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The Importance of Being in the Right Stocks

 As mankind has proven time and time again, human emotion will trump even the best of automated intentions. And to understand that past data may not help you in a current market.

you have a choice. You can spend your energy complaining or you can compete.

what a trader must never do, is make excuses.


SHORTENING THE LEARNING CURVE

The volatility of the markets transformed one trading day into the equivalent of five trading sessions of market patterns.

Since you are trading a stock that is moving more intraday, you are seeing more market patterns. And as a result, you are gaining added experience over someone who might just be trading a basket of stocks.

 Using the “five trading days” equivalent from above, think of it as the difference between taking 250 free throws in your driveway before going in to dinner, instead of the normal 50, but in the same amount of time. Trading the Stocks In Play will speed up your learning curve.


FINDING STOCKS IN PLAY 

Stocks In Play generally have unexpected fresh news, either positive or negative. News that most interests me is higher margins, better sales than expected, or increased market share.I check the news on all stocks up or down 3 plus percent premarket. Stocks In Play the day before often are still In Play. Stocks near important support and resistance levels are also considered. I ask this simple question: If I was a Hedge Fund and a sales trader called me to pitch a trade in this stock, would I be interested? If so, then this stock will be In Play.

If we choose properly before the Open, we often trade just one stock. If we choose very wisely, we often trade one stock for three days and squeeze every cent we can out of it. Short, long, light, loaded, millisecond-holding periods, positions held all day. It’s called trading.

We choose our stocks before the Open so we can best prepare. We find the levels on our charts and from our trading notes that are most important and consider the different ways the stock may trade. Now often, we don’t know the stocks we are trading very well so we must do research to ensure we are properly prepared. (Remember The Butcher, failing to prepare is preparing to fail.) We ferret out data about the stocks that is meaningful to us such as average daily volume, short interest, important technical support and resistance levels, average daily range, etc. After all of our morning preparation, we determine which stocks out of about a dozen with fresh news are best to trade.

Experienced traders are hypersensitive about being in the right stocks, as we have learned we are all just as good as the stocks we trade.

Reading the Tape is the first skill that new traders should master, the very first skill!

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