to formulate a trading plan.
(Click image to view video)
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
World Series Series, Part 3 – Sacrifice Bunt
October 25, 2008 at 8:26 pm
This is Part 3 of a series, be sure to check out Part 1 and Part 2 as well. New posts will be made during game days of the World Series.
Lose Small
With a base runner on and a batter at the plate, one thing we’ve come to expect in baseball is the sacrifice bunt. Rather than risk hitting into a potential double-play situation, a definite option is to force a fielder’s choice with a bunt. Doing this isn’t likely to result in more than one out, and it just might advance a runner and put him into scoring position.
In the trading realm, we’re often faced with the decision of choosing between multiple trades, some of which just aren’t cutting it for us. And it doesn’t have to be multiple trades, it might be multiple trading strategies which need to be reduced. In order to make net progress, we might give up a little bit of potential with one of them in order to focus more on the one which has higher odds of growing our accounts. Eating a small loss in one trade (or strategy) for the sake of managing a better-performing trade (or strategy) is never a bad choice. We’re putting our attention on something that’s actually producing, and that’s the key.
Take One For the Team
Not every at-bat is going to be a glamorous one for the baseball players on TV, so when it’s time for the sacrifice play, it’s important to note that there’s actually some honor for the guy willing to lay one down for the better good of the team. Accepting a short-term setback in return for the longer-term health of the team (or your trading account) is wise. It keeps the ego out of the equation, which is great because we want to be in the habit of making good decisions.
So the next time you’re faced with a choice between a trade you’re hoping will work vs. a trade you already have working, be willing to cut the unproven trade first, and trust that losing small now will mean winning big later. Your career just might depend on your adopting that mentality.
Trade well out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
World Series Series, Part 2 – Have a Backup
October 23, 2008 at 8:45 pm
This is Part 2 of a series and a follow-up post to Part 1. New posts will be made during game days of the World Series.
When Plan A Requires a Plan B
Every game in the World Series is headlined by the starting pitchers as they come up in the rotation. Even throughout the season, when you get tickets to a game, one of the first things to ask is “who’s on the mound?”
Whether you’re a fan or a manager, your hope is that the starter is going to have his best stuff on game night. That’s the first line of defense needed to win games, but just in case, there’s always a backup. A reliever. Someone waiting in the wings who is the Plan B just in case the starter isn’t at his best.
In trading, we always want to have a stop loss in place for our trades. That’s the defense required to limit losses so that we can profit in the long haul with the winning trades we’ll have.
What If…
There’s nothing like being able to limit your losses, so make every effort to do so. Determine where you need to be out of a position, and stick with it. But don’t be afraid to have a disaster plan in place just in case. If your position gaps through your stop, what will you do?
Determining a ‘what if’ scenario at any given time in your trading is a good practice to be in. It’s also a great reminder to size your trades accordingly, because you don’t want everything riding on any one trade – ever. The idea of doing that might be exciting if you were to be right, but that’s a 2-way street and you absolutely must limit your downside if you’re going to stay in this game and survive.
Trade well out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
World Series Series, Part 1 – Think Like A Batter
October 22, 2008 at 9:01 pm
Trading has so many similarities to sports that I can’t help but occasionally mention it. A few years ago I did a series on Trading and Golf, which drew a number of parallels between the two endeavors. It was well-received by you as readers, so to mix things up a little for a few days I’m going to do a mini-series here on baseball and trading analogies to overlap with the World Series, which of course starts tonight.
I don’t know how many games we’ll see this Series go, but I’ll have new posts on game days right here so check back often. Now let’s get right to it with Part 1…
Think Like A Batter
Every batter in the World Series has a skill which has been acquired over time – he anticipates what pitch is coming. He’s played the game long enough, studied each pitcher extensively, and has been coached on the habits of the guy on the mound. So he knows to watch for that slider or change-up.
Now, it’s important to note that there’s a big difference between anticipating and predicting, because remember, predictions don’t do anything for us. However, anticipating makes us sharper. It forces us to watch for some specific clues, which can in turn accelerate the speed at which we’re processing information.
Wait For Your Pitch
As traders, whether we’re monitoring the overall market or a specific stock, it benefits us to anticipate what we might see next. That doesn’t mean we take action before it’s time, because like the batter, he’ll still wait for the pitch before he decides whether or not to act. What it does mean is that we are always attentive to the conditions and on the lookout for certain reactions in the market. That way, when we see them, we’re more prepared to act quickly – and speed is everything in trading (just as it is when swinging at a 90mph fastball).
So think like a batter and start to anticipate what may happen next. Then wait for your pitch before you take action. It will speed up your response when your anticipations are confirmed, but at the very least it will sharpen your attention.
Trade well out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Market View Video October 19, 2008
October 19, 2008 at 12:12 pm
Last week we saw the market finally tack on some gains, although the volatility continues to run quite high with frequent reversals and very wide trading ranges. Are the indexes attempting to carve out some support to rebound from, or are they simply taking a breather before another decline? That’s the trillion-dollar question at the moment, but my hunch is that we’ll start to find out soon enough.
With Bernanke on deck this week, a slew of earnings reports yet to come, and of course the price action of late, it’s sure to be another interesting week of trading – so show up prepared!
Before you even push a single button in your trading platform this week, be sure to check out the Market View video over at the main site for a closer look at the overall market as you build your game plan.
(Click image to view video)
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
