$Sometimes It’s Just The Simple Things That Count

September has been a great learning month for me. I have been writing, reflecting, thinking, analyzing trades, and doing anything that comes to mind to document what my challenges have been this month and what I need to do to fix my performance.

The answer came to me in an email from Mentor Pete after I had sent him the an email with questions. In my email I made the point that I am good at trading a trend (in stock or stock and market) and poor at trading range bound stocks or  range bound stocks and markets. I was looking to make changes in what I was doing to correct my mistakes from this month and I missed the simple solution.

The simple solution was..

If you know you are good at trading a trend then, as Mentor Pete, put it, “Only trade when you get a trend”.

This leads me to what I am reminding myself of …..don’t make things difficult and when something works do it when it does not kick it to the side.

I also must mention that I am very excited about the  Mastermind Meeting at Keystone on Tuesday, Sept. 22, 2009 from 6:oopm to 7:30 pm. about this exact topic. What does not work for you as a trader? I can’t wait  to hear from other traders about what does not work for them. It is the best “set up” for learning. When we learn from each other we solidify and build individual learning and individual and group  success.

Always remember its the simple things that we miss sometimes and the things that really count much of the time.

 

Thanks all at Keystone…I can’t wait for the Mastermind meeting!!

 

Debbie

$SPY starting to show signs of profit taking

Tracking which side of the market to trade from the last few months has been as simple as watching the daily and hourly charts. We have had text book heavy volume rallies and light volume pauses withing that momentum. This week has brought a different picture to the party.

Yesterday (9/17) we saw a heavy volume sell day in the $SPY, otherwise known as distribution. It takes a few more of these to be significant and potential leading to a reversal of order flow but a good trader must be on top of all clues.

The next sign we would look for before we start initiating any confident short sales would be a break below the hourly support levels with some significant volume. We are currently trading below the hourly on the SPY but volume will be a little light because of the Jewish holiday. If we close near the lows today I expect Monday to bring some pretty heavy selling. If it does occur my target on the $SPY is the $104 area.

heavy volume distribution day on $SPY daily

$SPY breaks below the hourly support

$GLD setting up for a trade

$GLD is consolidating near a significant reference point of $100. If the $INDU continues it’s agressive selling we witnessed yesterday (9/1/09) look for $GLD to break through the resistance and start building a position.

Gold setting up

$Scary view from this high up

Day after day the $VIX keeps telling us that there is absolutely no fear in the market to be long. Every day the $SPY opens higher and continues higher or opens lower and rallies.

I am not saying the market is “too high.” No successful trader would every say that, it is never too high or too low. However, not having any meaningful pauses or pullbacks means that there are continuous bids supporting prices.

At some point retail traders are going to be left without a seat at the dance. Please be sure that you have trailing stop loss orders that are MARKET ORDERS not limit orders on any swing trades or any longer term trade. The percentage moves we have seen the last 4 months is simply astounding. Book it and smile.

I feel like I am on a roller coaster without the protective bar that goes over your lap. It is exciting but dangerous. IF WE GET the healthy pause or a consolidation of the gains it will be time to get aggressive again, right now especially for short term traders keep your share size down.

$knowing when to trade bigger size

Do you know how to tell the difference between a 500 share trade and a 10,000 share trade?

Trading big size is every traders dream. “Load the boat on every idea! Let’s make a killing!”

Do you trade every scenario the same way? In other words does every bull or bear flag look the same to you? Does every breakout or breakdown tell you the same story or how you should trade it?

Understanding how to develop scenarios and assign a risk reward to a trade BEFORE you place the trade is one of the most important skills to learn in order to propel your career in to the next level of trading profits.

In my opinion this is one of the most important concepts NOT included in most trading books and training programs.

If you are trading like a professional you must know WHEN to size up and how to do it. In other words you must ask yourself the question: If I could trade 10,000 shares on this trade, would I?”

How often do high probability trades with low risk come across your desk on a regular basis?

All of our full time traders and potential traders enrolled in our Keystone 20 program are taught from the first day to assess how obvious the edge for a particular scenario.

Only when you can assess the difference between a great/very obvious edge from everything else can you understand how to use leverage. This will also set the tone for trade duration and stop loss.

As a veteran trader I can tell you that 65% of the month you will have “less than obvious” staring you in the face; which means one bull flag may not have the same trade expectation as another. One breakout should be entred and managed differently from another.

If you want to earn consistent money as a trader your trading plan must have a checklist of the pieces that will tell you to expect more or less from a trade set up.

Some of these include: Market internals, sector strength/weakness, daily volume, major indices technical set up, order flow analysis from the last two-twenty days. The list can go on and on.

It can be as long as you want (which will result in fewer trades) or as short as you want (which probably means you are scalping).

If you want to learn how to trade big and make the big money you must train yourself NOW to understand every scenario is not the same, and then ask the question “would I trade 10,000 shares if I could?”

When you actually pay attention to the answer and write the reasons for yes or no in your TRADING JOURNAL you will  be closer to the big time.

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