The Trader Talk Think Tank

Announcing an unprecedented opportunity to learn…

We are visiting Chicago and Philadelphia!

Keystone Trading Concepts presents the

Trader Talk Think Tank

Each month in our NYC office Keystone Trading hosts and moderates a two hour networking event that empowers our attendees to:

· Discover how to assess market conditions like a professional for the upcoming quarter

· Gain insight into which sectors have the lowest risk opportunities

· Discuss ideas you have previously traded and new ideas you are considering

· Review of previous Game Plans and how Keystone’s proprietary traders and students executed those ideas with real money

· Get a glimpse into the Keystone Trading Plan and how we plan to attack the markets in the coming week

Additional topics on the schedule include:

· The most common and (most costly) stock trading mistake and how to avoid it

· How to eliminate the anxiety caused by reading your brokerage statement

· The difference between a risk only trade versus a trade with a high probability to earn money

· How to qualify to trade firm capital for Keystone (remotely)

On Wednesday October 27th at 7:00pm EDT Keystone Trading Concepts will be hosting a preview webinar for the next Trader Talk Think Tank to be held in Chicago at the Sofitel hotel on Monday, November 8th 2010.

During the Preview Webinar we will be discussing the top 5 reasons why attending the Chicago

Trader Talk Think Tank on November 8th will stimulate new ideas for you, learn how a professional trading firm allocates capital to scenarios and most likely develop some great new friendships.

Think Tank attendance has no fee with pre-registration however we normally have standing room only so there is a $75 fee at the door for those without an entrance ticket.

We strongly encourage registering with a friend or spouse!

Once again the preview webinar for the Chicago Think Tank is this Wednesday , October 27th at 7:00pm EDT, (6pm in Chicago) .

Please call 212-594-8900 to Reserve your spot Today!

Breakout Trade $RIMM $$

Day after day we as traders are in search of opportunity.  I have many conversations with traders who complain at the end of the day that this market is void of good trades.  They complain that there is only 30 minutes to an hours worth of good trading a day.  The problem these traders are having is that they are not in the right stocks.  The majority of our time should be spent looking for stocks that are going to move plus be readable. 

Today was a perfect example of being in the right stock.  The market as a whole was flat and basically trendless on the day.  Even though this was the case I ended the day thinking it was an easy day.  Why? Because I was in the right stock. 

On the open today there was one stock on my radar, Research in Motion (RIMM).  The previous day RIMM traded very well, with volume, and closed strong.  I was watching the stock trade in the pre-market and right around 915-920 RIMM started to show some strength on the tape.  My game plan was to get long around the previous days high.  This entry triggered at 933 and I got long.  This was the definition of a breakout trade as I was booking half of my trade for a point within 6 minutes.  The reason I booked is the market lately has been retracing opening moves only to resume them later on in the day.  The correct way to trade this breakout was to book some of the trade in order to manage risk.  RIMM ended up pulling back a bit but was still exhibiting strength on the tape so I added back in around the 53 level.  As you can see from the chart this was a good idea as I got another point out of the trade before exiting most of the trade during the consolidation of the move around 1030-11.  I reentered the trade when volume picked up at the 55 level and the bid held after the break.  I got a quick .90 on this trade before I recognized exhaustion coming and exited.  The tape started to get erratic and I knew this was the time to get out as something was changing about the way RIMM was trading. 

The key to this trade was that I was ready for it.  I had a game plan and the plan executed.  Many traders spend their time complaining about moves they missed or trades they mismanaged.  The reason for this is that they don’t have a good plan about what they are going to do.  Spend your time developing trade scenarios and spend the market hours executing your plan.  Best of luck in your trading. 

Kyle

Trading a Sector $LVS $MGM $WYNN $$

Over the past few months the market has been basically directionless.  This lack of direction from the markets has made trading with conviction a little difficult.  Trading day in day out has been more of a stocks pickers market and has forced us as traders to focus on a bigger list of stocks.  The reason for this is because of news, and or volume, specific sectors may be in play on a certain day.  When these specific sectors are in play you can’t miss out on the opportunity because opportunities to make big money in this market have been limited. 

Yesterday we had a perfect example of a sector that was in play for the day, it happened to be the gaming sector.  Las Vegas Sands (LVS) has been on my list for a while now.  It is a readable stock that generally has good volume.  It has been on my list as a long because it has been holding the previous breakout above 32.70 and doesn’t have any resistance till around 39.  My plan going into the day was to watch for strength on the open and get involved above 35.90. 

This plan changed a bit on the open because of the relative strength on the open from the gaming sector.  I got involved on the first pause around 35.70 so that I could build a position above the breakout level.  Because of the relative strength compared to the market my probabilities for the trade went up so it was my responsibility to allocate more capital  to the trade. 

I ended up holding this trade for most of the move and captured most of the move with full position size.  These have been the types of opportunities that this market has been providing.  Find where the money is flowing into or out of each day.  Good luck today in your trading. 

Kyle

$SPY in a tough trading area

Trading the $SPY for the last 7  days long has been relatively easy. Technically speaking it is text book. Large range days with good volume on rallies. Significantly lighter volume on days with small price ranges.

We rallied into the 200SMA on the daily chart last week @$111.78 and paused, with everyone looking at the same charts this created a lot of indecision. (again, perfect technical structure)

Keystone traders went home Friday with a game plan with two scenarios; what do I trade if the 200SMA holds as resistance and what do I trade if buyers some back strong and this significant level gets taken out?

Based on the light volume pause for the better part of 3 days (after the violent momentum rally) we expected a bullish day (this was not a guess it is technical analysis 101). However if we did get the bullish stampede there was an even bigger level to be aware of in the SPY at just over $113.

This $113 is the level that excites the sellers to come off the sidelines, it has been the trigger since just after the flash crash in May.

Now here is the situation you are faced with as a trader: long (being a buyer) is the correct trade, but there is limited upside potential to the trade taking into consideration this mornings gap to the upside.

What do you do? This is the zone where a lot of money is lost. The buying ideas are still valid but have less profit potential but there are not that many solid short sale scenarios.

I will ask again, what do you do?

Most inexperienced traders who feel the longs are not following through will put out short sale probes or actually in allocate capital to a full short sale position (because longs seem to have used up all their energy).

The correct play here is to be patient on the longs for new levels or better risk reward (from lower levels, which would be a flag on a daily chart) or do nothing. Doing nothing is the hardest thing to do.

Remember, not wanting to be long is not necessarily a reason to be a short seller.

MON: Monsanto showing healthy price action

MON: Monsanto demonstrated some terrific buying order flow for a few weeks and has had some time to consolidate the explosion. This pattern of “catching up” is one of our favorite price action scenarios to take advantage of.

I am looking for the stock to approach the $62 level again with the ultimate profit target of $65,  risking a close on the daily below $56.