5 Years!
January 15, 2010 at 9:27 am
In the world of trading where 5 minutes can seem like an eternity, 5 years feels like a really long time. That’s the number I’m celebrating today, as it was 5 years ago today that I published my first post over at my original blog. I spent one year writing there before creating TheStockBandit.net. I’ve been writing here ever since, publishing some 480 posts during this stretch.
I continue to be thankful for those of you who are regular readers. Your comments and emails are very rewarding, and I’m very hopeful that you return not out of habit, but rather because you find something useful here each time you visit.
I’m fully aware of the many, many blogs which have popped up since I began, giving you countless choices for where to spend your time. I don’t take it lightly that you choose this site as one on which to spend some of your time.
This blog continues to serve not only as an outlet for me to teach and discuss important trading matters, but also as a reminder to myself for what I need to aim for in my own trading. The growth of readership here suggests it has been helpful to you, which is certainly rewarding to see.
I’m excited to see what the next 5 years will bring. I plan to continue bringing you chart reviews, trading psychology articles, market commentary, trading videos, and whatever else is suitable for the environment we find ourselves in. I hope you’ll never hesitate to comment when you have something to add.
Thank you for reading!
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Keys From a 6-Month Streak
January 13, 2010 at 3:18 pm
Anytime you find yourself in the midst of a streak in your trading, it’s worth paying attention to. When you’re winning, you need to find out why.
A few years ago, I was fortunate to put together a 13-month streak of consecutive net profits (profits every month for 13 months). The longer the streak continued, the more I thought about it, and the better it made me to sort of ‘observe myself’ during that run. I made note of not only my routine and the kinds of plays which were working, but I also included my thought process and the mentality I was bringing to the table. I still occasionally reflect on those notes to stay sharp.
For the past 6 consecutive months, we’ve put together net profits in each month over at TheStockBandit.com (July, August, September, October, November, December). Results can be found here.
Although I am trading confidently, I’m not telling you this in order to boast. I’ve been at this long enough to know the market will serve up a healthy dose of humility when it’s needed!
Rather, I want to share with you some of the things I’ve been focused on in recent months that have brought consistent success, hoping it can improve your own process.
Here are 5 Keys I’ve taken from the past 6 months:
* Be Patient. I have not forced trades. When setups were plentiful, I would get more aggressive. Hence the reason some months had more trades than others. When the setups were harder to come by, I was willing to wait. The year is long, and there will be an abundance of opportunities, so there’s no need to try to make something happen. Watching and waiting for the must-take setups to come along pays off.
* Picky is Good. Before committing capital, I have been requiring high-quality chart patterns and situations which carry a nice potential payout. Lowering your standards to second-rate setups will result in overtrading and a higher barrier to success, and trading is already hard enough without that. You deserve the best, so require it if you’re putting money into it.
* Take the Conservative Route. The occasional home run is nice, but they don’t always happen on purpose. In fact, swinging for the fences will send you right back to the dugout more often than it’s likely to put you on base. My approach has been to hit singles and ring the register more often, paying myself when I catch a nice move, but now wearing out my welcome. The conservative route brings with it consistency and confidence, two things I strive for.
* Have Directional Flexibility. A willingness to trade both the long and short sides has led to my booking winning trades on the short side in every month during this run, despite the fact that the market has pushed relentlessly higher. This was extremely helpful during July, September and October when we saw some brief market pullbacks as well. Looking for outlier stocks can pay off, both in terms of winning trades and the occasional hedge to long positions.
* Monitor the Behavior of Positions. Never trust a skinny chef, or any stock you hold a position in. I don’t mind giving trades some wiggle room, but I do keep a close eye on the price action and how volume corresponds with it. During this run, whenever I started to notice a discrepancy between what I expected to happen and what was actually happening, it was a clue that an adjustment may be necessary. Every stock has some personality associated with it, so if that begins to change, give it your attention and be willing to modify your trade parameters.
The next time you find yourself in the midst of a nice run, take a little time to see what you can learn from it. Take note of what’s working and what isn’t, do more of that which is working, and keep plugging along. It will help you not only perpetuate the process you’re already in, but it’ll help you return to the same mode later on.
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Is NFLX Leading Again?
January 12, 2010 at 7:46 am
With new highs being hit almost daily in the market, there has been an abundance of long-sided trade candidates. However, weak stocks are still in our midst, and it can serve us well to watch for those outliers – whether as individual profit vehicles or simply as hedges.
NFLX is one such stock. Not only did this one prove to be a market leader when it began trending higher a few months prior to the market turning the corner (NFLX in late 2008 vs. the market in March 2009), but it’s now trending lower while the market continues to climb.
A pair of lower highs has been established since November, and currently the stock is struggling to reclaim recently-broken support. The bounce of the past few days is now starting to create a rising wedge pattern which, if confirmed with a move back under the $52.50 area, could bring another breakdown for the stock. If it does, this one is on my radar for a play.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
I See You PCU
January 11, 2010 at 7:26 am
Strength in this market has been relentless, and that means many individual names are riding the wave. It can be difficult to work through robust watch lists in search of great plays, but often times it boils down to identifying the most valid levels, knowing if they’re violated that opportunity will emerge.
Last week, PCU “got on its horse” for several days and made a nice move right to upper resistance – a well-defined level it has flirted with several times in recent months. It’s now threatening a breakout, but will need to punch through the $36.50 level in order to pull it off. If it does, this one is on my radar for a play.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Video Review of the Indexes 1-10-2010
January 10, 2010 at 2:50 pm
The New Year is underway, and it has started just like 2009 ended – with strength.
Last week we saw the bulls get quickly into gear with a Monday morning gap to the upside, sending the major averages back to new recovery highs. Although the follow through for the remainder of the week was rather modest, it was produced, sending yet another reminder that the trend is up and the recovery rally is still very much intact.
As we head into a brand new week of trading, let’s examine some important levels in the indexes to keep an eye on in the days ahead. That will have the greatest influence on how individual stocks are going to move, so it’s where the trading week begins.
This clip was also posted over on the Trading Videos site (as always), and perhaps you’ve seen it there – but in case you didn’t, I wanted to put it here on the blog for you.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Thanks for stopping by and I’ll see you here soon with more.
Until then… Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
The Envy of Other Traders
January 7, 2010 at 7:30 am
If you have traded for virtually any length of time, you’ve no doubt found yourself on both ends of the spectrum when it comes to winning and losing.
At times we can do no wrong, nailing trades with concise entries and the ability to scale out at our own prices. It’s nice. And during those times when it feels much more easy to fatten our accounts, it seems like such a foreign concept to lose. How could I ever have done that?
The Grass P&L is Greener on the Other Side
Other times, we find ourselves dead wrong with terrible timing. We’re dead wrong, and it feels like the moment a trade is entered, it begins moving against us. Frustration builds while confidence erodes, and you wonder if there’s something else you should try – anything to stop the bleeding. To top it off, knowing that we’re building the accounts of those guys on the other side of our trades is completely awful!
When we’re at our best, the traders we’re going against know the P&L is greener on the other side. Our side. It’s not about keeping “them” down, but rather ourselves up with consistency.
If there is one reality of trading, it is that we will indeed have losing trades. But how can we find ways to increase our odds of staying on the winning side more often?
5 Ways to Maintain an Edge
Put Yourself in Their Shoes. Considering the other side of your trades on a regular basis can give you a valuable taste of the emotions driving your competition to take action. Recognizing the greed or fear of traders by way of the price action will give you a valuable edge, whether by way of timing a new trade or adding to your confidence in an existing position.
Remember that Cash IS a Position. At times you’ll need to move to the sidelines, and others will wish they were with you. Feeling like you need to be in something all the time is a major but common mistake. When you see no great opportunities, sit on your hands.
Maintain High Standards. This goes hand in hand with the previous point, but those who overtrade are not keeping the bar set high. They’re lowering the barriers to entry, so to speak, by accepting mediocre setups, sloppy patterns, and generally trades with risk/reward profiles that aren’t in the upper echelon.
Zig and Zag. Many of us do have a directional bias with our trading, which may simply be a part of our nature. But trading isn’t about making ourselves comfortable – it’s about extracting profits. Sometimes that requires us to lean against or, dare I say, step a little outside those outer boundaries of our comfort zones. Consider the occasional short sale, because there are always weak stocks (even in a bull market). And even within a bear market, there will be strong stocks to focus on. Keep an eye on the outliers, there’s opportunity there.
Don’t Hesitate. When you see the writing on the wall that you’re poorly positioned (on the wrong side, or on the sidelines), act immediately. Hesitation opens the door for doubt, which results in costly delays. You either end up chasing a stock too far and end up with a poor entry, or you miss it entirely. So the moment you know you need to be out of a trade or into another, do it. Stay sharp, and show up focused. Speed is everything in this game, and absolutely includes your decision-making.
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
Nothing Wrong WIT This One
January 5, 2010 at 7:55 am
Solid technical setups often times will have more than one positive thing going for them. It may simply be having the market’s wind at its back, or it may be more like the stock I’m going to show you today. WIT has made a monster run since the March lows of 2009, tacking on about 350% since then. And while that’s a really impressive advance, the fact is that the stock is still trending higher – and may be poised for more.
Not only does this one have the long-term uptrend and higher lows/highs in place after that move, but even just over the past few weeks WIT has exhibited some great qualities. It popped big in mid-December on a surge in volume to make new highs, and since then it has put in some needed rest. We also see on the chart below a pair of white arrows highlighting short-term higher lows as the stock sits just shy of resistance.
On Monday, WIT turned higher on a pickup in volume, indicating we may soon see those highs get challenged at the $23 level. If so, this is one I’m definitely interested in, so it’s on my radar for a play.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
