Trading Lesson of the Week

• September 8, 2024
• T.ARR | TVTX | GME | PRAX

In This Week’s Issue:

• Market Outlook – All Eyes on Interest Rates
• This Week’s Market Minutes video – Is the STOCK MARKET CRASH Going to Get WORSE?
• Trader Training – 15 Ways to be a Better Investor
• Strategy – Stockscores Market Scan for Position Trades

Market Outlook – All Eyes on Interest Rates

The US Federal Open Market Committee meets Sept 17 – 18 to make a decision on US interest rates. The market expects a drop of at least 0.25 in the percentage rate and possibly 0.50. Canada has lowered three times already and it is beginning to have an effect on Banks and Real Estate Investment Trusts, which have been moving up. I expect the cycle of rate decreases will help interest sensitive groups in the US as well. The US market is seeing a cooling off of the AI story as investors take profits in stocks like NVDA, which have made big gains over the past two years and got too emotionally extended to the upside. As money flows out of a small number of large cap tech stocks, it is flowing into the broader market or sitting in cash. September is the traditional end to the weak time of year for stocks so investors should be ready for an improvement in market trading sometime this Fall.

This Week’s Market Minutes Video – Is the STOCK MARKET CRASH Going to Get WORSE?

Stocks crashed lower this week, lead by NVDA to the downside. This week, I show you how to predict weakness and where the market will bounce back and break the downward trend. Then, I provide my analysis on the overall stock, commodity, currency and bond markets before a look at the trade of the week on BLMZ.

Click Here to Watch This Week's Video

https://youtu.be/y0rSHmzvo98

Commentary – 15 Ways to be a Better Investor

What follows are 15 essentials for trading and investing successfully:

Follow the Action - stocks that beat the market and provide the best profits trade with abnormal price and volume activity. Focus on these stocks.

Don’t Fight the Trend - More than ever, trading in the direction of the overall market trend will have a major effect on your performance. Short when the market is moving lower, buy when the market is moving up. Focus on the sectors of the market that are leading in either direction.

Be Patient with Winners - Avoid selling winners because it feels good to do so or because they have hit your price target. Never limit upside, just sell when the upward trend is broken.

Have No Patience with Losers - Being wrong is part of trading. What you do with your losers will determine your trading skill. For every trade that you take, know the price level where the market will prove you wrong and get out when it hits that price.

Do the Work - Trading is simple, but it is not easy. Take the time to learn and gather experience. Compile data to prove the worth of your trading strategies and never stop evolving your trading skills.

Don’t Fall in Love - The more you know about a company, the greater the risk that you will fall in love with it and ignore the negative signals that the market gives you. Treat every stock as a symbol that you are just as willing to sell as you are to buy. Keep your emotions out of it.

Respect Your Tolerance for Risk - We make emotional trading mistakes because we are afraid of losing money. If we take a risk level we are comfortable with, there is less chance we will get emotional.

Don’t Expect to Always be Right - You don’t make money in the market by being right, you succeed by making more when you are right than you lose when you are wrong. When the market tells you are wrong, believe it.

The Stock Market is Not Fair - Most investors are trading on information that is publicly available. Some investors are trading on better information that is not widely known. To be successful, you either have to have better information or follow those who do.

Don’t Aim for Perfection - All traders make mistakes, miss good opportunities and take questionable ones. Don’t get frustrated by the inevitable errors. Put your focus on being as good as you can be.

You Can Make More by Trading Less - Take the best trading opportunities, not the marginal ones. Bad traders act on their fear of missing out. Good traders sacrifice catching every winner in favor of maximizing their overall profitability. There is nothing wrong with doing nothing when conditions are not good for trading.

The Market Will Do Things That Don’t Make Sense - A market’s move is rarely explainable until after the move happens because the market trades on information that most traders don’t have. Don’t doubt the market’s movements, you probably don’t have all the facts.

Gamblers Lose - Good traders have a strategy that they have tested over a large sample of trades to understand the probability and profitability of success. Gamblers trade against the odds because they don’t know what they are.

Never Buy More of a Loser - If your analysis of a stock is correct, the trade will show a profit. If it is losing then you have only been proven wrong. Don’t make being wrong worse by adding to the position.

Add to Your Winners - When you are right, add to the position as long as you are not adding on more risk than you are comfortable with. The risk of your added positions should be mitigated by the profits from the earlier entries.