Quote from geez:
One2,
I read different books and magazines to get my basic ideas of what "traders" look for in terms of setups,then spent months following the markets and trying to see what setups I could easily see on my own. Today I think you can find most of the same things just by browsing the internet. What I found out was that are literally thousands of different ways to trade the market. You just have to find what best suits you in terms of time frame (swing trading, scalping, daytrading) and , more importantly for me what is the EASIEST and most basic thing to see over and over again. I trade 4 different patterns over and over, that's it. Finding the setup for me is pretty easy(if you ask most traders, finding the setup is very easy for them), as for the sell points...I look for at least a 1.8 return on my money per trade, so I look at the chart to see how much resistance there is and if the return (target price) is doable...I take the trade. That simple.
I don't have any programs to screen stocks, I keep my "universe" of stocks pretty small so I have a better idea of what they are doing instead of trying to follow 2,000 stocks....I know I am not the smartest guy in the world, so I try to keep my trading as SIMPLE as possible. My favorite way of putting it is: I would want to be able to teach a 5th grader how to do this. The trading platform that I have to use for this bet has NO INDICATORS, NO STOCH's..the only thing it has is volume bars(which I don't even use) and the SMA's. I trade on a single monitor(17").
But what I think, by far, is the most important thing to tell a new trader is this:
YOU WILL HAVE LOSING TRADES!!!!...plain and simple.
I lose 50% of my trades..I WANT to lose 50% of my trades.
Because that means I am winning 50%. DO NOT be scared to take a loss. Turn into a robot..no emotion(it's hard, but if you can do this, it is amazing how much faster you can become a profitable trader)
IMO, it's not the setups that are the secret...it's understanding the fact that losing is GOOD!...it sucks, but it is a must to be a good trader.
My recommendation to you is this:
1. Learn what time frames you want to trade. For me it is 5 min charts, but I go into each day with a bias, or trading ideas from scanning the daily charts.
2. At the end of each day pick your favorite stock, or stocks, print the chart and find where the best entries were that day...there should only be 1-3 IMO.
3. Now program yourself to ONLY ENTER TRADES THAT LOOK LIKE those textbook trades you can find when you look st the chats at the end of the day. Before I enter any trade I ask myself that exact question.."is this textbook?" and " will I be able to find this trade on the chart I print at the end of the day?"
4. After you get into a trade, remember this:
You can't do anything to control it now. There is nothing you can do to change what direction it goes from your entry, so if it goes to your stop..TAKE IT!!!
Trust me on this.
5. Remember you trading plan......mine says as long as I'm 50% I continue to make money, that's how you get past the losses.
And getting past the losses is the hardest part for most trader I think.
So, to make it simple, here is what I think is the key.
1. Take only premium trades.
2. Don't be afraid to take your stop price
...stepping off my soap box now
