Home > Market Set Up > stock trading lessons: failed directional moves

stock trading lessons: failed directional moves

Sometimes you can get valuable information from a trade entry signal that does not follow through, you just need to pay attention and have an open mind.

 I generally trade in and out of stocks during the day looking to get a “feel” for good order flow and if I do; those stocks will be the ones I carry overnight for a longer term trade. I came into this week looking to reestablish my short positions that I covered last week. So naturally my bias was to the short side and was stalking entries in that direction. As any good trader should, any time I got an entry signal based on what we teach in Equity Trader 101, I took all the trades.

What I started to get was a lot of trades going nowhere or moving quickly against me. I have been taking quite a few small losses this week. Now this is where most new traders go back to Borders and buy another trading book because what they read in the last book “doesn’t work.”

The market “should” have started back down this week, the subprime mess has not gone away and the FED keeps trying to stave off infaltion with surprise rate cuts and another one expected today. With all this happening the market has not sold off and actually looks strong, the financials have gained almost 30% in 7 trading days.

In order to be a successful long term trader you must learn to pay attention. I don’t have a good feel for order flow right now because it is not following through based on the price model we at Keystone Trading have for price action. There fore I am trading lightly or not at all.

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