Archive for the ‘Uncategorized’ Category

PostHeaderIcon Five Reasons I Sold My Stock Index Positions Today

My entries for my last $SPY trade was at the end of day on the reversal up day off the 30 RSI near the $193.30ish level then the next day I added at the end of the day on the gap up near the $194 level. I took a half of my full account position on day one and doubled it on day two. My entry was a reversal off the 30 RSI and then a gap up that held the next day. I suspected all the traders that wanted out were already out as the Geo-political fears escalated. The best trades are the uncomfortable trades, we have to be zigging while the other 90% of traders are zagging if we want to be profitable.

  1. Today we gapped down showing an absence of buyers over the $200 level. Even as we rallied the concrete ceiling of $200 held strong.

  2. We closed below the previous days low of day.

  3. The $SPY trend flat lined near the 70 RSI level on the daily chart over the past four trading days which is what I expected due to the historical resistance found there.

  4. The risk/reward is now skewed against longs after this strong rally back near overbought levels. There is more potential and probability of a down move than a up move from here.

  5. The $SPY chart needs price consolidation here to set up for a run higher.

  6. I suspect there will be opportunities at lower levels to get back  in as a swing trader before the next big run higher. I will be watching the 50 RSI and 50 day sma for potential long entry levels.

  7. The MACD lines have a wide divergence here after this run.


PostHeaderIcon Ten Reasons to Exit a Long Position

We have to always have a reason to get into a trade and then a reason to get out of one. Written trading plans are an edge over the traders that use emotions, predictions, and opinions to make trading decisions.

  1. Your original stop loss is hit at a price level that shows your original entry was wrong.

  2. Your trailing stop is hit in your time frame.

  3. The position closes below the previous day’s low of day for shorter term traders.

  4. A key price support level is lost.

  5. A key moving average is lost.

  6. Your profit target is achieved.

  7. The chart enters a historical overbought level for your trading vehicle.

  8. Volatility expands and the risk is now too much for your position size. Or you exit due to a volatility stop.

  9. Your time stop is hit because the trade failed to move in the time you were allowing.

  10. You are traveling or going on vacation and you can’t give the needed attention to the trade.

PostHeaderIcon A Trader’s #1 Enemy is ………

The trader’s biggest enemy is their own EGO.

Ego: a person’s sense of self-esteem or self-importance.

1. The new traders with big egos always but confidence in their trading ability before developing competence in trading. New traders that trade before educating themselves are even ignorant of their own ignorance.

2. Ego driven traders think they are special and will beat the market even without putting the required work in even though there is no evidence from their past trading that they are special.

3. Most of the stubbornness of a trader arises from the egos refusal to change, to learn, or to accept they are wrong about something.

4. The ego will make you hold a trade that is going against you in the hope that later you can prove yourself right when it reverses.

5. The biggest cause of trading too big of a position size is that you believe that you just know that a trade will be a winner so you ignore risk management in favor of confidence in an unknown outcome.

6. Traders that are arrogant enough focus on being right about predictions more than developing a robust trading methodology.

7. Ego driven traders put being right above even being profitable. Their goal is ego gratification not really profitable trading.

Successful traders trade a plan based on logic, reason, probabilities, historical prices, and risk management.

PostHeaderIcon Just Stop It….

  1. Stop trying to predict the future, it does not exist. Play the current probabilities not a prophecy.

  2. Quit holding on to losing trades when you are proven wrong. If you want to be profitable in trading you better have small losses.

  3. Trying to pick tops and bottoms is a low probability trade. Trading with a trend is where the money is made.

  4. Trading huge position sizes is a great way to stress yourself out and let fear overtake your ability to make good decisions. Stop trading so big and trade a comfortable level that allows you to trade your plan.

  5. Stop trying to look like a genius with some clever market call and aim to instead just make money with good trades.

  6. Stop looking for the  ‘picks’ from others and start building your own trading system based on historical facts.

  7. Stop trading things you don’t understand.

  8. Stop trading before you educate yourself on what actually makes money in the markets.

  9. Stop setting your stops so close to your entry and being shaken out with random noise.

  10. Stop calling a bear market crash and start making money from the long side in a powerful bull market.

PostHeaderIcon Ten Fast Facts On The Current State Of The Stock Market

  1. The fact that the endless stream of scary news about ISIS, Ukraine, Gaza could not phase this market remains bullish.

  2. The market was able to go through the FED minutes and Jackson hole without the volatility most expected. It is the same old thing, the FED has the Bull’s back.

  3. Currently at this point in time on the charts there is no evidence of an imminent  pullback happening in the market. I will be reacting to what is happening not attempting to predict when something is going to happen. I have been tightening my stops on my longs on the way up last week but I am waiting to either be stopped out with an end of day close below the previous days lows or will sell my $SPY longs into a rally into the 70 RSI at the end of that day.

  4. The risk/reward on the daily chart is starting to shift against long equity positions here but there is still room for higher prices, we are not overbought in my model. A switch to small caps leading or to weaker sectors would help the rally continue higher.

  5. We still have room to run higher in $SPY to the 70 RSI. Odds are on support for $SPY at the 5 day ema in $SPY.

  6. $INDU went into a needed two day price base. It would be healthy for the chart to stay in a range for a few more days before higher. My $UDOW stop is a close beneath the previous days low of day.

  7. $IWM is struggling to find support at the 50 day sma. It has the best risk/reward left of the indexes because it has been the weakest for the whole summer. I will be stopped out of my $TNA position with a strong close beneath the 5 day ema and 50 day sma.

  8. $QQQ is now in overbought territory and can use time here to build a base. $QQQ does have the tendency to go parabolic more than other indexes and could possible see higher prices before a sizable pullback.

  9. Financials finally saw the breakout of a long term price range but went no where Friday. It has room to run higher.

  10. Currently the stock market is in an up trend on all time frames. The long side is where the dollars are the nickels are on the short side, for now.