Trading Lesson of the Week

• November 11, 2024
• T.EXE | BLND | BTBT

In This Week’s Issue:

• Market Outlook – End to Uncertainty
• This Week’s Market Minutes video – How to Find Hot Stocks Before They Rip Higher
• Trader Training – Don’t Set Goals, Take Action
• Strategy – Stockscores Simple Weekly

Market Outlook – End to Uncertainty

The US election is behind us and the buyers have come back, motivated by a Trump victory and an end to the uncertainty of waiting for the results. Strength in Bitcoin has lead the way, but many stocks are moving up and we are seeing a broadening of strength.

Most importantly, I am seeing a return of optimism among stock speculators. This allows lower priced stocks to make big price moves as crowds chase after the strength.

Focus on low float stocks trading with abnormal price and volume. Go where the strength is and don’t fight against the pessimism of falling tops on the chart.

This Week’s Market Minutes Video – How to Find Hot Stocks Before They Rip Higher

The hot stocks that make big gains leave strong clues before the rip higher. This week, I show the footprints that hot stocks make before the make big gains, then provide my analysis of the markets and the trade of the week on FOXO.

Click Here to Watch This Week's Video https://youtu.be/HyaGkNL14vM

Commentary – Don’t Make Goals, Take Action

Investors and Traders will often set goals.

Make $1000 a day, earn 20% return in the year, avoid big losses.

These are meaningless.

They are obvious; everyone wants to do these sorts of things. However, most people will not achieve because having the goal is not enough. Instead, you have to have the systems in place to find success.

Does a golfer who states that their goal is to win the tournament win because they made the goal? Of course not; every golfer in every tournament has the same goal but there is only one winner. The one who wins performs better than the rest.

Performing better means more practice, better analysis, stronger mental preparation, a higher level of determination and any other factor that contributes to success. Goal setters dream, winners make it happen.

So, whether you are an investor or trader, you need to focus on the process. Do you have a strategy that works? Do you have tools that give you an edge? Have you practiced enough? Is there a system in place to identify and execute good trades? Do you have the support of someone who can help keep you on track? Are you determined to succeed? Can you overcome your emotional self?

These are simple things to say but harder to execute. They take more than lip service and goals. They take targeted action.

I find it is best to break down the goal into parts that can be delivered on. Here is how it might look for a person who wants to make $1000 a day by day trading the stock market.

• I have a day trading strategy that can earn 4 times reward for risk (RR) per day. Some days will be more, some will be less, but an average RR of 4 per day is reasonable. This strategy is well tested and I believe in it. This strategy has specific rules for entry, exit, position sizing and process to identify trades.
• Risk $250 per trade and averaging 4RR per day will mean $1000 a day in profit on average
• Establish a gradual process of increasing risk to get to the goal. Start with $0 of capital and simply make practice trades to earn an average 4RR a day. Then use real capital, with a $50 risk tolerance per trade and achieve a consistent average of $200 a day. Once that is achieved, increase the risk to $100 a trade. Achieve success and then raise it to $200 a trade in risk. Step by step, always making capital preservation the number one priority.
• Have sufficient capital to hold enough positions to achieve 4RR a day
• Expect to have some losers and limit the size of the losses by selling when the trade breaks support
• Allow winners to win by letting profits run until there is an exit signal
• Use tools and a process to find trades in time to take advantage of them
• Have the focus to repeat the strategy consistently
• Constantly analyze the results to ensure the strategy continues to work and to identify failings in the execution of the strategy. What good trades did I miss? What invalid trades did I take? What were the problems in my execution?

Goals are easy and pretty obvious. It is the plan for achieving the goal, and then the purposeful action taken to get that is important. Stop dreaming and start doing.