All Entries in the "Trading Tips" Category
Trading Intentions vs. Trading Actions
February 1, 2007 at 9:46 am
We’re all weak from time to time! Even the most disciplined suffer from moments of weakness. But, it’s how we learn from those moments that will determine our growth.
Case in point: The other day I was heating up some leftovers from Macaroni Grill. It wasn’t enough for 2 servings, but it was more than 1 serving and I knew it. I just decided to heat it all up, intending to eat what I wanted and leave the rest. Yeah, right!
Next thing I know, I’m down to the last few bites from what was originally a huge plate of food! What happened? I love to eat good food but I’m no Kobayashi! I surprised myself with what I put away, but it’s easy to see how it happened. When I loaded up the plate to begin with, I left the door of possibility wide open.
They say if you make decisions ahead of time, that once it comes time to make a critical choice you will make the right move. I failed to do that with my Macaroni Grill leftovers, and you know where I’m going with this — Trading!
I’ve done it too many times and the odds are that you’re familiar with it too. That trade you never intended to let get away from you just somehow managed to get too big. What started out as a 2 or 3% loser just seemed to snowball and before you blinked you were staring at a 15% loss. Ouch!
Bad News First
The bad news is that as humans, we’re prone to mistakes and that means repeat offenses. We might not have it within ourselves to keep a mental stop and act on it when we should. Blame it on not paying attention, blame it on a slippery market maker, you can even Blame it on Mexico if you need a reason, but the truth is that failing to put our original intentions into an actionable plan is what can make a bad trade even worse.
Preventing Pain
You aren’t alone, every one of us have let trades slip away when we shouldn’t have. The good news is that it’s fixable, and that means it can be avoided (unless the stock gaps big against you). It’s so simple, but yet easy to forget or ignore. Don’t fall into that trap.
It’s your money, so be vigilant! Set your stop loss as soon as you get filled on your entry, and trail it higher as the trade progresses so that you can let your profits run. Personally I do this with conditional orders through CyberTrader because they let me specify exactly what needs to happen to trigger an exit, but even a plain-Jane stop loss will do the job better than a mental stop, so use whatever tools you have at your disposal and turn your trading intentions into actions!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[tags]Stock Market, Stock Trading, Day Trading[/tags]
Profit Targets: One or Two?
January 29, 2007 at 11:34 pm
I am a big proponent of planning trades as thoroughly as possible before getting in. I prefer to set my stops in one place and exit the trade all at once if I am wrong, but taking profits is another topic. At times, one profit target makes sense. Other times call for multiple profit targets.
Check out this week’s free newsletter over at TheStockBandit.com for my thoughts on planning profitable exits. And by the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com. 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, Trading Profits, Profit Targets, Stock Trading[/tags]
Potential Market Shifts
January 21, 2007 at 6:33 pm
As traders, we always have to stay aware of our surroundings. Ideally, we’re seeking to maintain an edge on our competition, and that means trying to determine with some degree of accuracy what may happen next.
I’m no fortune-teller and I never make market predictions, so instead I constantly ask a handful of questions regarding the market’s behavior. With last week’s failed breakout fresh on my mind, I’m watching for potential market shifts just in case. This may only be some temporary weakness, or it may be a warning that something bigger is on the horizon – it’s just too early to know for sure yet. What we CAN do is to gauge the character of the market, and that’s what I’ll be focused on this week.
Check out this week’s Free Newsletter at TheStockBandit.com where I discuss 4 factors I use to determine market strength when watching for potential market shifts. And when you do, make up your own mind whether or not the bull in the picture looks safe!
By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com. 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 out there this week!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Trading Articles
January 11, 2007 at 3:46 pm
I just wanted to give you a heads-up regarding all of my archived trading articles. There has always been a full list of them available over at TheStockBandit.com (more than 150 articles), and along with the chart patterns page, it’s one of the most heavily bookmarked pages of the site.
But now they’re all arranged by topic, nice and orderly!
That makes it easy to skim the list for any general trading topics which you’d like to read about. The topics include such things as technical analysis, trading psychology, trading tips, and there’s even a nice archived list of my free newsletter articles which started being posting directly on the site a few weeks back. So the next time you need some reading material, check out my stock market articles list!
Hope you enjoy them, and I’ll of course continue to churn out the content here going forward!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
3 Signs You’re Trading Too Big
January 9, 2007 at 3:12 pm
Are You Trading Too Big?
The market tends to expose our every weakness. Whether it’s emotional extremes, a lack of preparation, or simply being stubborn, trading will reveal your Achilles’ heel!
One common mistake we all make from time to time is trading too large of a position. This may be the case when an account is too small, or it may be a product of the market you’re trading and whether or not there’s ample liquidity to allow for entries and exits with minimal slippage. Sometimes trading too big can mean trading your normal size in an overly-erratic market. While there are several factors involved in trading too large for your own good, focusing on realizing when you’re trading too large can be quite helpful.
Here are 3 clues that you’re trading too big:
If you’re adding on trading size because you’re on the wrong side of a trade, you’re trading too big. Why add fuel to the fire when you’re wrong? It costs money and you’ll often come out of the other side of the trade not knowing which way is up! Compounding one mistake with another will often lead to even worse performance, so focus on working your way out of the first bad trade without adding to it.
If you can’t sleep at night, you’re trading too big. The phrase “sell down to the sleeping point†is often used but for good reason. If you walk away from your screens at the end of the day and all you can think about is the trade you’re in, then it probably means too much to you. Lighten up on your position, and you’ll usually find greater clarity which leads to profitable decisions.
If you are acting like a baby, you’re trading too big. Screaming at monitors, smashing keyboards, and banging on your desk is for toddlers, not traders. If you’re not acting rationally, then it’s time to cut down that trading size. I’ve been on a number of trading floors and witnessed this behavior, as well as been guilty of some of it myself. Such actions indicate that emotion is in the driver’s seat rather than logic, and that’s a huge disadvantage in trading. Trading plans should be in place to direct your next move, but how can anyone follow a logical plan when they’re busy throwing a temper tantrum? I don’t ever recall my own or anyone else’s childish behavior leading to a good day or rescuing a bad one! If this sounds like you lately, take a breath, lighten up on that position size, and get back to your game plan.
Position sizes should be increased when you’re trading well, not struggling. Cutting down position sizes during times of frustration will allow you to get your confidence back and find some clarity.
Wait for your mojo to return before you step back up to full size, and while you wait, focus on trading well rather than P&L!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
Minor Changes Make Major Differences
December 13, 2006 at 9:39 pm
Not long ago I noticed that buying dips and pullbacks within uptrends has been working much better for me than the breakout plays I generally prefer. This is largely a function of the market having run for so long without a meaningful rest, and fortunately my trading experience helped me to recognize that (along with, of course, a few failed breakout plays!). This has shifted my focus toward more of these types of plays in recent weeks, and my performance has improved substantially as a result of this minor and simple change.
The key to this change was when I took a closer look at my trades to see what was working well and what was costing me money (I do this regularly). It can be tough to admit the need for change if your ego is tied too closely with your trading, but remember that we’re in this to inflate our wallets, not our heads!
What aspects of your trading might need a little changing? Closely examine your process and the results you’re getting, and I’m confident that if something needs tweaking, it will stand out. Sometimes the smallest adjustments can make the biggest differences.
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
The Day After
December 9, 2006 at 12:10 pm
Secondary stocks can often make huge moves if you know what to look for.
Tuesday was a great trading day for us at TheStockBandit.com. You wouldn’t know it by glancing at the market. The NAZ was up 3 points, the S&P was up 5, and the RUT was up 1. In fact, you’d probably think that Monday was a big day and Tuesday was rather quiet.
It’s funny how that often works, but it’s just a function of the kinds of stocks we trade. We like to trade the names which are a little more obscure. Occasionally we’ll trade the biggies like AAPL and GOOG, but they are so dominated by the big funds that it’s harder to know what’s really going on with those stocks on a given day, not to mention they rarely make big percentage moves (which is the best measure of a move). Furthermore, options play a huge role in how the big names move, and you can never be sure if a lasting move is taking place or if it’s just part of the aftermath from the shifting or unloading of a large position held by institutions. They make for good day trading stocks, but they’re not ideal for swing trading.
A Different Breed
The stocks we tend to play are a little more secondary. Yes, they move well and have plenty of volume (our minimum volume cutoff is around 200k/day avg.), but the moves tend to be cleaner (and usually much larger) than the bigger names and that means a huge difference to the bottom line by the end of the month!
These secondary stocks often catch some nice follow through moves on days after the market averages make a jump, which means that some of our best days actually come after a big market move. When other traders are looking to play “follow the leader” the day after a big surge, it brings more activity into the stocks we are often already positioned in. This makes for some nice account growth on days when the broader market may be pulling back or just catching its breath.
So, the next time you feel like you’re missing out on a big market move, don’t discount the possibilities for the next session! There are a ton of stocks out there poised to move if you will do your homework and just find them. Believe me, they are out there!
Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
