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!

$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.

how a professional stock trader earns money

Do you want the secret to consistently going to the bank? The all powerful golden rule that will unlock stock trading profits and financial freedom for you?

The first part of the secret is keeping a detailed journal during the trading day of what definitely does not work. I am not talking about a long bunch of paragraphs, I am talking about maybe ten 7 word bullet points of observations.

As you build up more screen time you MUST build your personal list of  low probability ideas. In other words “Don’t do this, and this and this.” The sooner you can minimize mistakes the more crystal clear your trading plan will become and you will have a list of do this and this more often.

This leads us to the second part of the secret. New traders lose money on every idea they have, they allocate capital to every idea without deep consideration for the probability of that idea making money.

Consistently profitable traders lose money on good ideas. They don’t execute a trade if after giving it some thought the expectation for follow through is low. In other words newbies execute a lot of trades that they can manage risk on, but has little potential to actually earn money. They feel safe but they also won’t earn a living.

Everyone will lose money trading, maybe even 50% of the time, it is a given. Make sure you make the list of what definitely does not work, then commit capital great ideas only.

You will still lose money on some good ideas but you will come out positive at the end of each month.

WY: Weyerhaeuser Co. Building a solid base

WY: Weyerhaeuser Co. reports earnings next Friday July 30. No matter how you decide to find trades or investments you can’t ignore a huge spike in volume combined with a 24% increase in price.

Whether you are day trading or value investor this stock is building a classic base; one that is consolidating its recent gains as well as giving you a terrific risk point to plan for a solid risk/reward.

Initiating the first part of my trade here with a stop below $39, there is some short term resistance to get through at $44. A close above this level I plan to add to the trade which should take me to my profit target of just over $48.

If I start to see similar price action in IP: International Paper and LPX: Louisiana Pacific this will confirm money is flowing in to the sector for earnings season and I will increase my capital allocation on the idea.

Stcok will adjust for dividend today and conversion to a real estate trust, let the charts clean themselves up and scenario will still be good.

Keystone Trading