No hurry no pause

It is always intriguing to me when I read about lifestyles of successful people and the power of habits in their life.  One of my favorites right now is Melissa Hartwig, co-founder of Whole30.  She will occasionally speak to her daily routine and just simply explains in her always unabashed, unapologetic manner “because routine”.

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Reversal time power

Becoming a successful trader is all about developing your strategy, which entails finding a play that you feel confident you recognize when it appears in your charts and then acting upon it in a smart manner.  Once you have a proven strategy that you feel confident to sit at the table with and play, you need to have within your playbook the rules that will keep you in and/or take you out of plays.  One of my rules when I see a potential play is to check the clock, as there are key pockets of time around which you may see consistent price reversals in stocks and the general market.  The key reversal times I have found to be be meaningful are the following:

  • 9:50-10:10 am
  • 10:25-10:35 am
  • 11:15-11:30 am
  • 1:15-1:30 pm
  • 2:15-2:30 pm
  • 3:00 pm
  • 3:30 pm

Look to reversal times to provide the following:

  • Washout buy opportunities
  • Parabolic short setups
  • Profit taking opportunities

 

The correct way to add

Aside from finding 1-2 strategies that you recognize in an instant; correctly adding is the third most important part of a successful trade (the second being adhering to your stop if the trade goes against you).

Taking the opportunity to add will enable a couple of things to happen:

  • keeps your position small so FOMO is not present but you aren’t risking too much too soon. You are in without danger of too large of an early stop.
  • enables you to grow your profits while continuing to minimize your potential loss as the trade proves your directional thought correct.

MYSZ had a massive gap down on 2/16 and had maintained its pre-market trend.  I had taken the quick rip at 9:50 am and was out in 10 minutes for a solid .20, which made my day goal considering the r/r and size I had taken but I had a feeling it wasn’t done, so I set alerts and left it alone.

VWAP proved itself again when it held the price, so I started very small just to be in for a feeler.  Whatever small looks like for you, keep it manageable, as you have to remember that adds can only occur when your directional thought proves itself RIGHT.  This is so key and why so many new traders (including myself at one time) struggle and/or fail.  This was such a pivotal moment for my p/l when I reversed how I approached starting into trades.  You are never going to catch the exact top or bottom but starting small with a theory will get you into some amazing trades.  I have gotten so much better by nailing the correct direction but if you are in too big and wrong it can result in some larger than necessary losses.  By the time I had added on washouts and also reduced by locking in some profits when it ramped, my average resulted in a .60 gain, which was awesome considering the risk moved to break even if I was wrong.  Always play safely and protect your assets…and pay yourself along the way.

If you don’t know who the Patsi is, then it’s you..

Have you heard this?  While it typically applies to Poker, I find it just as useful in trading.  One of the biggest edges I have found is putting myself in the mindset of the trader sitting opposite of the position I am in or about to take.  Are they feeling panicked?  Are they feeling fat and sassy?  There is the edge, as their sentiment may abruptly see a change.  Whether it is a long term or a short term difference, the trend can abruptly change away from their feelings.  When they quickly react, as most will, it provides opportunity.

The power of your strategy-RAD and SGYP

Like any business, developing strategies that you feel comfortable with and competent in actualizing is critical for success.  One strategy that I continue to develop is buying the washout, the panic…whatever you want to call it.  In fact, so much, that is often my sole strategy for the day as I generally trade a maximum of two hours of the day.  It is generally the quickest play and often the most powerful in producing results.  Understanding the odds and reading your play is important, though, as this is one that can be disastrous if you are wrong and stubbornly hold on.  From experience, this has led to some of my largest losses in the past.  As with any play, ensure you enter with a solid plan given the size you take.  For me, because I usually enter these with fairly larger size, it is crucial that I follow my rules.  It is important to also recognize WHY there is panic. A stock that is dipping like this because it is gapping down after several days down while in a positive uptrend has great odds and what I like to see on the daily chart.

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