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Every time the market gets volatile for a few weeks, the stories start to come out of the woodwork of traders who made it or lost it big….

“So-and-so made $150k in that last selloff.”

“What’s-his-name lost 80 grand on that reversal.”

They’re impressive stories and often eye-opening when the numbers are considered in terms of real dollars, but to some traders these kinds of rumors might do more harm than good. Occasionally, a guy might hear a story like that and decide it’s time to start swinging for the fences and step up his size.

And of course we all know how that story ends!

Wanna know the secret to good trading? It isn’t found in some other trading style, and it most likely doesn’t require a major change in your method or taking massive swings in your account equity. The secret to good trading is to trade like you know how. Trade the way you know you should. Don’t trade like someone else, and don’t go overnight from trading for a steady paycheck to trading for riches. Take the setups you do well with, and pass on anything that doesn’t fit that mold.

When the market gets volatile, suddenly the urge to go big and catch a major turning point hits traders of all kinds. Those who want to catch the falling knife or short the top will usually pay for it several times before they finally catch a meaningful turn. The funny thing is that by then they’ve either shrunk their account or they’ve damaged their confidence enough that they might only recoup what they gave back in their first few failed attempts.

Don’t be a hero in the market. Leave that to someone else.

The best trades tend to be planned in advance and then simply executed well when the right factors fall into place. Take what the market provides, but don’t force big trades out of your desire to get noticed by your trading peers. Remember, the good thing about trading from the charts is that we don’t have to know where stocks are going (what a relief!)! Just keep working the charts and take the setups as they come, and know that bullish and bearish plays will present themselves at the proper times. That’s all we have to do, and there’s no need to be a hero!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading

One television show I find myself mindlessly watching probably once a week is Deal or No Deal. Perhaps the allure of the spotlight is simply too much to turn down, but it’s uncanny how the first good offer is never taken and the participant’s greed overcomes them to make poor financial decisions.

Often they are lower-income earners with a shot at a million, and something like $200k just isn’t enough for some reason. I can’t help but wonder if for many of them they had been offered $200k before they even taped the show that they’d take it, yet when on the air it’s a completely different story. The show offers them a gift and they turn it down.

When the market gives you a gift, TAKE THE MONEY & RUN!

You’ve no doubt made the same comparison, but I can’t help but relate this to trading. A good trade turns great on news or a major market move, and all of a sudden a home run isn’t enough - you want a grand slam.

My suggestion? Don’t fall victim to that mentality on Tuesday if you’re short coming into the day.

The giant gap we’re poised to see is a gift to you from the market, so push that big button quickly and ring the register! You might even have an opportunity to flip the position if we start to see buyers step in to scoop up bargains, but otherwise you could take the rest of the day off! When you see your P&L and it’s larger than you expected, it’s time to take the market’s gift.

For more market commentary, be sure to check out this week’s Market View page over at TheStockBandit.com. You might find some food for thought before you start your trading week after taking a closer look at the index charts which were posted tonight (and every Sunday). Hope you enjoy it!

Be patient this week and don’t get greedy.

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading

Trading means many things to different people. Some love the excitement and the thrill of a financial adventure. Some people want something to talk about and discuss, while others simply want a hobby. However, plenty of us are in it for the money.

For those who are purely seeking profits, there are many ways to play the game. Different approaches and timeframes will require a variety of strategies, but we all have something in common: if we choose to play at the wrong times, it’ll cost us.

Opportunities will surface on a regular basis though, regardless of your trading style. A big part of becoming a consistently profitable trader lies in the recognition of those circumstances, so it doesn’t simply boil down to selecting a strategy. The proper implementation of your strategy is what matters most, and if you aren’t seeking to learn that then the market won’t hesitate to teach you.

I like to trade actively. The market’s always in motion, and that means certain stocks are on the move as well. It can be so easy to step off the sidelines and into the game, but timing is the biggest issue in whether those ventures will be profitable or not.

There have been some big moves in this market for the past couple of weeks, and that means there has been no shortage of opportunities. However, the moves have been swift and violent, so they’ve catered to a certain type of trader. The contrarian is one such trader, who may have been calling for a top on the way up and initiating short positions as the market climbed. Obviously that meant some pain while the advance was underway, but now it means profits. Another type of trader who has been able to benefit from the recent conditions is the momentum scalper. They are willing to chase stocks which are already on the move, darting in and out quickly to catch snippets of the moves, adding numerous small gains together to make their day’s pay.

While I have traded each of these strategies at different times in the past, neither one defines my current style. That means that when conditions changed quickly recently, my best plan was to shift into capital preservation mode. Recognizing the change of market character has saved me considerable money these past several weeks, while others have fought and lost because of their unwillingness to protect their trading capital.

Every one of us has a choice of how to manage our trading business. We can throw caution to the wind and hope that we get lucky, or we can be methodical in our approach and choose a path which improves our odds of survival at all times. Choosing the latter keeps us in the game, allowing us opportunity to collect profits when conditions do cater to our specific style.

Trading success does not come easy - we have to earn it. That includes putting in the week-to-week effort, but it also means controlling our emotions and urges in such a way that we stick with our game plan. At times those plans may need altering, but that generally comes after a prolonged period of having something else work better.

Right now the market is trading with higher volatility than we’ve seen. Of course there’s no way to know just how long the extreme moves will stick around, but fortunately as traders it isn’t our job to predict. All we have to do is react to what we see. At some point we’ll see calmer conditions surface, and that’s when those of us with a multi-day to multi-week trading timeframe will be able to return to higher levels of activity.

Until then, protection of capital is the top priority, and we simply must be patient until our favorite conditions return. That way we can pick up where we left off. It may be uneventful while we wait, but it certainly beats the situation so many others are now in who have to make up lost ground. Don’t insist on activity if you don’t see what you like. Have the courage and discipline to wait for your pitch, and if you’re new to the game spend some time determining just what you need to see in order for your strategy to work. It’ll be well worth it!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading

The current recovery is facing a test at this juncture, as the rising channels which have formed from the November lows are starting to give way to some selling. This of course introduces the threat of new lower highs if the bulls don’t step in quickly, and that places great emphasis on the next few days as we wait to see how the buyers respond.

Be sure to check out this week’s Market View page over at TheStockBandit.com before you start your trading week for a closer look at the index charts and some market commentary which were posted tonight (and every Sunday). It’s actually the top portion of the nightly Bandit Broadcast (without the trading ideas), which is published on the Market View page as a weekend bonus for readers of this blog - hope you enjoy it!

Trade well this week,

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading

The end of the year is a great time. If you’re like me, you’ll enjoy the holidays, pig out on great food, and spend some quality time with family. There’s also that end-of-the-year examination of how our goals went this year and what adjustments we need to make for next year.

As we enter into the final couple weeks of the year, keep in mind that things are as tricky as ever. Cross-currents of all kinds are swirling during this month that aren’t seen at any other times of the year. Performance anxiety of fund managers, rebalancing of indexes, tax loss selling, and a host of other things will motivate market participants in unique ways.

Considering the already wild market environment we find ourselves in (the past few weeks have truly been volatile), December might just add fuel to the fire of confusion.

Let me caution you as you review where your year stands not to make bold year-end bets in order to reach your goals. Stick with your game plan, trade the good setups when you see them, but mostly just remember to take what the market offers. Don’t increase your size or take sub-standard plays for the sake of finishing big and trying to go out on a high note.

I’m a positive thinker and I love to trade. I like to set lofty goals and work my tail off to reach them. But these next couple of weeks aren’t the time to go big or make unusual plays. Cruise into the New Year with your objectivity intact, and focus not on what you need between now and December 31st, but instead on what you’ll want to aim for once January 2nd arrives.

Just don’t let December’s whirlwind of cross-currents throw you off balance.

Happy Holidays!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading