Trading Lesson of the Week

• November 17, 2024
• C.IP | V.OM | ZVIA

In This Week’s Issue:

• Market Outlook – Overbought Pullback
• This Week’s Market Minutes video – The Mistake that Rookie Traders Make
• Trader Training – Focus on These for Stock Market Success
• Strategy – Cheap Stocks with Potential

Market Outlook – Overbought Pullback

The market made big gains and positive long term signals after the US election results came in. That caused the market to be overbought and has lead to a pullback since. I think the pullback momentum is slowing and we should see the buyers come back in the next few days, providing an opportunity to buy strong stocks on sale when they break their pullback. Sectors like Biotech and Pharmaceuticals are weak while precious metals and uranium are strong. Good day trading action in low float stocks, particularly in the extended hours trading sessions.

This Week’s Market Minutes Video – The Mistake that Rookie Traders Make

Most traders make a simple mistake that is hard to overome unless you understand the reason for making it. This week, I share what this mistake is and how to stop making it. Plus, I provide my analysis of the overall markets and look at the trade of the week on BTCT.

Click here to Watch this week's video

https://youtu.be/fmZTPw8hqdo

Commentary – Focus on These for Stock Market Success

Want to know how to consistently do well in the stock market? Let me give you an outline for the mindset you must have.

First, understand that the stock market is not fair. Some people get better information than others. They have an advantage.

Second, use this lack of fairness to your advantage. When people with better information act in the market, they leave a trail for the rest of us to follow. If you want to find stocks that have a better potential to move up significantly, don’t listen to what the media says. Don’t listen to what people say. Look only at what people are doing with their money.

When a stock suddenly shows strong buyer interest with stronger than normal volume, take notice. These are the characteristics of Alpha stocks and trading Alpha stocks is how you beat the market. They lead the pack.

Learn how to read a stock chart. If you don’t know how yet, watch the free videos on the Stockscores YouTube channel. It is not hard, but it does take practice. You have to know the basics of chart reading because not every stock that shows abnormal price and volume activity is worth buying. Only those that make abnormal moves from a predictive pattern are worth considering. I can teach you how to read chart patterns.

Realize that even the best analysis on the stocks that have the most standout chart pattern breaks does not guarantee success. Trading is a numbers game. Some trades will work, some will work really well and others will be losers. What matters is how you do over 10 trades, not just one. This requires an appreciation for Expected Value which consider the reward potential for the risk and the probability of making or losing on the trade.

Since you will not be right on every trade, you must be good at losing. You must know when to take a loss and have the discipline to take that loss when the market proves you wrong. Good losers do well in the market because their losses don’t outweigh their winners.

You must always be learning and evolving. The market has always been about human fear and greed but the ways to take advantage of it change over time. After 35 years of trading, I am still always looking for ways to be better. We have to be one step ahead of the crowd.

Finally, if you want to be successful in the market, focus on yourself. Emotional control, discipline, focus, determination and optimism are the characteristics of most good investors and traders. Whether you succeed or fail is entirely in your control, you just have to take the time to understand how the market really works and how to take advantage of it.