Stock Trading Picks Alerts Newsletter Chat

Far too many novice market players fail to realize that there is someone on the other side of every single trade they make. Each time you buy, someone is on the other side of the transaction selling the stock to you . Each time you sell, someone is on the other side buying the stock from you. The 64K question is, " who' s smarter ?" Is it you, or is it the person or entity on the other side of your trade?

Day Trading is erroneously defined as a frenzied, rapid-fire buy-and-sell approach that never calls for taking the position home over night. While that is a form of day trading, it is not the only form.

Our approach is a technical one. It is based on a number of very reliable chart patterns that represent key short-term shifts in market psychology. There are certain chart patterns that pinpoint when a change in the balance of power between buyers and sellers occurs. We will teach you not only how to identify these chart patterns, but also help you to build tactics and strategies that are designed to profitably exploit them .

We have found stocks experiencing a great degree of momentum tend to correct or consolidate for 3 to 5 days before they resume their upward moves. This 3- to 5-day decline typically sets up a unique opportunity for the educated swing trader.

SEEDS OF WISDOM FOR THE MASTER TRADER
Preparing the Trader's Mind for Greatness

Trading tactics and techniques will have little to no value if the mind behind those techniques has not been properly prepared.

The greatest riches of a successful trader lie within his or her thinking , not within the methods used. . Sound methods follow the trader who has a sound mind .

THE MASTER TRADER REQUIRES ONLY A FEW TOOLS It has always been my belief that the mastery of a few trading tools is all that ' s necessary to become a highly successful trader . Most would-be successful traders are incapacitated by the false notion that in order to trade for a living , one must have accumulated a wealth of knowledge over countless years of experience . Not only is this not altogether true , the exact opposite is actually closer to the truth . In fact , it has been my ex-perience that those who possess a limited amount of trading knowledge have a much better chance of becoming effective market players than their so-called overly experienced brethren . Why ? Because varied mar- ket experiences , if not utilized and interpreted correctly , help to crystal- lize inaccurate beliefs . And inaccurate beliefs , which are allowed to exist over time , eventually flourish into full-blown , faulty ideologies that ulti- mately result in the trader ' s ruin . Knowledge is power , but only if it ' s the right knowledge . By mastering any two or three of the many trading techniques contained in the Tactics section of this book , you ' ll be well on your way to becoming a consistently profitable trader . It literally only takes two or three workable techniques to rise to the top of this game we call trading

The best traders are minimalists. They find two or three tactics or techniques that work consistently. Once they've found them, they simply implement them over and over and over. Repetition really does have value.

Looking forward requires that someone step up to the plate and put his or her hard-earned reputation at risk . It not only requires that someone study and perform a mountain of homework , it also calls for that someone to reveal the results of that study to the rest of the world . And we don ' t have to tell you that we are the inhabitants of a very critical world . Considering the risk, it is not surprising that the firms and services with the most to lose are the ones most reluctant to step out on the limb in a forward manner . However this is where services like ours come in.

We spend very little time dwelling on what has already occurred , which only has a small academic value . The majority of our efforts are directed toward what we think is about to happen . And today ' s market player , who is a lot more sophisticated than his or her counterparts of the past , thrives on that .

When uncertain and crippled by doubt , give your 6- to 8-month market outlook . It buys you a good deal of time during which you may get a clue . Should you fail to get a clue-and most do fail-you can always change your view ( the public has a short memory ) or just issue another view , which in turn buys you another 6- to 8-month outlook on the market . Needless to say , this is pathetic . Although rare , the real talent on the street doesn ' t need to hide behind a 6- to 12-month gap in time . They are not always right , for sure . But they are confident and willing to step up to the plate each day , if need be , and say , " this is what we feel you need to be aware of , and this is how we propose you can profit from it ." Whenever I hear that type of gutsy action from an an- alyst , a newsletter , or trading service , the first thing I do is tip my hat to pay my respects . Second , I make it my business to get to know them , ei- ther through their service or even personally if possible .

Our whole point is this . As far as we are concerned , our domain , as traders , is the Here and Now . We do not live our lives drifting in the past , nor do we avoid the realities of the moment by lingering in some distant future . As active market players , our entire lives are perpetually spent in the next 2 to maybe 10 days . If we get it right , we will tend to make a good deal of money . If we happen to get it wrong-and we do at times-we quickly regroup and move on . There is always the next 2- to 10-day period to get right . But even when we miss the mark in our 2- to 10-day projection , at least we haven ' t lost or wasted an entire 8 to 12 months of our trading lives being dead wrong .

Technical Vs Fundamental Analysis

As many traders know through per- sonal experience , even the most fundamentally sound companies can de- cline $ 2 to $ 10 in a matter of days , hours even , while fundamentally poor companies can rise and do the exact opposite . Fundamentals , while use- ful at times , possess their greatest value when one is considering a stock over a period of 1 % to 5 years . Technicals , however , such as proven price patterns , support and resistance , volume characteristics , institutional ac- cumulation / distribution , break-outs and break-downs , etc ., are the tools of choice for short-term traders , because they are based on the Here and Now we spoke about earlier . But what must be realized above all else is the fact that technical setups and chart patterns are only guides , nothing more , nothing less . They help the trader to assess the odds of a particular play , to see its merits and its risks at the current moment . They are not guarantees . They are not foolproof . And they definitely can ' t deliver the comfort of absolute certainty . But then again , what can ?

Learning to Read Indicators

Many ill-informed novices will witness a certain technical con- cept , such as price support , fail and erroneously assume that it is unreli- able and useless . This is a very big mistake that should be avoided like the plague . The astute trader learns just as much , if not more , from a tech- nical concept failing as he does from it working . If price support , which proved reliable four times in a row , suddenly failed , that would be very valuable and useful information . That , in our view , is not a concept that has failed . That is a technical concept that is revealing the strongest and most valuable message of all : the message of change .

Price Charts Do Not Lie

Price charts do nothing more than graphically display what we call the " footprints " of money . They show hu- man psychology at work and the repetitive cycles of fear , greed , and uncer- tainty . What we have always liked about charts is that they are factual. You see , a large money manager can show his face on CNBC , MSNBC , or MoneyLine and lie about how much he or she loves a stock , when all the money manager really wants to do is generate enough buying to offset his or her major blocks of sell orders

A key analyst can issue a major brokerage report stating how XYZ is positioned to dominate its industry , yet you will be able to tell if this is really true . How ? Because if the chart of the stock is rising faster than its industry group , you can confidently say , " that analyst is my friend ."

Earnings reports can paint a false picture with the help of fancy accounting , but charts don ' t he . A CEO can hold a conference and boldly issue inaccurate statements about a company , but the chart , my friends , won ' t ever lie . Investors and traders , both large and small , bet with their money , not with their mouths .

Every stock move is driven by one of three emotions : greed , uncertainty , and fear , uncertainty being the pit stop between greed and fear , the two most dominant emotions . When the most dominant group of players in a stock is being driven by greed , the stock will rise . We call this the Bull phase . When the most dominate group of players in a given stock are ex- periencing the pains of fear , the stock will head steadily lower . When the dominant group is uncertain , on the fence so to speak , prices will stabilize in a sideways pattern , as if for a brief period it had no home to go to or di- rection to travel in . Charts give us the power to be able to quickly assess what the real players in any given stocks are experiencing . Charts don ' t lie . They reveal what that all-important group is feeling and doing .

Technical analysis , or charting to be more specific , is noth- ing more than the art of following the flow of money.

Short-term trad- ers find themselves in similar situations . They are constantly being bom- barded with both glowing news and horrible news. People who have a vested interest in us believing and thinking a certain way have to be looked at with skeptical eyes , but charts are our true friends . They represent the footprints of money .

What is the real value of knowing what is causing a de- cline , if your well-thought out trading plan is to exit at your stop point anyway ? In fact , being aware of the cause has a strong tendency to trip the trader up by making it difficult at times to act when the need arises . I can- not begin to tell you how many times I ' ve allowed a news story , an over- paid Wall Street analyst , or some chat room rumor to shake me out of a trade , only to see it skyrocket

every one of our actions should be dictated by a well-thought out trading plan , not rumors or stories . This is how traders remain disciplined in the face of chaos . This is how the best traders keep their sanity when everyone else is paralyzed and confused

The master traders adhere to the technicals and their predetermined stop loss at all costs . They act when the technicals and their stops tell them to , and they ask questions later . It is our view that questions should be asked from the sidelines . Stated another way , questions should be asked before the bat- tle and after the battle , not during the battle . When in the trenches ( when in the trade ), your plan ( trading strategy ), based on your maps ( charts ), must be adhered to . Think about it . Would you feel safe in the trenches with someone who was nervously asking a slew of questions ?

Most traders who seek our instruction are shocked when we tell them that we cannot turn them into winners . As the editors of a popular advisory letter , they expect us to sell them the notion that we ' re miracle workers , deliverers of dreams , and guarantors of hope , fortune , and massive wealth . Those who know us better know that we will never promise or promote such things . You see , the truth of the matter is that no one is capable of transferring trading proficiency . We cannot , with the wave of a wand , hand over the mind-set , the mental attitude , the discipline , and the ways of a winner . Only you can do that ual can earn for himself the right to win . Each would-be trader possesses the capability to win , but that possibility lies dormant and can only be drawn out by the individual . It ' s a personal challenge that no one else can pull off for the trader . The only thing we , and other mentors like us , can do is help guide and direct the trader along the way . Even with our advanced knowledge , we can only point out the many pitfalls and booby traps that are designed to snuff out a trader ' s life . We can show the trader what works and what doesn ' t . We can even give up some of the hard- earned knowledge that we possess , and reveal some of the tactics and techniques that have proven very reliable for us . But no matter what we do , we cannot control what players do with those things . We cannot con- trol the way traders think or the way they feel or react . And we cannot in- fluence their fears or alter their psychological and emotional makeup . We can certainly make sure that they show up to the game with all that is necessary . But after we have packed their bags , so to speak , and after we have knelt down to whisper some words of faith and encouragement in their ears , the traders are on their own . We cannot take the test for them . We can only help them prepare . That is our mission .

Trading mastery can never be achieved without first achieving some measure of self-mastery . The reality is that a teacher , whether he or she manifests in the form of an instructor or a trading service , is indefinably limited in ability to deliver or transfer success in trading . The only role a teacher can play is to make sure you are properly equipped and thor- oughly prepared for the upcoming battle . But it must never be forgotten that the battle is all yours . No one can fight for you . No one can take your place or even alleviate inevitable hardships . Only you can bring about success . And with the proper guidance , you can , and you will .

SEEK KNOWLEDGE FIRST , PROFITS SECOND

Success is a very vague term , the true meaning of which must be deter- mined by each individual . Why ? Because each of us has his own unique

definition of what success is and what it means . But failure , the very op- posite end of the spectrum , is defined by only one thing , and that is the act or habit of majoring in minor things . Most people spend the bulk of their ex- istence going after and focusing on the more minute things in life , the things that offer the smallest value . Let ' s quickly take a glimpse at an ex- ample of this . Our daily newsletter attempts to deliver two potential ben- efits : trading knowledge and trading profits . Now , while profits are likely to receive most of the attention , knowledge is by far the more im- portant of the two . Isn ' t a $ 2 or $ 3 short-term trading gain , once taken , gone forever ? We ' re afraid it is . But acquiring or having a grasp on the knowledge that produced that gain makes profiting a life-long possibil- ity . A famous Chinese proverb says it the best . " Give a man a fish and you ' ll feed him for a day . Teach a man to fish and you ' ll feed him for a lifetime ." We provide an educational element to our newsletter because we want traders to major in what matters . By all means , we want them to go after and get profits . But in all they ' re getting , we want them to make sure they get the knowledge that will ultimately determine not only how profitable they are at the moment , but also how profitable they stay .

SHORT-TERM TIME FRAME : THE MASTER KEY TO HIGHER TRADING ACCURACY (( 2 days to 2 weeks )

Isn ' t it true that the clarity of one ' s vision diminishes as the dis- tance between the viewer and the object being viewed increases ?

The astute swing trader knows that the odds of being right over the next few days , as opposed to the next few years , are immeasurably greater . The astute day trader knows that the odds of being right over the next few hours , as opposed to the next few , days , are far more favorable .

And the astute micro trader understands fully that the odds of being right over the next few minutes are impressively better than they ' d be over the next few hours . You should never lose sight of the fact that good traders , in their most basic form , are really masterful odds players . While it is true that absolute certainty can never be achieved , traders do have the power to skew the market ' s odds to a highly favorable condition by operating in a shortened time frame

short-term traders have the luxury of turn- ing on a dime . They can bob and weave , switch sides with the speed of light , change stances , and even position themselves to capitalize on the fear for a while

However , today ' s excessive market volatility , coupled with its fre- quent bouts of weakness that commonly produced 40 to 60 percent declines in certain stocks , has almost compelled market players to become more short term .

To our way of thinking , there is no excuse for allowing a stock to move against you 40 percent . The best traders would never do such a thing . Why ? Because they believe in the following points :
1 . When in doubt , it is best to get out .

2 . You can always get back in . 3 . Clearing the slate ( selling out ) also clears the mind . 4 . There are times when the market rewards the cowards . 5 . A 5 percent loss on a stock that drops 20 percent is a win , not a loss . 6 . A good defense is at times the best offense . 7 . Stepping aside guarantees that you live to play another day .

MY THREE GREATEST DISCOVERIES

I would like to briefly share with you several discoveries that led me to a re- warding career as a professional trader
Trading for a living is no doubt the goal and burning aspiration of nearly every novice market player who experiences his or her first will- ing trade . Total independence , absolute freedom , and the potential for enormous financial rewards are but a few of the possibilities that capture their imaginations, give hope to new dreams.

At first , my style was that of a strict fundamentalist , believing that all knowledge of future stock prices lay in those highly manipulated financial reports generated by overpaid analysts

My consistent losing record made it very apparent that a market player could buy the right stock at the wrong time and lose his shirt , and his or her pants . I paid a . great deal to learn this lesson , but when I did , it revolutionized the way I thought and approached the market . 2 . Equally important was the discovery that a trader could buy the wrong stock at the right time and make a fortune . This discovery was the magic elixir that put my thinking over the top . It helped me fully realize that many of the generally accepted concepts and practices exposed by Wall Street are flawed 3 . Discovery 1 and 2 together forced me to truly understand an overwhelmingly basic truth that every market player claims to know already , but really doesn ' t . That fundamental principle is this . There is only one power on planet Earth that can make a stock rise , and that power , my friends , is simply , MORE BUYING THAN SELLING ! That ' s it . Good fundamentals do lift stocks . Good management doesn ' t raise prices . Neither do good earnings . The direct power behind every possible up move in a stock is simply more buying than selling . There can be many reasons that ignite that power . Varying circumstances can kick it into action , but the direct power behind every move is none other than more buying then selling .

I decided to buy everything in sight that my charts told me to buy , especially if my fundamental background told me not to buy . Why ? Because the favorable chart with an unfavorable fundamental picture meant that I was likely getting in be- fore the crowd , before the bean counters found out what was really happening. High debt lev- els , absurd book-to-bill ratios , and negative cashflows became pleasing music to my ears when they did not prevent the stock from advancing .

So to make a long story short , after focusing on the stocks themselves , and not stories , statements , tips , rumors , and empty promises of future earnings made by super-rich CEOs , I found myself on the winning side of the market much more consistently . At the age of 26 , I began deriving my entire livelihood from the markets . The rest, my friends, is history.

I want every reader of this book to know , beyond a shadow of a doubt , that chart reading is real . Despite what you may have heard from the old , conventional Wall Street crew , technical analysis works . My en- tire professional trading life , and the high degree of accuracy which our trading services enjoy , serve as daily proof of this . Fundamental analysis does have a certain value and it should command a place in your overall investment arsenal . But what every short-term market player needs to understand is that the fundamentals of a company fail to answer the most important question a trader can ask . And that is , " When do I buy ?"

Astute traders understand that stock prices move before Wall Street ' s fundamental numbers do . That is because the market is a discounting mechanism . Collectively , the market attempts to anticipate events by 2 to 6 months . Traders who wait for the fundamental numbers to bear out what the stock price has been communicating all along will find them- selves always a few months late and a few thousand dollars short.

Love: The Trader's Biggest Gift

If time stands still when you are studying the markets, if you can't wait for the morning to come and markets to start trading, if you love the challenge of winning, and love trading for the sake of trading, and not for what trading can provide you, then you will find that you will start winning and getting more successful. You will find the persistence to sustain you, the strength to survive the tough trades and difficult stretches.

You will find that the market will give back to you. Hate something and it returns hate, love and you will get love back. And that' when life gets very rewarding.