Readers, I just started reading Mark Douglas’ The Disciplined Trader and am gripped by the intro and first chapter and wanted to pass on the reference to those who are gripped by fear in trading. I take notes on everything I read, and in this book, I have written down so much already, and I…
I often try to mark-up the “perfect trade zones” based on my system each evening looking back at the day’s action, and today offered very little in terms of trades I identify and am comfortable taking. Today, I was chopped around as I tried to play the short side because of the strongly negative breadth…
I wanted to point to a recent, clear example of the “Impulse Buy” trade I’ve been referencing. The chart ends March 23: A few highlights: Note the consolidation (base) preceding the move The new momentum high drives price sharply up as news broke (Chrysler may be a take-over candidate) New traders entered after the news…
I found the article Positive Trading Attitude at the Money Blogs to be particularly interesting. A few quotes: “…the right attitude helps create the conditions to reach your goals.” “The acceptance of personal responsibility is a key difference between successful and unsuccessful traders, and success can be traced back to a positive mental attitude.” “A…
Have you ever been caught in a trade and your emotions are overtaking you, causing you to make a decision based on your feelings? Was it a good decision after the fact? Typically, if we trade specifically on emotion (greed makes us buy too late, and fear keeps us in too long… or prevents us…
By analyzing fundamental components of the economy and business cycles, you can gain an edge using technical analysis signals. But what happens when fundamental signals (or anticipated releases) thwart an otherwise good technical setup? When I first started trading, I wanted as many signals to be in line with my analysis as possible, and as…
When trying to assess daily market internals, it is helpful to follow the Breadth, or the Advance/Decline Lines (number of stocks positive for the day vs. the number of stocks negative for the day). I plot these lines to create an inverse graph, rather than simply following the breadth number because it helps show the…
While no blog post can adequately address the realities and implications of “regret aversion,” I wanted to alert you to its existence and possible resources for learning more. Simply stated, we feel regret and remorse more for actions we DID take than for actions we DID NOT take. One way to understand this is that…
How did everyone enjoy today’s market action? I am noticing a shockingly similar pattern to trading days where Federal Reserve policy is announced: There is sharp contraction in volatility and immediately following the action, there are usually three sudden pulses (bursts) of trending price movement. Such days are indeed for the bold and daring, but…
I wanted to highlight two recent posts concerning whether or not to use stops, and what exactly is their purpose. From Move the Markets, Prospectus discusses “What Is a Stop Loss For Anyway?” The premise is that many investors make an error by placing a stop at the point where “the market will prove your…