062716 MetaStock.com - How to Trade Stocks Successfully SBAC chart

How to Trade Stocks Successfully

Why a Stock Market Education is Important

Trading Stocks is becoming an alternative career for many people. It offers a variety of opportunities and advantages that working for a corporation does not. The first step in learning how to trade stocks successfully, is to understand what you need to do to trade a stock for short term profits.

This requires finding a stock that is poised to move up in price, but that also has what is called a “low risk entry.” What is meant by a “low risk entry” is how the price has moved in recent days. There are patterns in a stock chart that tell you, when a stock is ideal for buying with a low risk.

Risk is calculated by the use of a Stop Loss, which protects your capital and profits should the market suddenly go down.

You also will need to learn how to read a stock chart with accuracy. A stock chart is merely a historical set of data that shows how the price moved, and how many traders or investors bought the stock during that period of time.

How to trade stocks successfully means you are able to read the stock chart correctly, which will tell you which Market Participant Groups were buying the stock, and this is critically important information.

Below is a chart that is showing what is called a “bottom,” or when a stock stops a Downtrend. This is when it begins a recovery returning to moving in an Uptrend, which is what traders want to trade for short term profits.

The stock chart also shows resistance, which is where the stock will either stop moving up and move sideways, or retrace which is a brief period of price moving down.

Stock charts do not predict what a stock will do. However, they are a necessary and highly useful tool when considering a stock to trade. Certain patterns will indicate that the giant Buy Side Institutions using Dark Pools are buying giant lots of the stock in an accumulation mode. They want to buy millions of shares of a stock to put into their portfolios, to create the Mutual Funds which individuals invest in. However as an example, they cannot buy 10 million shares of a stock all at one time. So using the Dark Pools they buy the stock in increments over an extended period of time, and this creates a specific pattern on the stock chart.

When you see this pattern, it is time to buy the stock for a short term trade because the Dark Pool buying creates an underlying energy. They are pulling so much liquidity aka stock from the market that it alerts Professional Traders and High Frequency Trading HFTs firms, which quickly move the stock up in a fast momentum run.

Summary

When you understand why certain patterns form, who is controlling price, and how to calculate the best entry for the lowest risk then trading becomes easy and fun.

Learning how to trade the Stock Market does require a solid Stock Market Education. If you want to be trading quickly for extra income or as a career, then you need to take a Stock Trading Course. If you want to try to learn this all on your own, be aware that most people spend 5 -10 years attempting to do this and many thousands of dollars in “hard learned lessons and losses” before they may get it right. That all adds up to a lot of wasted opportunity, time, and money.

There is a lot to learn but you will find it fascinating, inspiring, and amazing. In learning how to trade stocks successfully by taking a course in Stock Market Education, you will be opening a door to a whole world that you had no idea existed.

I invite you to watch a Video or download an eBook about beginning trading at TechniTrader.com HERE. Sign Up for full access.

Followers may request a specific article topic for this blog by emailing: info@technitrader.com

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

Instructor & Developer of TechniTrader Stock and Option Courses

This weekly stock discussion is sponsored by TechniTrader.com a MetaStock® Partner

Copyright ©2016 Decisions Unlimited, Inc. dba TechniTrader. All rights reserved.

TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

061716 MestaStock - Trading Range Market Conditions S&P500 Index chart

Trading Range Market Conditions

Why Big Blue Chip Stocks are Sideways

Trading Range Market Conditions are rather rare. They do not occur on the long term trend often. This is the most challenging market condition for Technical and Retail Traders. It is a challenge because it seems as if the market is chaotic, volatile, or random in nature.

Often times traders do not recognize Trading Range Market Conditions, because they either do not know about this condition or they do not use charts that show what is really happening.

The chart example below is a Weekly Chart view, and clearly shows the Range Bound pattern.

The Index has nearly consistent highs as if there is a Technical Resistance above price, and inconsistent lows. Many traders are assuming this is a Bear Market, but it is not.

Trading Range Market Conditions occur for several reasons. This one in particular has specific reasons WHY the big blue chip stocks are stuck in sideways patterns.

Here are the reasons why big blue chip stocks are sideways:

1.     The price of stocks over the prior 4 years was artificially inflated, as many big blue chip companies decided to do massive buyback stock purchases. This removed a huge amount of liquidity of the company stock. Since stock prices are based upon supply and demand as much as fundamentals, the drawdown of liquidity forced prices upward, as the corporations intended. However, buybacks are a temporary event and do not last. As the buybacks ended, stocks began to show signs of weakness in the chart patterns as far back as the middle of 2014.

2.     Fundamentals and Financials which had a huge growth out of the 2009 economic contraction, started to slow down in 2014 at the commencement of the Trading Range. Dark Pools who control vast quantities of stocks, started Quiet Rotation to lower their held shares of stock in companies poised for a business contraction. This fueled many Topping Formations late in the year 2014 and early 2015.

This Trading Range Market Condition was predicated, on obvious and easily seen patterns in the charts. By understanding what was going on with stocks beyond just a mere MACD Crossover or an Engulfing White Candle, Technical Traders who were able to analyze the conditions were prepared for this Trading Range.

Summary

What happens next? Trading Range Market Conditions rarely last a long time. Range bound action is usually, but not always a continuation pattern. To determine whether this is a continuation or reversal, it is necessary to study a longer term timeframe, thereby eliminating the “white noise” present in Daily or even Weekly View charts.

Next week this discussion lesson will analyze the longer term chart, to see whether this Trading Range is a continuation pattern or a reversal pattern.

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock.

www.TechniTrader.com

Chartered Market Technician

Instructor & Developer of TechniTrader Stock & Option Courses

©2016 Decisions Unlimited, Inc. dba TechniTrader.  All rights reserved.

TechniTrader is also a registered trademark of Decisions Unlimited, Inc.

Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.

Making Invisible Visible: Market Internals Reveal Continuing Bearishness

From the desk of Sagar Nandi and Superior Profit:

Superior Profit Investors are alert to what is happening in the Market Internals to take advantage of opportunities in the outside: in terms of Stock investing.

Exactly one month ago, I had shared the Market Internals of USA Market that was Bearish in connotation. You may study that article here. In that study we had used Traffic Light to color the Candles. You may study more about Traffic Light and other Superior Profit indicators etc. in our Education Center Books.

Today, on 13th June' 16- prior to Market Open, I looked at Market Internal again. And the Bearishness continues. Here is today's NASDAQ and NYSE Market Internals study: today I used Flow color to paint the Candles. You may learn about Flow indicator also from our Education Center Books.

Note that this study is using Weekly interval. Which is what Superior Profit Investors use for Broad Market Internals. On shorter time frame, such study may provide no clear information of use.

If we look back four bars ago (which is four weeks ago - about the time the last Internal study was presented in an eariler Blog), we see that both NYSE (right side chart) and NASDAQ (left side chart) actually recovered from that level. To novice eyes looking only at overall market (say, looking at SPY and QQQ ETFs) market may seem to be strengthening. Not to our Superior Profit Investors who are aware of Market Internals.

Let us study this Internals chart  in some detail - following the pointed areas in the chart.

(1) NYSE Index went to the previous top and hit the Memory Resistance and came down with a Bearish shape Candle (with long Upper Tail). The top of the Tail pierced the Memory line - probably stopping out many Shorts. And pulling in new Longs who look for Breakout trades (in Superior Profit Way, we are not gaga about Breakout trades if you follow us regularly ...). Only to frustrate the Longs with the Bearish Candle at end of the week.

(2) NASDAQ Index was weaker in price chart than NYSE. It could not even reach the Resistance Memory Line. And closed the week with a Bearish shape Candle (solid body Candle).

(3) NYSE made more 52 Week Highs relative to the last peak. Which is Bullish. And this again probably mislead many investors. Fooling them into thinking that market is going to rally. The 52 Week Highs were probably in strong stocks that were making new Highs were big players were selling other stocks. A well known ploy of big players to mislead small investors. Why we think that Market was not actually strong? We see that from subsequent Internals study.

(4) NASDAQ was not making a new peak of 52 Week Highs. Here it was sideways. Again showing a weak NASDAQ relative to NYSE.

(5) In terms of Stocks Advancing vs. Stocks Declining, NYSE was clearly Bearish. Declining stocks made Deeper Troughs than Advancing Stocks could make Higher Peaks.

(6) NASDAQ Advance Decline showed the same picture as NYSE. Decliners outpaced Advancing stocks.

(7) NYSE Up vs Down Volume pained same Bearish story as NYSE Advancing Declining study. Bears were stronger - making Deeper Troughs.

(8) NASDAQ Up Down Volume shared same characteristics as NYSE Up Down Volume. Indicating Bearishness.

 

The above point by point analysis - which takes only few minutes for a Superior Profit Trader, reveals the broader picture.

Between the four studies each of NYSE and NASDAQ that we perused: Indices Price Move, 52 Week High Low, Advancing Declining Issues and Up Down Volume, only 52 High Low of NYSE is of Bullish implication. All the other 7 studies are Bearish. Giving rise to the overall Bearish conclusion on Broad Markets.

How to use this information? It could be used in many ways by Superior Profit Investors:

A) One could look to tighten Stop on existing Long positions - specially those instruments that move in tandem with Broad Market. Or may exit those positions and book profit. At least partial profit may be booked ... to protect profit. One of our Superior Profit Traders had booked quick profit in a recent Mylan trade shared in Traders Community - not holding on to the trade for longer.

B) One could look for Short Opportunities. Using CUE Sonar (Explorer in Metastock) and CUE Charts to look for Trend Reversal / Top Catching investments ... you may look at recent analysis of Facebook in our Traders Community for one such potential trade idea.

C) One could look for instruments that were not correlated with Market. Which might have been languishing while Broad Market was rallying for last year and more ... And look for Long opportunity in those. You may look at recent analysis of Natural Gas to see how such an investment could be identified.

Other possibilities exist. Using Stocks or Options or Futures etc. as per the liking of a particular investor.

And Superior Profit Investors make profitable decisions using such analysis every time. Confidently.

Sagar.

Volume Reversal Tutorial for SPY

From the desk of Top Market Timer Mark Leivovit,

A Leibovit Negative Volume Reversal was posted Thursday in both the DIA and SPY triggering the purchase of an inverse ETF position at www.vrtrader.com and confirming a top in the major indexes.  Also presented are a couple of important Leibovit Positive Volume Reversals in WBA (Walgreens) ahead of this past Friday's big rally accompanied by news - news that was known in advance by the saavy buyers who created the Leibovit Positive Volume Reversal.

Happy Trading.  

10%+ Profit in Less Than 10 Days using Rubber Band Like Stretch

From the desk of Sagar Nandi and Superior Profit.

Well, I understated.

The actual profit would be about 15% in 4 trading days in the Short trade illustrated below. And the Long trade generated about 30% profit in 7 trading days. Both trades using Rubber Band Like Stretch and Release of that Stretch.

We may say, 10 score out of 10 in each of the trades in terms of Entry Timing. And equally high score in terms of Disciplined Profit Booking.

Once we have a robust trading system (I use CUE Global on Metastock) and follow Superior Profit disciplined Way, we usually end up with profit. As these two trades show.

Let us first look at what is Rubber Band Like Stretch and Stretch Release?

When a stock moves considerably up or down, it goes to a Stretched state - somewhat like a rubber band. And it usually needs to pause and take a breath before continuing in prevailing direction. When it pauses, traders would like to book some profit and that moves the price in reverse direction. When this reverse direction move starts, the rubber band Stretch is Released.  We say that the Stretch is Released.

This Stretch Release shows up as Up or Down Arrow in CUE Charts. This is a highly responsive signal. Meaning, it responds fast to rubber band tension change.

How to use it? If a trader is looking for Reversal Swing Trade to catch the local Top or Bottom, it may be done using Stretch Release. It could be used for Swing Trade as well as for Day Trade. Below real life trade taken in recent weeks examples illustrate the use of Stretch Signal in Swing Trades.

Note that Stretch Release is a "fast" signal. A trade entered based on only a fast signal is prone to whipsaw and stop out. That is why Superior Profit Way suggests to combine Stretch Release with additional confirming signals' before taking a Stretch Release Reversal Trade.

What could be additional confirmation signals?

It could be Heavy Activity at or just prior to Stretch Release. That typically indicates exhaustion and need for the stock to pause.

Another confirmation signal could be price hitting support or resistance level.  Such support / resistance could be in the form of CUE Memory Line, Double Top/Bottom or the Longer Term Direction Lines.

CUE Headwind signal could be yet another confirmation signal: Headwind indicating that up or down momentum is slowing down.

You may read more about Stretch Release, Headwind and other CUE signals and trading way in the Education Center Books.

Now let us go through an actual Stretch Release trade that was announced in Superior Profit Traders Community as the trade signals were generated.

On 24th May 2016 we had alerted about Chesapeake Energy (CHK) in our Traders Community. You may access that post here.

Below CUE Chart of CHK explains how the trade was initiated on 14th May'16  - the day when CHK went up by more than 10%. (this image is taken from the above mentioned Community post and annotated to explain the entry signals in detail).

Following standard Superior Profit guideline, one would not take a Long trade when Weekly Backdrop is Bearish; as was in this case. So, this entry would be considered an improvised trade. And probably it was taken on the analysis that CHK was at extreme (Pendulum) Low and that price was reversing from Double Bottom with strong strength - indicated by the 10% move up on entry day. Our Superior Profit Trader who posted the trade also looked at some peer groups of CHK on 24th May - using XENITH - coming to conclusion that the industry/sector state may also justify a Long position on CHK.

How did the improvised trade play out? Let us look at CHK as of today, 31st of May (after Market Close) to see the result.

From the narration of points 1 to 3 we can see that the Long Trade using Bullish Stretch Release had resulted in 22% profit in 2 trading days. Assuming partial profit was booked and that remaining position is currently held at 9%+ profit, we may see that net profit as of today is about 15% in 4 trading days from 24th May Entry to today's date of 31st May.

Below is the brokerage snapshot showing entry price of 3.88 and 9%+ profit on remaining CHK position being held by a CUE trader - entry being on 24th May - precisely when the Community post was submitted.

The chart above also illustrates that Stretch Release could be used for Short trades as well. For example, at point 4 where Stretch Release in Bearish direction coincided with a Bearish Headwind and price bouncing down from Very Slow Direction line. That trade would result in profit of about 40% in 7 trading days. If partial profit was booked earlier around 20% profit level, this Short would result in a net profit of about 30% in 7 days.

In this way, following disciplined Superior Profit Trading, a trader could benefit from both Short followed by Long trade. Capturing a significant total of about 30%+15% = 45% profit in few weeks using Stock.

It was pretty good result in my opinion. And both the Long and Short the trades could be taken relatively easily using Stretch Release signal and combining it with other supporting CUE signals.

Does your system allow you to identify and execute trades in such unambiguous and easy way?

Sagar

______________________________________________________________________

These products are not a recommendation to buy or sell, but rather a guideline to interpreting the specified analysis methods. Only investors who are aware of the risks inherent in securities trading should use this information. MetaStock in no way endorses the products and services advertised and accept no liability whatsoever for any loss arising from any use of these products or their contents.

Today (26th May) US market did not move much.

At around 11 AM EST I had shared my thought on the Market Internals in a quick Superior Profit Traders Community post. Mentioning that as of that time, Market - though virtually unchanged from the day before - was showing some sign of Bearishness in the Intraday charts and few other places. I had also mentioned that later I will share my reasoning behind that observation in a blog.

​Well, here is the blog.

Before I go into the the detail, I want to mention one key work. I had said there was a "hint" of Bearishness. Not a full display of it. A full display of Bearishness would mean Market falling down. It did not. It was mostly unchanged.

Market was mostly unchanged as seen from S&P500. How did I thought of Bearishness then? Would it not be appropriate to say that Market was neutral? That is how it would appear to other traders. But Superior Profit traders don't only keep an eye on S&P500. That is outward health or weakness. They also tend to look at Market Internals from time to time. To see how strong the market really is under the hood.

First, let us look at the E Mini S&P 500 through CUE At A Glance Template (Weekly Backdrop View on the left and Daily Hop On View on the right) - this is as of 27th May early morning (around 1 AM).

As explained in the chart above, Market is  going up - as seen by Hop On Daily Chart Traffic Light Candle color being green.

To a CUE Chart trader, Green is Bullish. So we are not going to say it is Bearish. And that would be correct interpretation. And it is also explained that "Bullishness" was not a roaring Bullishness owing to anemic Activity of last few days in the above chart.

Lets delve a bit deeper in market internals now to see what was really going on there.

I had posted a Broad Market Internal study in Superior Profit Blog  a few days ago. That showed overall Market Internals showing weakness. You may find that blog here.

[Note that every week we tend to share this valuable Market Internal snapshot in Superior Profit Traders Community - USA Market category. You may access the Community here.]

That blog on Market Internal was analyzing Market health usiing Weekly chart. Today, I look into finer detail of today's Market movement using Intraday chart of Market Internals.

​The chart below shows NYSE Internals of today's (26th May) - combining S&P500 E Mini with Tick Chart, Activity, NYSE Advance Decline and NYSE Up Down Volume - all key Market Internal indicators.

Here is what we can gather from this chart:

Point marked (1) : The Tick chart did not show any extreme move upward or downward for the whole day. It was moving sideways. Meaning neither Bulls were heavily buying many stocks at same time. Nor were Bears selling many stocks at same time in NYSE market.

Points marked (2): Market (here we plot @ES - which is E Mini S&P 500 Futures symbol) Opened somewhat higher with larger Activity bars.

Points marked (3): However, price soon came back to Last Day's Close (magenta Pivot line) and then below that by 10:30 AM EST. While Activity was reducing (this is the time when I posted my comment on hint of Bearishness in Traders Community).

Point marked (4): After that, whole day Activity remained muted. As if it was a holiday session and big traders were taking a break. Or, as if, traders were waiting for some key event or announcement to happen (like Fed chair person Janet Yelen's Harvard talk tomorrow 27th May at 1:15 PM EST?).

Point marked (5): Around 2 PM EST Market gave the appearance of a short rally - going back to Open (blue Pivot line). However, as we noted, Activity and Tick was not confirming Bull's strength. Tick was actually showing a Divergence. More on this later.

Point marked (6): Soon after the 3:30 PM EST, S&P 500 came back right to Last Day's Close.

Point marked (7): In terms of number of stocks in NYSE that were Advancing or Declining, we see that at Open more stocks were Advancing. A Bullish sign at Open. However, soon it turned negative around 11 AM EST (the time when I posted my comment on hint of Bearishness in Traders Community).

Point marked (8): And for remaining hours of the day, Advance Decline signal was neutral. Essentially wrapping around the zero  line.

Point marked (9): In terms of Up Volume (Volume of all stocks moving up) and Down Volume (Volume of all NYSE stocks moving down), at Open, again, it was Bullish. But reversed to below zero line around 11 AM EST  (the time when I posted my comment on hint of Bearishness in Traders Community).  For remaining hours of the day, Up Down Volume remained below zero line - Bearish. Though not by much.

Probably you can now see why at around 11 AM EST I came to announce of the "hint" of Bearishness in the Market.

​Lastly, let us look at sector/industry wise performance of market (using Dow Jones Index) for today (as of end of day of 26th May).

Clearly, by end of day on 26th May, more industries were in red than in green. A bearish sign. Though not full fledged Bearish - as several industries ended in green as well.

These are all  is interesting study from Market Internals. Now, how do we use such Market Internal study in trading? Or can we use it at all?

Remember the Weekly Market Internal Blog mentioned above? Here is the link again for ready reference.

That analysis was using longer term Weekly chart. And Superior Profit traders may use information gleaned from such Weekly studies to assess if and when Market "may be" topping. And that information may be used by  CUE Traders to look for potential Short in individual stocks - may be using trend following Go With Flow trade or trend reversing Headwind or Stretch Release trade. You may learn more about those easy tactics in Education Center and also in the many trade ideas posted in Traders Community.

What about the Intraday Real Time Market Internal chart that I shared above?

That is used by more active traders.

By E Mini Futures Day Traders for example. Indeed, the "Market" chart in this Real Time study is that of @ES - and seeing that in conjunction with the Tick Chart, Activity, Advance Decline and Up Down Volume helps an E Mini Day Trader to catch a  continuation / breakout as well as reversal trade more confidently.

It may also be used by active Stock Day Traders. If one is thinking of Shorting a Stock as Day Trade, it certainly helps to see that E Mini S&P500 is also showing a Tick Divergence at same time. Yes. The chart shared above does  show this very valuable Tick Divergence. One such area is marked by points (10). Where E Mini S&P500 was going up. Whereas Tick was going down. Such Tick Divergence may indicate a reversal point in @ES. As was in this case in the chart. Such Tick Divergence information could be used by E Mini S&P500 Day Traders. As much as it could be used by stock Day Traders. This is because often stocks tend to reverse when S&P500 E Mini reverses in Intraday chart.

Superior Profit Way: Prepared, Patient, Improvising, Flexible, Confident

From the Desk of Sagar Nandi and Superior Profit.

In Superior Profit Way we like to do our homework. It does not take long. Using Sonar (Explorer in Metastock) it takes a Swing trader ten minutes or less usually when he wants to identify a trade.

After we identify potential opportunity, if the time is right (say, following CUE Trading Signals guideline), we take the trade.

Else we wait. And wait. And wait. Until the right time comes - and when it comes, we take the trade without hesitation.

Here area  few real life examples from Superior Profit Traders Community trades of last one week on how we were prepared. And profited from that.

​It also illustrates several useful characteristics of a successful (a.k.a. profitable) trader:

1. Being Prepared
2. Patience
3. Improvising: For example, improvising  on the standard CUE Trade Set Ups  (standard CUE Trade set ups and rules are explained in detail in Superior Profit Books; specifically)
4. Remaining Flexible
5. Confidence on Own Trading System (for me, it is CUE Global)

Let us look at them in action in the real life trades that I took in last few days.

Being Prepared and Patient

Three days ago I had run CUE Explorer to scan for potential Shorts. Within few minutes, I had identified stocks in four different industries that might give a profitable trade and shared it in Superior Profit Traders Community here. In that post I had mentioned that it might be wiser to wait. To see if SPY (broad Market) holds support or breaks it - before taking any of these potential Short trade(s).

In short, I was prepared with my analysis outcome. But was not ready to take the trade. I waited patiently to see when and if a suitable entry opportunity arises.

Let us see how these four stocks played out after the original post in Traders Community.

Yahoo (YHOO.O): 

Yahoo did not yet give any signal to take a Standard Superior Profit Swing trade. This is explained in the chart below.

​ Procter & Gamble (PG):

PG went up for one day and then gave an optimal entry opportunity using Fine Tune template as explained in two charts below. This shows how the same CUE opportunity could be traded as Day Trade, Two Day Trade as well as Swing Trade.

​Some Superior Profit Traders might have traded PG in one of the CUE ways mentioned above. I had not taken PG. However, I had improvised on a QQQ.O trade and benefited from the market drop on 18th May - the same day when PG also started dropping. Here is how.

Improvising

NASDAQ ETF (QQQ.O)

CUE Charts have several easy to use tools - and once someone is used to them, new trades may be improvised; combining CUE Charts with broader Market facts (not judgement or opinion - we try to stay away from that if we can !)..

You may recall that I had already analyzed the broad market to be Bearish in my Market Internal study blog a few days ago.  Based on that and movement of QQQ.O, I could improvise a profitable quick trade using Weekly Options. 

​I had booked profit on most of the QQQ.O Put Options on entry day itself. At more than 100% profit. And I allowed some lots to carry on for next day. Letting profit run - but ensuring it was already a guaranteed Risk Free Trade. The remaining position was stopped out today at a Trailing Protect Profit Stop. Which I had put some distance away from my Entry Price. A net highly profitable trade closed within two days.

Not all the time a Stock moves in our anticipated direction. It does so many times when we follow a roust and disciplined trading way. But not always.

Sometimes market moves opposite to what we anticipated and we have to take small loss, close the trade and move ahead to next trade.

​Some other times we may be flexible enough to switch direction and come out with some profit. Here is exactly that happening with JPM.

Being Flexible

JP Morgan (JPM)

JPM did not turn out as we anticipated.  It moved sideways for two days since we analyzed it and then on 18th May it shoot up - as shown below in CUE Hop On chart below.

JPM going up in itself probably would not entice a Superior Profit trader to display flexibility and switch from intended Short direction to a Long trade on JMP. There were few more facts in play.

On 18th Fed meeting minutes were due at 2 PM. On this day, market struggled to go up. However, Financials were soaring right from beginning of day. As if someone knew what the minutes will say and what its probable impact on banking stocks might be. And were buying up many banking stocks in advance. Resulting them to soar.

Below is the sector wise performance of Dow Jones Industries index as of end of day. Financials were strong from beginning of day itself and closed the day as the strongest sector of Dow Jones.

That observation, along with relatively narrow Stop Loss from Fine Tune Template could lead Superior Profit Trader to switch from Short to Long Direction and make a profitable Day Trade - as explained below.

​This is how the Day Trade would have played out - using CUE Fine Tune Template.

It was a profitable trade. No - I did not take it; I missed this opportunity. And I am not sad about it. I don't try to take every possible Superior Profit trade that comes in the market.

However, did you see in the sector wise breakup of .DJI above that Industrials were poor performer today?

And do you remember that we had DOW in our original Community post being a Bearish Stock? I was watching DOW since I identified it to be Bearish ... and I did take the DOW Short today and profited from that.

Being Confident

​Dow Chemicals (DOW):

Dow had a Bearish Candle yesterday in Daily Hop On (not shown here ... you may look it up on your CUE Charts). However, as the Candle Flow was still Bullish (cyan), one would not enter Short. And  would watch it today.

Today DOW was Bearish (part of Industrials - which were also Bearish as a whole) from beginning of day.

And as broad Market fell, DOW fell even more.

Here I could time the trade well. And could confidently add to my position. Using Weekly Options -I  booked more than 130% profit in a day on partial position - making the entire trade a guaranteed trade a Risk Free Trade. Below snapshot explains the trade.

These trades illustrate the many opportunities that a Superior Profit Trader may encounter and exploit. I have traded these using Options. However, the same trades could be taken using Stocks or ETFs.

Before I end this blog, some further discussion of the trader's characteristics in display here is warranted.

Different Characteristics in Different Trades/at Different Times

We watched several characteristics in action. Being prepared, being patient, improvising, being flexible and being confident.

Being prepared and patient are all good. No further discussion required on that probably. They are essential and useful in trading. And that is that.

Improvising may need a few words. This characteristics come after observing the Market for a while. After trading for a while. It is like in any other skill. Photography. Playing violin. Or in golf. Trying to improvise from the early days of trading career may be frustrating.

Then comes the matter of being flexible and confident. These may be two edged sword. They are indeed useful - and allows an experienced trader to capture more from the opportunities the Market presents. However, they also incorporate the risk of going into the realm of gambling. To chase a trade. Or to break one's own trading system rules. Or doubling down too much into a losing trade. Worse than even that ... to not cut loss if Stop Level is touched.

How to avoid those pitfalls?

Like in the case of  improvising, one may wait for a while before starting to be flexible (to reverse direction in a trade) or to be confident (to add to a losing position).

One might also practice for a while on simulation money first. Before going all out with flexibility and confidence.

With a bit of practice and discipline, trading can be fun. And even profitable.  The above examples illustrate that.

​Sagar