TheStockBandit.net

I used to think that the most successful traders just knew how to locate the big winning trades and that was the key to their profitability.

We all know what happens after the STOP.

Not anymore - I’m past that, and thankful that I finally realized it. It took some time, probably because of the irony of it all. Who would have thought that the best traders’ real key to consistent profits in the market all boils down to humility and their ability to get out of trades when they need to the most? What happened to bravado and having the guts to take the plunge and go big when you really feel you’re right? Is that not how the best traders do it? Occasionally that approach might give you a windfall profit, but what happens when you’re wrong (and you WILL be)? If you don’t have an exit plan, you’re gonna be toast. It’ll be Hammer Time for your account, and it won’t be pretty or fun!

If you don’t respect the market, it will force you to respect it.

I’m a huge advocate of using stop loss orders, regardless of your operating timeframe. There are plenty of reasons to sell your stock, but the most basic premise is that once your trade stops behaving as you expected, it’s time to consider kicking it out the door.

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Second chances are so nice to get, even if we don’t deserve them! If you pay attention in this choppy market environment, you’ll often find that you get multiple chances to get into a trade (and profit).

This could be viewed as frustrating, as a stock breaks down or breaks out, only to quickly return to the support or resistance level. However, it can be great if you get caught snoozing on the first move!

Last night in my stock newsletter, I highlighted NTRI as a potential short. NTRI had broken down a couple of weeks ago and since then had formed a bear pennant pattern. A break below $51.00 at the lower trend line was the trigger for my short sale.

(Click image for full size) NTRI was primed and ready to break down from this bear pennant pattern, with the trigger being a break of the lower trend line at $51.00.

NTRI triggered soon after the open today and I was able to short sell it as it broke through the $51.00 level (thank you ARCA market sell/short!). Had I missed the first entry, I would have had another shot at getting in the trade by offering into the first bounce which carried it right back up to the $51.00 level (funny how that works!).

(Click image for full size) NTRI broke the $51.00 level right off the open, but the bounce which followed provided another shot at entering this trade. Gotta love those second chances!

Fortunately, NTRI drifted lower throughout the day, providing a nice trade whether you caught the first or second entry. In fact, if you don’t like to trade breakouts/breakdowns, you may actually prefer to bid into pullbacks or offer into bounces in order to establish a position - if so, this is an excellent market for you. Be on the lookout for second chance entries in these choppy conditions, and you’re sure to find some second chances to profit!

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

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Technorati Tags: Stocks, Investing, Stock Trading, Short Sell, Trading

Although I’m a big proponent of trading with the use of chart patterns, a stock’s volume simply cannot be ignored.

I run across literally thousands of stocks every day in search of not only the best technical setups, but also the proper conditions under which to trade those stocks. I ultimately locate the cream of the crop for subscribers of my stock newsletter, and it results in consistently profitable trading.

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This is an excellent dip-buying market, but you’ve got to know how to do it right if you want your trade to be a winner!

The idea of buying stocks on a dip sounds nice, but it isn’t easy to put into practice. Some people think that buying a stock on a dip means that any weakness should be bought. Well, what defines a dip? It depends on the timeframe! When do you know that a stock has finished “dipping” and is now ready to turn higher? Should every purchase be made on a dip?

My standpoint (and that of TheStockBandit.com) is not to buy any stock just because Read more »

Some stocks on the move are simply best avoided.

We’ve looked at MOVI twice (December 6th and February 13th) as a downtrending stock to avoid. Cheap stocks can be tough to short sell because they don’t move very much and they become more ripe for takeovers, which you sure don’t want to get caught on the wrong side of!

But sometimes stocks move up at such a rate that Read more »