10 Ways For Traders to Stay Inside the Circle of Profitability

22 Oct
October 22, 2014



“Stay in the center of the circle, and let all things take their course.” – Lao Tzu

For long term profitability a trader has to develop an edge over other traders, and then leverage that edge using discipline. Money comes from a trader’s ability to develop a system of robust entries and exits, and trade it using a plan that incorporates risk management. 

Regardless of what is going on around you in the markets, stay inside your circle of competence as a trader:

  1. Follow your trading plan.
  2. Take your trade entry signals and set ups.
  3. Manage your risk closely.
  4. Cut your losses when you are proven wrong.
  5. Keep trading within your own time frame.
  6. Keep following your own tested system.
  7. Don’t start trading out of fear.
  8. Don’t start to position size based on greed.
  9. If you are on a losing streak, trade smaller not bigger until you start winning again.
  10. Do not let others predictions and opinions influence your trading; trade price action.

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21 Oct
October 21, 2014

10 Fast Facts About the $SPY Chart 10/19/14

19 Oct
October 19, 2014


  1. Last week the markets did things that have not happened in a long time all of them pointing to a down trend and a structural change in the market.
  2. The 200 day was lost and then the market dropped dramatically. The 200 day has held as support since 2012.
  3. The 30 RSI was lost intra-day and not recovered by the end of the day which has not happened in a very long time.
  4. Swing traders and dip buyers buying weakness and fear was finally punished by relentless plunging.
  5. Trend followers finally started making money going short below the 200 day.
  6. The market for the first time in a long time started truly having fear about the end of quantitative easing.
  7. The gap up on Friday was met by selling all day as it finished where it began and used the previous day’s high of day as support. This was not a bullish gap and go just a gap and hold.
  8. $SPY was rejected at the 200 day sma on Friday which was not a confirmation long for my system. A close above the 200 day would get me to start wading in long. Friday was just a rally inside a down trending market at this point.
  9. $IWM was rejected strongly in its Friday move back into the red. $IWM has been leading the other market indexes up and down in recent weeks this correlation has good odds of continuing.
  10. Some recent hot stocks like $TSLA $SCTY $NFLX $AAPL and $GOOGL have appeared to be under distribution as well. A sign of an aging uptrend in equities.

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18 Oct
October 18, 2014


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Top Trading Tweets of the Week 10/17/14

17 Oct
October 17, 2014