Dealing with shakeouts
Trading is a psychological battle and with each battle comes something to be learned. Jesse Livermore called losses his “tuition payment” and I have probably made more “tuition payments” when dealing with shakeouts than with any other market phenomenon. Let me know if this sounds familiar. A good setup presents itself and you enter a position with a sound trading plan, including a “hard” stop loss. Previous experience has taught you that respecting the stop loss is paramount, but you notice that your “hard stops” are being triggered by the daily...
read moreUsing REI oscillator to time trades
Now is the time to remain patient. Maintaining discipline can be especially difficult when it seems like you see breakouts in every stock BUT the ones that you own. Even worse, you might become frustrated because that particular stock you have been patiently watching didn’t pull back quite far enough to buy and now it is up 30% without you. So what can be done to help ensure that you don’t miss out? I like to use the Range Expansion Index (REI) to help me time entry points. The REI is a nice oscillator that responds to prices more than other well-known oscillators. The key to...
read moreThe dangers of buying breakouts – SWI case study
One of the best systems to learn as a new trader or investor is the CANSLIM method developed by...
read moreThe Importance of Risk Management and Position Sizing
“Control your risk; the returns will take care of themselves” It wasn’t that long ago that I realized the true meaning of that old trader koan. I must have read or heard the quote hundreds of times before I actually understood it in the way that top-traders do. What I thought of as a cliche, turned out to be a Zen koan that I just didn’t “get” yet. When I look back, I attained this “trader satori” while I was working on a trading system late one night. I was comparing some different position sizing strategies for a complex...
read moreSequential Breakouts as Day Trade Setups
Since there are so many Sequential breakout setups out there, I thought that I would share how I use Sequential signals to point out day trade setups. In the daily chart you can see that NTGR has been hugging the upper portion of the shaded channel (original sequential sell stop loss). Today there was a nice price rejection of that area and I noticed an oversold reading on the range expansion index (REI), indicating that a bounce could be coming. So how should I play it? First, let’s zoom into the 30 minute chart and look for a good entry point that satisfies our risk management...
read moreAdapting Sequential Sell Signals to Wyckoff’s methods
A long position that I put on a few days ago paid off for me today. DXPE showed up on my Sequential screen when it crossed into the shaded area shown on the chart. The area is defined by using a modified version of Demark’s TD Sequential indicator. Basically the Sequential indicator defines an important level that can correspond to a turning point in a move up or down. Many top money managers use it to help them scale into, or out of a position without driving the price higher or lower, depending on what side of the trade they are on. To put it another way, the Sequential...
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