All Entries in the "Trading Tips" Category

Trading Plans & Self-Honesty

April 2, 2007 at 10:13 am

This week’s Free Newsletter over at TheStockBandit.com discusses the topic of Trading Plans & Self-Honesty in trading. It’s hard to argue that knowing yourself is the first step towards developing the right trading plan.

Our strengths and weaknesses must all be evaluated when it comes to devising the proper plan for our own trading, so stop by to read this week’s free newsletter for my thoughts on the topic.

By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com and we’ll notify you every time one is published. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.

Trade well this week!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Jeff White | Comments 0

Trading Responsibly

March 27, 2007 at 8:23 pm

You’re not the only trader who falls into bad habits from time to time. Sure, we all will occasionally blow a stop when we get a little overconfident, but I’m not even referring to those kinds of habits….. I’m talking about the ones outside the actual process of trading.

Irresponsible trading is in many ways a byproduct of choices we make outside of market hours. One very common way to trade irresponsibly is by failing to do your homework. However, even worse is when you are not keeping close enough tabs on your trading account.

It’s real easy to view account statements and print out daily P&L sheets when trading is going well, isn’t it? After all, every one of us likes to see the progress we’re making – whether it’s reducing our waistline or fattening up our trading accounts!

So here’s a simple tip that will help your trading: Print your daily P&L sheets!

My broker has an “Intraday View” which I print from the Portfolio Manager, and it breaks down all kinds of stats on the day’s trades. Included are such things as Total P&L, Commissions, Longs vs. shorts, and Biggest Gain & Biggest Loss. Just taking a look at basic stats like these takes about 30 seconds of my day. When the closing bell rings, I hit the print button and it’s right in front of me. But the benefits run deeper than just the superficial numbers.

One of the most important parts of the sheet I print out is the stats on my account. At a glance, I can see my account’s Starting Net Worth on the day, Net Worth Change today, and the current Net Worth on the account, along with the day’s P&L numbers. Having a hard copy of these stats in my hand each day makes the numbers seem a little bit more real, believe it or not. Punching holes in it and filing it into a binder is just part of my post-market routine, and it helps me keep close tabs on my progress.

It’s easy for me to flip back in the binder and see where I was in the past, whether a week or a month ago. But what I really like is that by forcing myself to review my progress in this way regularly, it helps me adjust my trading throughout the year. I can easily see where I stand in relation to my goals. I can also see if I need to be trading larger, smaller, or even less-frequently based on how my results have been. If things are going well, I need to bump up the size. If my account is shrinking, I need to back down the size and get more selective. And if the results are somewhat stagnant, then it helps me to see that a trip back to the drawing board and a closer review of my recent trading methods may be in order.

Be a responsible trader and keep close tabs on your trading account! I’m willing to bet that forcing yourself to even glance at your daily results will help you make critical adjustments to your trading as the year progresses.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Jeff White | Comments 8

Goodness & Greatness in Trading

March 26, 2007 at 7:50 pm

This week’s Free Newsletter over at TheStockBandit.com discusses the topic of Goodness & Greatness in trading. You can be great at just one thing in trading and good at the rest and still find success in the markets. The key is knowing which one thing requires greatness!

Knowing how to seek out the plays you prefer, reading the markets correctly, and gauging when to get aggressive all have some validity. However, there is one particular aspect of trading that you must choose to be great at. Stop by and check out this week’s free newsletter for my thoughts on the topic.

Trade well this week!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Jeff White | Comments 0

Trading Chart Patterns: Why Cleaner is Better

March 22, 2007 at 12:54 pm

Gut feel comes with experience, but the only problem is that it’s based on feel. That means that discretionary trades which are based on feel are subject to your moods. So, whether you’ve been on a hot streak, a cold streak, you’re distracted or just plain tired, your trading method itself will vary. We all see results vary from time to time, but our method should only vary when we want it to!

I’m a chart pattern trader, there’s no doubt about it. Almost all of my trades are based on the charts, and for a few good reasons. Some time ago, I outlined the reasons why I use technical analysis, but here are the two biggest reasons why my trades come from chart patterns:

Well-defined entries.

Well-defined exits.

the most important aspect

There’s no incredible magic about how clean or ‘tight’ the pattern itself is in terms of reliability, but there is some real substance in knowing exactly at which point in time you should be IN or OUT of a trade. That is of course derived from the chart pattern itself. A breakdown from a well-defined bull flag or ascending triangle pattern gives me a specific exit plan, and that puts me well ahead of the curve by telling me it’s time to step aside and move to cash, or simply shift those funds into a new setup.

This is the basis of our swing trading at TheStockBandit.com. We locate the chart patterns for our members and then explain why the stock is a trade candidate to begin with. Every single trade is provided with a specific entry level, a stop loss, and typically two profit targets so that we can scale out of the trade and take profits into strength (with price projections also being based on the chart patterns).

If you aren’t trading the cleanest patterns in the market, maybe it’s time you should. Check out our free trial today, and put some consistency into your method!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

Jeff White | Comments 6

Watch List Management

February 13, 2007 at 2:34 pm

All traders keep watch lists in one form or another. Maybe you jot yours down on a whiteboard in your office or keep some scratch paper close by to write down the symbols you’re keeping an eye on. You might store your watch lists inside your trading platform or charting program. Regardless of where you store it, it’s a fact of life that even watch lists need a little spring cleaning.

My personal preference is to store and manage my watch lists in my charting program TeleChart. (I’ll cover the reasons why in another post, but for now I’ll stick with the subject of managing my watch lists). On a regular basis, I do find that I need to remove certain stocks which no longer fit my trading criteria (for price, volume, volatility, etc.), or which are no longer anywhere close to areas from which I would initiate new entries. I want to keep the list clean and organized and of the highest quality possible, as that will let me quickly find trading opportunities when the conditions are right.

Timing is Everything

Every one of us is busy, so it can be hard to set aside some time to streamline our charting process. I’ve found that when the market stagnates, it’s the perfect time for managing my watch lists. Whether it’s an intraday lull in the action or it’s just shaping up to be a slow week (like Bernanke scheduled to speak the next day), these resting phases in the market action tend to free up my attention from trading. It’s on these days that I devote some time to removing the dogs from my lists so that I can refine and rebuild my watch list. I make sure to also remove any clutter which no longer belongs on the list (stocks which now have significant gaps, have reversed suddenly, or simply are no longer poised for the initiation of a new swing trade).

Here’s an example of a stock I recently removed from my watch list. OSG had provided some great shorting opportunities in recent months (note the lower highs), but once it cleared the previous high recently, the downtrend was broken so I took it off my watch list.

Chart Courtesy of TeleChart.

Making Space for New Ideas

By paring back my list to only those stocks which meet my criteria, I also create space for adding new names to the list. Freeing up some room for new watch list candidates lets me get to one of my favorite activities in the market: scanning and sorting. I love to dig up new trading ideas and locate the stocks which were previously flying under the radar, but I’m less inclined to do this if my watch lists are already too large to use effectively.

Managing my watch lists also includes redrawing trend lines, updating new support and resistance levels, and of course locating new chart patterns. This also contributes to the flow of new ideas as refined entry and exit levels become apparent. My watch lists are truly the lifeblood of my trading!

So the next time the market slows down and enters a resting phase, remember it isn’t worth trading. Instead, use that time to build and edit your shopping list so that once things do start moving again, you’ll be that much closer to having your game plan in place. Put on some good music, kick back and work those watch lists!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Investing, Swing Trading, Day Trading, Stock Watch Lists, TeleChart[/tags]

Jeff White | Comments 7

Trading Lessons & Worden TeleChart

February 8, 2007 at 10:20 am

In my previous post, I discussed the importance of learning from our trading mistakes to become better traders, citing one way we learn at TheStockBandit.com is through the Trade of the Week lesson. In this post, I want to show you a way to learn more from trades of your past – by keeping them separate and tracking them in TeleChart.

I’ve been a user of TeleChart since 1999, and I’ve never regretted paying for this great product. I talk a lot about the importance of using a charting program if you’re an active trader (an absolute MUST!), so I’ll leave that for another discussion (even though I still believe it!). What I want to point out here is how to use TeleChart to learn from your past trades, so let’s get to it.

Learning From Others

At 7pm ET after every market close, I do one last update of TeleChart for the final end-of-day data. I use their real-time charting service, called Platinum (find me on TCNet anytime, I’m TheStockBandit), so when the market closes I already have the ending numbers for the day. However, there are occasional minor changes in data from the exchanges after the closing bell, so the 7pm update includes the official closing levels and volume totals.

The 7pm update also includes an incredibly underrated feature – The Worden Report from Don Worden. Don has been in the market for many decades, and his trading experience is most likely greater than yours and mine put together. His nightly report alone is worth the price of their software, and I rarely miss his posts to see how he is viewing the current market conditions. In addition to his post, there are often trading lessons provided via submitted notes from other TeleChart users to Don, along with his response to them. While many of these contain over-complicated formulas for locating trade ideas which I ignore, there are some real gems that show up when other traders share their own trading lessons.

One recent idea was submitted by Sir Fertile Sources, who suggested something revolutionary yet unbelievably simple: create a separate watch list for stocks you have sold! Soon after, Sir Major Lessons added another layer to the idea by creating separate “sold” watch lists depending on the conditions which generated the sale (abysmal loser, stop loss hit, stop loss hit for a gain, booked substantial gain). The idea is to be able to quickly review those stocks which you have held and see not just how they are doing now but also how you may have improved upon your exit.

TeleChart Notes

The Notes feature in TeleChart is highly underrated. Pull up any chart on any timeframe within TeleChart and click ‘N’ on the keyboard. A dialogue box pops up with an instant capture of the chart as it looks right now. Enter your thoughts (the note) and click ‘OK’. You’ve just made a note which will forever be tied to the current chart view, allowing you to return at any later date and review your note. This is perfect for the “sold” watch list…..once you’ve sold your stock, simply enter a note, save it and move on. Later when you want to review it, you’ll see exactly what you saw when you made your sale, giving you an instant visual comparison to the current chart.

Notes are a one-click feature of TeleChart, allowing you to capture the chart and store your thoughts along with it. (The actual window can of course be resized).

WatchList Tracking

The WatchList Tracking feature of TeleChart is often overlooked. This is an excellent way to track a portfolio or even just a WatchList such as the “sold” WatchList. WatchList tracking will do exactly what it says – track every individual component in the list and even provide averages for things like percent change and number of days. This is ideal for the “Sold” WatchList, as the program will immediately and automatically begin to track your old stocks and you’ll be able to pull them up at a glance at any later date to see how well or poorly they have performed since your exit.

WatchList Tracking in TeleChart is done automatically, which really streamlines the past-trade review process.

Keeping it Simple

Every trader who is looking to improve can find great lessons in trades of the past. Trading can get real complicated if you let it, so take the easy approach to improvement when you have the chance. This new learning approach is already simplifying how I review my trades, letting me get to the application of lessons much faster. I hope it works for you just as well!

Take a free 30-day trial of TeleChart 2007 and see what it can do for your trading. I did, and I’m still using it 8 years later.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Investing, Stock Trading, Stock Charts, Chart Patterns, TeleChart, Worden[/tags]

Jeff White | Comments 7

Learning From Trading Mistakes

February 7, 2007 at 10:15 am

Bob trades online so his dumb mistakes remain anonymous.

While I’m not a backtester, I do believe that we can learn a lot as traders by reviewing our trades of the past. After all, if we can’t learn from our mistakes, how can we learn at all?

The member area of TheStockBandit.com has a feature called “Trade of the Week”. It’s a useful area that a lot of members comment on due to the lessons taught there. The T.O.W. is a look back at a trade I took each week and how it turned out. Some of them work beautifully and I get to brag a little, but the ones that we all learn from the most (myself included) are the losing trades which are dissected after the fact.

JAH is one trade I recently featured, which was a channeling stock I took for a short sale at an area of resistance. My stop loss level was close by and the stock had bounced on diminishing volume right up to the upper channel line. I went short, but the stock soon after broke above the trend line, triggering my buy stop to take me out of the trade for a small loss.

After examining the trade closely, I determined that if I were given the same setup again, I’d trade it again the same way. I just like these setups because in every case my risk is quantified with a good potential reward, and that’s the cornerstone of how I trade. However, in this case I was objective and this was one trade in which my timing was simply off. Sometimes the lessons are minor, but being willing to take something away from a closed trade is the mentality we need.

It always surprises me how even selecting just one trade per week to examine more closely helps me learn and apply that lesson better going forward. Over the course of a year, I end up being a lot smarter as a trader.

What are you doing to learn from your trading mistakes? In my next post, I’ll show you a great way to learn from your past trades which is so simple you won’t believe it.

Until then, trade well!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Trading Profits, Profit Targets, Stock Trading[/tags]

Jeff White | Comments 2