Then Always Consider Market Conditions

Category: Finance.

Timing is everything!

It amazes me the thought process a lot of students go through when it comes to trading. Especially when it comes to trading in the stock market. First, you do NOT have to have all your money in the market at all times to make a fortune trading. Third, wait for a stock to come to you. Second, you should not have all your trading funds in the market at all times ever! What I mean is for it to be done falling to play the upside, or done going up to play the downside" but don t enter in the middle of nowhere on a trade.

What I am about to discuss I have slightly touched on somewhat in a recent newsletter, but since timing is so critical, and I still see seasoned traders after years of trading still not getting this" I feel the need to stress it in more detail. I like to use about half of my funds to trade and have the other half available for some fantastic, unexpected buying opportunities that might come around once in awhile or to double up on a trade that has not exactly worked out as fast as I had planned. When I wrote my 40 CENTS DVD series, it was in a hopes of helping students see the power of waiting for stocks to reach the perfect point to play them. It is really not that hard to find. Where is that perfect point? I like to look at support and resistance using candlesticks. UPSIDE: I will wait for the stock to stop falling.

To me I want to get in at the very beginning of a run to the upside or a fall to the downside. I look for a market close doji or open candlestick at support as a sign it may have stopped falling. The next day if the stock continues up I enter the trade intra- day for the upside. However, it is critical to confirm it with a continuation pattern the next trading day. If it is moving up and down and I am not quite sure, then I use the high of yesterday to give me an entry point. However, if it is not going up DO NOT ENTER" but I see so many students enter here anyway and I just want to scream WHY DID YOU DO THAT! If it breaks that high, I can enter.

DOWNSIDE: I wait for a sign that the stock has stopped rising, a market close doji or closed candlestick at resistance as my sign it may have stopped going up. The next day if the stock continues to fall, I can enter the trade intra- day to play the downside. Remember I still need to confirm it the next day. If it is moving up and down and I am not sure, then I use the low of yesterday to give me a confirmed entry point. It is really easy to set an alert to my cell phone to let me know it hit that point, instead of watching the stock all day to see if I can enter the trade. If it breaks that low, I can enter.

However, if it is not going down DO NOT ENTER" just use common sense before entering a trade and profits can be yours! My rule of thumb is to just pick 5 you love and that s ENOUGH! OTHER CONCERNS: Of course you want to look at other trading indicators to confirm direction" and there are a lot you could pick from. Here are some of my favorites: Support and Resistance Using candlesticks with number 1 Volume Exponential Moving averages 4& 8 Bollinger Bands. If the market is too high and the signs say it has to fall( sentiment indicators) then look for stocks that follow that market at resistance to play the downside. Then always consider market conditions. Don t try to play stocks to the upside with this scenario" again just use common sense and go with the FLOW of the market.

This means if the market is going down they go up, they do the opposite of the market. Remember some stocks do not follow the market. In this case you should already be able to see that is happening so you would do the opposite of the market for the trend on these stocks. If the market is running up OIL is usually running down in price, etc" Some stocks have compelling reasons to run up even against market conditions, such as a stock running into an earnings report or a stock split, but the market is due to fall. An example is OIL. In this case set your bail alerts daily and if it turns over get out of the up trade fast. If you tend to stay in the trade too long don t play trades against market direction even if the stock has a compelling reason to do the opposite.

However, you can play these against the market falling or about to fall if you are good at exiting fast if the trade goes against you. Wait until you are more seasoned and understand that pulling the plug when a trade goes wrong is critical, not to mention it can be very profitable when you exit and switch hats to play the other direction. Sometimes the simplest things are the most important. I wish you huge success trading. Buy low" sell high! Below is the schedule for my upcoming classes. I hope to see you soon in a live class.

Happy Trading, Darlene with BetterTrades