July 8, 2015

How to Trade Anything on the Planet

You've probably noticed the stock market has been going nuts lately. Up down, up down, up down, up down! Additionally, the Chinese stock market is imploding and the EU ECB can't seem to get Greece to agree to any austerity measures in exchange for more bailout money with better terms.

Many traders are complaining on Twitter, trading forums, CNBC, etc., that their trading strategies just aren't working like they used to. The market is just acting too volatile right now and shaking everyone out of their positions and racking up losses. Well I'm here to tell you that you can trade any market in any market condition if you know how to apply the right trading strategy for the current market condition, not the past one.

First off, let's get some market principles straight and then I'll break them down in more detail afterward:

1. Every trader's/investor's #1 priority is to protect the bankroll. Fight FOMO relentlessly by trading ONLY the best chart patterns and doing something else if boredom creeps in. NO trade is far better than a BAD trade!
2. Trading is fractal, only the time frame changes, not how you trade it.
3. Markets/stocks tend to trade like they have been trading (Newton's First Law of Motion).
4. Trading ranges (buy low, sell high, bet breakouts fail), Trends (bet breakouts succeed, buy high, sell higher and vice versa).

Now let me break down each market principle so we can navigate these choppy waters with ease and profits:

July 3, 2015

Trade Recap - FIT

Morning everyone! Let's take a look at my FIT trade on June 25th.

FIT was on my radar because it recently IPO'd and it's been a great momo stock for retail traders and institutions alike. On June 25th at around 2 pm, I pulled up the 1 hour chart and performed technical analysis (TA). My journal notes included "BO (breakout) of recent tight trading range and downtrend line (DTL), long biased but will short failures."

Next I pulled up the 5 min chart and performed TA. FIT had sold of big time in the morning and gave back all gains from the huge gap up (which is not surprising if you look at the previous big gap up two days prior--stocks tend to trade like they have been trading):