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When trading stock for a living you do not need to know what is going to happen next to make money. However you do need some type of model for price structure. You need this so you can begin to form as many if-then scenarios as possible. The more high percentage scenarios you can create the more trades you can take advantage of.
The successful progression we teach is to watch only a few stock, master the set ups in those stocks, increase your share size, and then do it again adding more stocks to your list.
One of the simplest and effective setups to monitor for is a consolidation. A consolidation is a pause in a trend. No matter what time frame you monitor trades on, you should be able to find a consolidation which you can stalk. I say stalk because consolidations lead to trends. This can be done on a short term basis also. Yesterday was a very tight trading range, my expectation for today was not long or short, but breakout. I was not going to guess, just sit back and let the natural price action of the market tell me what to do. Trend leads to pause, pause leads to trend. Pay attention.
This stock trading environment is heaven for traders who have experience and a plan. The traders who I can see on the floor of our NYC desk that are very frustrated are traders who do not have a plan or a structure for price action. They view this volatility as "unreadable." If you want to join the ranks of experienced traders, sit down and write out a plan, have an idea of what price "should" look like so that when it presents itself, no matter how fast the moves, you will be prepared.
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Source by Pete Renzulli
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