All Entries Tagged With: "Confidence"
Apply What You Learn or Stop Learning!
September 15, 2011 at 1:06 pm
For whatever reason, a theme hit me this week that I think is highly important to share with you here.
It all started when Tyler recently pointed out that many traders get caught in the nonstop cycle of learning, and he brought forth some excellent points. Most notably that many traders mistakenly aim for breadth of knowledge rather than depth. I think he’s dead right.
Then I ran across another article along the same exact lines, this time aimed at entrepreneurs, highlighting information bias as the tendency to seek information even when it cannot affect action.
After all, what good is information if it’s not altering or improving your actions?
As a trader, you can learn and learn and learn and not see improved results if all you’re doing is learning. Read that sentence again, I’ll wait. In fact, learning without practice will do you no practical good.
In other words, to find greater success as a trader, yes you need to learn, but you absolutely must incorporate that new knowledge into your approach. Without it, you’re wasting time learning!
Learning Isn’t Bad…
Now, don’t get me wrong. I’m passionate about traders learning more, which is why I’ve produced so much quality material through the trading courses, service membership, and the hundreds of free articles and videos for you here on the blog.
And I fully embrace the always-be-learning mentality, so long as it’s for the sake of (1) staying humble and teachable by the market, and (2) to keep growing so you’re equipped to adapt when necessary.
But It Can’t Stop There
Beyond the learning comes the application, so never leave that all-important step out of the mix.
Bella just brought up the highly valid point of how to learn from another trader by seeing their approach, internalizing their rules, “tweaking them, working on executing them, and then internalizing these improved rules” for better results. It’s one thing to learn what someone else did with a trade, but it’s much more to take elements from it to improve your next trade.
That’s what customized application looks like.
The whole idea of putting knowledge into practice is being in the habit of taking what you’re learning and then putting in the mental effort to decide how it fits with what you’re currently doing. It’s about considering ways to implement the new info rather than simply storing it away for a rainy day.
So by all means, keep learning, but only if you’re willing to apply it. Otherwise, spend your valuable time on something else.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
3 Signs You Have a Home Run Trade
September 7, 2011 at 10:21 am
Here’s 3 signs you have a home-run trade on your hands:
* Your initial target gets reached faster than expected. Ideally, this is also accompanied by heavy volume to confirm the move. Either way, this is a stock that’s getting quickly on the move, and you’re participating – congrats.
* You get runaway gaps in your favor. A runaway gap is an indication that emotions are heating up and traders are becoming impatient. With prices moving in your favor, you’re in good shape to capture additional momentum and be able to offer out stock at higher levels.
* Your stock has a historical propensity to make big moves. This factor alone isn’t enough to produce a home-run, but with either (or both) of the previous two at work, it only adds to the likelihood that the move getting underway is going to pay you well.
Momentum trading requires a different mindset, and momentum arrives when there’s more emotion present than logic. Keep this in mind the next time you have a trade performing better than expected, and see how much you can get out of it.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
The Key to Trade Selection
September 1, 2011 at 9:45 am
There’s always a move you’re missing. It might be in the overall market (ETF’s), or it might be a sector or individual stock that’s making the move of the day.
As traders, we all dream of being involved in those names on a regular basis. And while you can focus your entire day on monitoring the news and the stocks which are jumping on headlines (some do and are highly successful), the fact of the matter is that those plays might not be best-suited for you. And that’s perfectly fine.
You’re unique, and your approach should be as well. Some traders are tuned-in enough to dedicate their attention to the headline stocks, but many are not. It’s important to accept that and go the best way for you.
Choose Wisely
In my experience, the important aspect of trade selection is founded in the ability to narrow a list of trading prospects to just a few actual candidates. The aim is to get your watchlist down to a select few which really “fit” you best.
Here are a few things to consider when doing this…
* Are there specific setups or chart patterns which have performed best for you in the past?
* What’s your preferred price range or volume minimum?
* Do you have a directional bias?
* Which type of play do you prefer… breakouts, reversals, pullbacks?
Hopefully you’re seeing some ways to start reducing that list of the cleanest 20 patterns and derive from it an actual trading list. This way, you can ignore what’s left and stick with only the ones which are most suitable for your style of trading.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Don’t Discount Daily Charts When Day Trading
August 31, 2011 at 9:16 am
The daily charts are where nearly all my trades originate. Whether I’m looking for a single-day move or one that lasts several weeks, I always at least take the daily chart into consideration.
Day traders often forget the value that the daily chart can bring. The conclusion is that it’s only suitable for swing trading or position trading, but the truth is that the daily chart can offer some good signals for entry and exit as levels are cleared or reached. Even better, those same levels can often add to your confidence in a day trade and help you stay in it.
Let me offer 3 examples from Tuesday’s session where the daily charts played important roles. On Monday night in the member area, I listed only 3 plays for Tuesday’s session, with each of them being day trade candidates. I’ll break them down one at a time with the initial setup, and then a look at Tuesday’s intraday chart where the daily level played a significant role.
First up was QIHU, which looked poised for a push higher after establishing both a higher low and a higher high in recent weeks. The pullback over the previous several sessions provided a clean descending trend line which I used as a pivot for getting long at $23.60. Here was the original setup:
QIHU pushed past that trend line and never dealt with it again, running initially almost 3% higher before pulling back but still holding above that same trend line:
Next up was GLNG, which had corrected and then settled into a multi-week narrowing consolidation pattern in the form of a symmetrical triangle. These patterns can break either way, and with a strong market and the upper trend line being challenged, I was looking long on a trend line break through $32.15:
GLNG triggered an entry as it cleared the $32.15 level, showing a nice initial pop followed by a pullback to test the breakout zone. To heighten the validity of the $32.15 level, the low of the pullback was $32.18, just 3 cents above it. From there, it ran again in the afternoon to clear the morning highs and get 4% beyond the morning trigger. Not bad for a few hours and no pain:
Last but not least was FSL, a little stock which had huge potential. It had just pulled back to test and hold the early-August closing low, and in recent days had stabilized just above that level. On Monday it saw expanding volume but only minimal progress as it edged past a descending trend line. I set a trigger for $11.25, which would be a multi-day high, to get long. Here’s a look at the pre-trade setup:
FSL triggered late in the day with a massive thrust higher once it cleared the $11.25 level, vaulting straight up to $12 to offer a very fast 6.6%. The move was fast and furious, but a quick payoff once the level was cleared:
A couple lessons from these trades…
A level is a level. Doesn’t matter if you found it on the daily chart or some other timeframe, the odds are it’s going to be evident across multiple timeframes. Recognize and respect that, because it could pay quite well. All 3 of these trades were winners, and each of them respected the level originally found on the daily chart.
Keep an open mind. Perhaps your preference for day trades is a 15-minute chart or a 30 or a 5-minute chart. That’s great. But keep an open mind about how trades might originate. Don’t resign the daily charts to something only multi-day traders consider. You’re missing out on several great opportunities per day by ignoring the daily charts.
Hopefully you found this walk-through helpful. If you want to know what I’m trading tomorrow, stop by the site and begin your trial to our stock pick service.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Intelligence is Only Part of Trading Success
August 24, 2011 at 10:46 am
In a recent conversation with a trader who had just accepted some small but frequent losses, it came to light that his emotions were flaring. Taking a small loss here or there doesn’t affect him, but taking a few in a row does.
What’s interesting though, is that it wasn’t the money that bothered him so much. It was the fact that he came to doubt his intelligence after a string of losses.
Every one of us has been there, and it’s no fun. Losing is a part of trading, and each of us knows that, but how we cope with those losses will determine how quickly we rebound from those hits that inevitably come.
Here are 3 steps I suggested he take…
1. Trade smaller. If you’re getting frustrated and angry, it’s a sign you’re placing too much importance on each trade. The way to diminish that is by reducing your size for a little while so that trades take on much less importance and you’re simply focusing on managing them properly.
2. View losses differently. Losses aren’t fun, but when viewed in a different light, they can be seen as helpful. They will make you better, because you scrutinize your mistakes and either learn something new or get reminded of a lesson you’ve previously learned. Losses also free up your capital and attention to shift toward another trade which may quickly overcome that loss.
3. Expect losses to happen. This isn’t negative thinking, but rational thinking. Begin each day knowing you might take several trades, and some might be losses. That makes it easier to accept them when they happen and it allows you to keep moving without letting emotions take over. Expect winning trades as well. And be sure you’re stopping out for smaller losses than the winning trades are providing. That will keep you net profitable and that’s the aim.
Remember, being right every time is not the aim of trading, so get out of that mindset as soon as you find yourself in it. Intelligence is only a small part of trading. Trading is a numbers game, and it’s one that requires you to deal with emotions rather than allow them to flare. Those who have an edge and who can manage emotions (tied to both losses and gains) are the ones who will succeed in trading.
What else would you tell this trader?
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Let Your Trades Go
August 4, 2011 at 7:15 am
Trading on certain timeframes requires that we monitor every tick, gauge the momentum, and continually modify our management of the trade.
For most traders, however, more of a hands-off approach is far better. Whether it’s a job that prevents fixating on the screens, or simply an aversion to that high a level of activity, many traders choose to operate on a timeframe that doesn’t require their nonstop full attention.
When I’m swing trading, there’s a tool I utilize that makes all the difference in the world. It allows me to take a set-it-and-forget-it approach to my trades so I can set them up and let them go. It helps me prevent interfering with my positions so that my original trade plan can fully develop.
Just as you should, I already know from the outset of my trade what I’ll risk if I’m wrong and where I’ll ring the register if my target is reached, so with those pieces of the equation already known, all I need to do is plug them in.
Read this post for an explanation and a video I made explaining how I trade with Peace of Mind.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Elevating Your Odds
August 3, 2011 at 6:05 am
Each of us would say we want every advantage possible in our favor, regardless of the activity. But a closer look at your trades would likely reveal occasions where you didn’t quite wait for all the elements of your trading plan to come together.
Perhaps that’s out of impatience or anxiety, but we’ve all done it and either suffered diminished returns from lowering our standards or we’ve implemented some poor habits which came back to bite us later.
When it comes to daytrading, our greatest odds for success come when we combine multiple favorable conditions before placing trades. That might be locating setups which point to the same outcome on multiple timeframes, or it might be considering the overall market environment and trading in such a way that we’re not fighting that.
Go check out this post from the archives which has both a written explanation & a video showing you what I mean, because the key is to Stack the Odds for Daytrading Success.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
