Author Archive for Jeff White
Jeff White is the founder of www.TheStockBandit.com, a nightly newsletter for active traders. He has been trading his own account for over a decade and currently trades full time in Texas.
Embracing Market Changes
August 5, 2011 at 7:15 am
The market is ever-changing, both in what it fixates on and in how it moves. At times it’s earnings, at other times it’s politics, and still other times it’s the economy. Sometimes it sprints, sometimes it crawls, and sometimes it jumps back and forth across the same line to get nowhere.
As traders, it’s this constant change which actually provides us with serious opportunity. The long-term buy-and-hope type doesn’t have a different approach for profiting from a momentum market vs. a sharp correction. You as a trader do, so embrace that!
When it’s time to adapt, be willing to do it. The same old patterns might not work, so at times you’ll need to modify what you’re looking for and go with something a little different. Experience will teach you this, but right alongside that is your ongoing willingness to listen to the market and identify what’s working.
I want you to check out this post from the archives where I talk about Profiting From Market Changes – you’ll learn from it.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Let Your Trades Go
August 4, 2011 at 7:15 am
Trading on certain timeframes requires that we monitor every tick, gauge the momentum, and continually modify our management of the trade.
For most traders, however, more of a hands-off approach is far better. Whether it’s a job that prevents fixating on the screens, or simply an aversion to that high a level of activity, many traders choose to operate on a timeframe that doesn’t require their nonstop full attention.
When I’m swing trading, there’s a tool I utilize that makes all the difference in the world. It allows me to take a set-it-and-forget-it approach to my trades so I can set them up and let them go. It helps me prevent interfering with my positions so that my original trade plan can fully develop.
Just as you should, I already know from the outset of my trade what I’ll risk if I’m wrong and where I’ll ring the register if my target is reached, so with those pieces of the equation already known, all I need to do is plug them in.
Read this post for an explanation and a video I made explaining how I trade with Peace of Mind.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Elevating Your Odds
August 3, 2011 at 6:05 am
Each of us would say we want every advantage possible in our favor, regardless of the activity. But a closer look at your trades would likely reveal occasions where you didn’t quite wait for all the elements of your trading plan to come together.
Perhaps that’s out of impatience or anxiety, but we’ve all done it and either suffered diminished returns from lowering our standards or we’ve implemented some poor habits which came back to bite us later.
When it comes to daytrading, our greatest odds for success come when we combine multiple favorable conditions before placing trades. That might be locating setups which point to the same outcome on multiple timeframes, or it might be considering the overall market environment and trading in such a way that we’re not fighting that.
Go check out this post from the archives which has both a written explanation & a video showing you what I mean, because the key is to Stack the Odds for Daytrading Success.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Don’t Let Trading Be Everything
August 2, 2011 at 2:15 am
I love trading – it’s such a challenge with multiple rewards. I look forward to it, I think about it alot, and I’m passionate about it so I work quite hard to continually improve at it.
But it’s good to constantly remind myself that trading isn’t everything.
It can’t be. There’s too much more to life than just watching numbers and letters on the screen. Trading is a means to an end, and for each of us that may be something different. What we have in common though is that we have to keep trading in perspective.
One of the ways to ensure you’re doing that is to have off-the-screen goals. Maybe you’ve got another hobby or you’re a runner or a cyclist or a golfer or you have a side business. Whatever “it” is, the good thing is that you have it. Don’t view it as a distraction – think of it as a necessary diversion.
Thinking about your trading constantly shows that it’s important to you, but it borders on obsessive and that’s not good. Inevitably, there will be tough days filled with frustration, and that’s not something worth fixating on. Being able to walk away from your desk and shift your mind to something else (once you’ve reviewed your trading session) is critical to your ability to return tomorrow mentally prepared.
Check out this post for more of my thoughts on The Importance of Off-the-Screen Goals.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Take Time to Rest & Relax
August 1, 2011 at 7:15 am
This week I’m on vacation – and how sweet it is! But I’m still going to deliver some goods for you to read here…every day, actually, so keep coming back.
Today I wanted to discuss the importance of stepping away from the screens from time to time to rest up and recharge. The market will always be there when we return, but if we trade with fatigue of any sort (physical, mental, or emotional), we’ll be far from our best. That brings suffering to both our confidence and emotions – both of which we need in this game.
As you well know, trading is very demanding, so for us to show up each day with our full focus, we have to stay rested and avoid burnout.
I felt this post from the past was particularly pertinent to the current market environment. We’ve seen lots of day-to-day indecision, some sizeable gaps, and some wide-ranging bars in both directions lately. That’s not allowing many stocks to establish quality bases, which means the opportunity that’s out there is rather narrow at the moment. That will at some point change, but for the time being this is a good time to step away and let some of the dust settle.
Check out this post: The View From the Hammock for more of my thoughts on R&R.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Two Homebuilders to Watch
July 28, 2011 at 9:22 am
Homebuilder stocks have suffered for some time now, with most of them unable to make any lasting progress on bounce attempts. Many of them have been trending lower, but there are a couple of standouts I’m keeping my eye on.
TOL is the first, as it has been creating higher lows for the past year, grinding its way higher without really showing any momentum yet. It’s been caught in a range for the past few months, but is bouncing from support here and has room to work higher in the short term. Currently, there’s a pretty big wedge setting up on the chart, so I’ll be particularly interested to see which way it gets resolved. If it’s to the upside, it may be the start of some better price action as the stock again heads higher. Earnings are due out August 22nd according to Yahoo Finance.
Here’s a closer look at the daily chart:
PHM is the other, as it has been creating both higher lows and lower highs for many months now. In the near term, it has room to bounce within this wedge. On a longer-term timeframe, it could gather upside momentum once it clears the downtrend line, currently at the $8.30 level. It reported earnings this morning, so the news flow should be clear for a little while.
Here’s a closer look at the daily chart:
These are the kinds of setups I take a look at for position trades lasting weeks to months. The sector itself remains under some pressure, but these are the two in the group I’d consider on the long side if support continues to hold.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Day Trade or Swing Trade? Progression of a Play
July 26, 2011 at 11:21 am
One of the things I’m asked about quite often is how I decide my timeframe for a good setup. Will it be a day trade or a swing trade?
That’s a great question, and it took me a long time to figure that out. I go in-depth in the Advanced Trading Course at TheStockBanditUniversity.com to explain it fully, but one component in the decision is the pattern quality. That’s going to encompass the risk associated with the trade, which means entries and exits are more defined by a cleaner, mature pattern vs. one which is simply building.
So rather than just talk about it, I wanted to show you an excellent example from last week of how a stock can go from being simply a day trade candidate to a swing trade candidate when the pattern matures.
I had run across CROX pulling back from its 7/7 high on 7/11. The uptrend was still very much intact, and this looked to be a potential dip to buy once the dip was completed. Here it was at that time:
CROX needed to be watched a little longer before a play was evident, as I wanted to be able to draw a clean trend line along the highs and then go long on a push through that trend line. Sometimes you have to wait on the market. It took a couple of days, but I finally listed it for subscribers on the night of 7/13 for a day trade the following day. It wasn’t a fully mature pattern, so I was only interested in grabbing the next pop if it occurred the next day (7/14). Here was the setup, which didn’t trigger (it stopped a few cents shy of clearing the trend line, therefore no trigger):
Despite not triggering an entry for a day trade, I kept CROX on the radar nonetheless. After two more daily bars had been painted on the chart, a cleaner trend line could be drawn, and the pullback had the appearance of greater stabilization. I then set up a swing trade since the pattern was more mature, the pivot was more evident, and a stop loss area was now well-defined. Here was the setup I posted for subscribers along with a $26.60 entry trigger price, a $25.70 stop loss (just beneath newfound support), and upside targets at $28 and $29:
From there, CROX triggered an entry on 7/18, dipped for a day on weak volume, then got back on the move. With Target 1 at $28, the stock stopped just a few cents shy of hitting that level on 7/21, creating a bearish engulfing bar. However, I stayed with the trade since volume didn’t confirm distribution, and the following day the stock blew through the $28 first target on much heavier volume.
CROX pushed all the way to Target 2, topping out exactly at $29 on Monday. That offered a nice quick 9% gain, allowing me to book a solid profit ahead of the August 1st earnings announcement (which I always avoid). Here’s a look at the final bar of my trade:
Several takeaways…
Allow setups to determine your trade timeframe. I’ve said it many times, but the smaller the pattern, the shorter the trade should last. Bigger patterns can be trusted for more, it’s just that simple. This started out as a day trade candidate but evolved into a swing trade setup after the pattern grew and matured.
Be patient as patterns build. I stalked this stock for several days before placing a trade. Waiting for stocks to “come to you” is the best way to improve your odds of success. Risk management is crucial, pattern awareness is important, and position sizing is not something to ignore. However, it all begins with making a limited-risk entry, so timing is everything. Don’t rush the process.
Monitor the volume in relation to the price action. This stock made a few moves which, based on price alone, would have made me wonder. The trigger day saw a weak finish. Four days into the trade a bearish engulfing bar could have spooked me out. But neither were confirmed by volume. Instead, I kept seeing volume expansion along with advances in price, which gave me conviction in the trade and allowed me to stick with it.
Stick with good trades and don’t get shaken out. Along with the previous point on conviction, staying with a good trade can be tough. The price action or the overall market activity can cause premature evacuation. Stick with your trade plan and what the overall trade is doing. If it pulls back but volume’s weak, stay with your existing stop. It could just be a head fake on the way to much higher prices.
Hopefully this walk-through helps you understand better how I determine my timeframe for a trade. Beyond that, this review should also give you some insights into managing trades along the way, because learning to assess how a trade is developing is a critical skill you must possess for trading success.
If you want to know what I’m trading tomorrow, stop by the site and begin your trial to our stock pick service.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
