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!

$HPQ- Do You Know What an “A” Trade Looks Like??

Our main job as traders is to take advantage of the opportunities the market provides us everyday.  We take these opportunities and turn them into trades where we must manage the risk/reward associated with each idea.  It is up to us as traders to risk more on our really good ideas and lower our risk exposure when the probabilities are not in our favor.  Today Hewlett-Packard(HPQ) provided a great example of a trade where it was our responsibility to trade it with some size and take on more risk because it was an “A” setup. 

For the past few weeks HPQ has been in the news and has been trading with increased volume.  After the gap down earlier in the month HPQ has been showing relative weakness compared to the rest of the market.  Going into the open today we knew that 40 was an important intraday level to watch.  We opened at this level and it immediately held and we started to trade lower.  I didn’t get in on the open so I was looking for an offer to hold and sellers to step in.  This happened at 39.85 as the offer was getting hit and HPQ wouldn’t trade higher.  A print went off for 400000 shares and the bids dropped fast to 39.80.  The bid started to get hit so I got in, knowing that I would add size to this trade if the offers held below the low of the day.  I added to the trade below 39.70 and was able to get a point from my core position scaling out some of the trade at 39.25. 

The main thing I need to take from this trade was how I felt and the conviction I had in the idea as it was playing out.  I knew what I needed to see, to know the idea was playing out.  I was able to hold most of my core position for the entire move because the trade was acting like a weak stock should.  As traders we should be looking for more of these “A” setups as they allow us to trade with size and a stronger conviction.  These are the types of trades which can make your day, which in this market can make your week.  Best of luck tomorrow and have a great night. 

Kyle

Making an Appointment

As I have discussed numerous times on this blog planning is one of if not the most important thing in trading.  You must plan out what you are going to do in every single scenario, so as to not hesitate if and when a trading opportunity presents itself.  Sometimes these plans take a little more time to develop so you must set alerts and be ready at all times like today in Hewlett-Packard (HPQ). 

HPQ has been weak on the charts ever since their CEO got himself in a little bit of trouble and resigned.  This downmove has been met with a lot of volume as funds have been liquidating their positions based on the uncertainty this company now faces.  On Tuesday I was looking to get involved in this stock if it continued to show weakness on the tape.  The levels we were watching were 42.40, 42.30, and 41.94.  I got short a few times on Tuesday anticipating a break only to watch the stock basically trade flat save for the last 5 minutes of the day. 

This last 5 minutes of the day was so important because it basically told the story of what to expect coming into today.  We traded through the first two levels I was watching like they were nothing and with increased volume.  Also we closed below these levels so I had a good idea that HPQ would be in play today on the open.  If you weren’t paying much attention to HPQ on the close Tuesday you probably weren’t ready for it today.  We opened down today and basically broke the flash crash lows of 41.94 in the first 10 minutes and trended lower for the entire day. 

This was a very simple trade as long as you were ready for it today.  The setup is one that everybody can understand.  A stock sells off, consolidates, then makes another leg down.  The key was to not get frustrated the previous day and keep this stock on your radar.  Put your alerts in at the price you need to see the stock trade at, then when it breaks get involved.  Have a good night and best of luck tomorrow. 

Kyle

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