Home > Lessons from the trading floor > Adjusting expectations to market conditions

Adjusting expectations to market conditions

Lets make some big money. Teach me how to make $1,000 a day. I want to trade $GS Goldman Sachs, thats where the big moves are. Of course we all have a burning desire to consistently earn a great living from the stock market but do you actually understand how to make money?

Sure you know how read charts. You know about breakouts, bull flags and candlesticks but do you understand how to make money? Do you understand what it means to accept risk as a part of a trade? Do you understand when to use more or less leverage?

I want to touch on leverage and trade expectations. As we teach in our Equity Trader 101 course (preview button on the right side of the page) there is a big difference between order flow and momentum.

The obvious order flow right now is buying pressure. When you are at your trading desk each morning you will have opportunities unfold before you. We define those opportunities as momentum. That momentum will be in the direction of the order flow or against it.

Your expectation for follow through (profit potential) should be adjusted according to whether or not you are trading momentum with or against the order flow. Every trade will not have the same expectation.

The environment we are in right now  is very bullish, any short sale opportunity must have a lower expectation for follow through which means lower share size, quicker profits and losses. Any long trades you should be a more aggressive and look to build a position.

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