Thursday, February 19, 2015

The smart way traders use Twitter: Getting past the love-hate relationship



As traders we all have a love-hate relationship with Twitter.  If used correctly Twitter is a great tool for traders.  The benefits of twitter include:
  1. Forging relationships with other traders thousands of miles away
  2. Learning from others
  3. Getting a feel for what sectors or stocks are hot
Let's use some real life examples to show application of these benefits.  One of my newest and already best trading friends lives in Eastern Europe.  I had posted a quote on twitter that connected with him, he contacted me and from there we learned we both share common interests in trading, science fiction, basketball, greek philosophy and 70s muscle cars.  Where in the world would I have ever met someone with my eclectic tastes but on Twitter?

Not only can Twitter be used to make trading buddies, but also as an effective learning tool.  It has never been easier to learn from other profitable traders.  If you can find a helpful and transparent trader on twitter that posts helpful tweets, links to their blogposts or a premium service, you should jump on it.  

The only use I have for Twitter when it comes to actual trading is to get a feel for what sectors or stocks are hot.  While I never base trades on anything I see on Twitter, if a stock or sector that is not already on my watch list is mentioned by 5 different traders I respect, I will pay attention.  While that alone will not get me to trade a stock, it may make my focus list.

These three fantastic benefits are why I love Twitter.  

Now why do I hate Twitter?  Let me count the ways:
  1. It's a free for all mostly made up of bad traders giving bad advice
  2. Information overload that leads to overtrading and micro-managing positions
  3. It's full of "look at me" narcissists that aren't in it to help others and selectively post trades
  4. It is a time waster
  5. Time frame confusion between day traders and swing traders
  6. Compounds the emotional extremes that traders often face
  7. It's full of negative people who look to ridicule others
We don't need to dig deep into this list. It is more than likely you have experienced all seven of these twitter negatives. Rather, let's talk about how to combat the negatives of Twitter.

First, find a select group of traders that you respect and who trade on the time frame that you trade.  Make sure these traders go out of their way to help others, get results and add value. 

Next, create a list that allows you to only view tweets from these traders.

Finally, use this list as a learning tool, gathering useful information and disregarding the rest.

Twitter can be a great trading tool if used correctly.  Following these three steps will add value to your Twitter experience and possibly even make you a better trader.

P.S. How do you use Twitter?

If you would like to learn more about how I trade, receive my nightly focus list with market analysis,setups and trade alerts, sign up for a 14 day free trial at BullsonWallStreet.com.  

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Tuesday, February 17, 2015

Chart of the day: GTLS

We have been swing trading the bottoming formation in commodities since December and now the formation has matured to the start of a possible trend move.

GTLS is a good example of a commodity stock ready to start a momentum trend.  It looks to have put in a bottom formation on strong volume and now is working hard to remount the 50 dma.  Once this level clears a measured move to $45 is in play in the coming months.


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Monday, February 16, 2015

The Power of One Winning Trade and Getting Your Mind Right


I am the worst trader in the world!  

I know you have said this to yourself before, or at least something close to it.  I have.  When do I say it?  

It's always after a few losing trades.  Yeah I know.  You all think I'm an emotionless robotic trader.  In my member only Trade Report videos, you have never heard me get pissed off or sound frustrated.  I am ALWAYS positive.  

Here is a deep dark secret.  In the quiet moments, even I question myself during drawdowns (periods of losing trades).  It does not matter if it's a small drawdown sandwiched between two successful winning runs.  It's just how we are programmed as human beings.  Losing hurts more than winning feels good.  Every great coach will agree with that.  We obsess over the losses to the point that winning is nothing more than a relief.

Now here is where winning and losing traders diverge.  While we all feel the same emotions, the trader with a negative, losing mindset will change his game and start trading "stupid".  He will chase stocks that already made a move, take bigger risks with bigger position size than his account can handle and start taking small profits just to get that little win.  

The winning trader, while emotionally frustrated, sticks with the game plan and trading methodology.  Ten losing trades are not going to deter her because she knows she is a good trader and is just on the wrong side of the probabilities.  Soon the odds will change and if they do not, she will reassess her game plan and adapt.

2015 Trading Stats
Of course there are times when you are trading incorrectly and you need to review your trades to make sure it's just probability and not poor judgment.  However, even if you have made poor judgments with setups, you will never commit the trading sins you can easily control.

If you stick with your plan and do not let your emotions get the best of you, you will get that first winning trade.  That trade will kick start a new winning run and over time, if trading correctly, your winning runs will far outnumber your losing runs.  

It's all about getting your head right during the toughest times.  If you do that, and I know you will, you will be a successful trader.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis,setups and trade alerts, sign up for a 14 day free trial at BullsonWallStreet.com.  

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Friday, February 13, 2015

Stop gunning: The most frustrating aspect of swing trading


Here is a note I sent Trade Report members a few days ago related to "stop gunning". 

I have received a few questions about TWTR this morning.  Some of you set your stops around $45.70-90 and were stopped out.

In today's morning report I mentioned setting it around $45.50.  It got down to $45.57.  I have a mental stop in place, not a hard stop.  If I feel there is stop gunning going on, I will wait a bit to see if the level holds.  In this environment where market makers are not even trying to hide stop gunning, you have to be careful.

This is why I give stop ranges and not a specific number.  First, your stop depends on your position size and how much you are willing to risk and second, you don't want a bunch of people at the same exact level.  When "they" see that, they start salivating.  Therefore, you must always think about where everybody else is placing there stops and adjust accordingly.

The cat and mouse "stop game" with market makers/algos is the most frustrating aspect of trading.  If you do get stopped out, take comfort in the fact that you have taken only a small loss and it does not impact your account much.  Then go back and devise a plan to win the game.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis,setups and trade alerts, sign up for a 14 day free trial at BullsonWallStreet.com.  

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Tuesday, February 10, 2015

Chart of the day: GOOGL Revisited

As swing traders we often stalk a stock for days weeks or even months before entering.  Why do we do this?  In a universe of thousands of trading vehicles, there is no reason to rush or chase a stock.

We have been watching Google for quite some time.  Over on Bullsonwallstreet.com, it has been our Stock of the Week twice in the past three weeks.

In this time we have developed a feel for the stock.  It has become our friend. I can read it's mind like I can read my kid's mind.  From the pre-earnings pullback, earnings breakout, and now consolidation post 50dma remount, GOOGL has developed character.

That personality profile is that of a volatile person that can lose their temper form time to time, but always ends up doing the right thing.  In other words, we'll get some volatility and fakeouts, but in the end it does what we technically expect it to do.

Watch this post breakout consolidation and look for a good entry on pullback to the 50 day moving average.  This offers a good reward to risk profile and sets the stock up for its next run up.


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Friday, February 06, 2015

Winning traders have a secret crystal ball: let me show you how to get yours

A winning swing trader must have that uncanny knack for predicting the future.  Yes, the successful ones have a crystal ball that losing traders can not access.  In this post I will share how to access it and more importantly, use it effectively.


Did I have you going?  No, there is no crystal ball.  We play probabilities, manage risk, manage our trades and prepare relentlessly for every realistic possibility with an enthusiasm unknown to mankind.  

Identifying as many of the possible outcomes as you can, key in on the probable outcomes and come up with a game plan for each of these outcomes. That is our crystal ball.  

Let's use biotech to illustrate this point.

Biotech has been THE sector to trade since    .  Even when it looked like it might crack, it came back with a vengeance.  It has been the market leader.  However, biotech is like a great boxer that shows signs of weakness before getting his bell rung.  He may have a few fights left in him, but we all know he's close to getting knocked out.

Notice that negative volume is picking up to the downside.  Whereas in October the bounce that followed the pullback had stronger volume than the pullback, the last two major pullbacks have been met by weak, feeble bounces.  The trend is slowing.  Biotech is giving us clues that it no longer wants to lead the market.


Now how do we use our crystal ball?  We identify the probable outcomes based on past experience.

  1. the current bounce stalls in "dead cat bounce" fashion . We enter on a confirmation candle or early near resistance.
  2. the low volume bounce carries farther than expected to highs.  This bounce will likely fail, as did the previous one.  In this scenario we enter on a close below the old high as a breakout-failure setup.
  3. volume unexpectedly picks up on the bounce.  In this case we look for a good long entry.

These are the three most likely scenarios.  While we will come up with good probabilities for each scenario, we do not have a crystal ball.

However, once one of the scenarios occurs, we have a game plan in place that will make it appear that we have some sort of mystical crystal ball.  

At the end of the day, we do no have a crystal ball.  We do have something much better: PROFITS!

If you would like to learn more about how I trade, receive my nightly focus list with market analysis,setups and trade alerts, sign up for a 14 day free trial at BullsonWallStreet.com.  

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Tuesday, February 03, 2015

The Next Explosive Bottoming Formation: Steel

Back in December we successfully identified and swing traded the bottoming formation in gold miners, followed by energy/oil/gas in early January.  Often when one or two sectors show this formation, other related sectors will follow.

Steel is showing signs that it is the next bottoming formation candidate.  This sector does not have an ETF to trade, so we look to leading stocks like X.

Notice the trend line break.  The big gap up 5 days ago was an earnings breakout, which gives the stock the catalyst it needs to start a new trend.  Positive volume is pouring in, which is exactly what we want to see.

As we saw with gold miners and energy, these types of bottom formations take time to develop and are volatile.  You must be patient with entry as there will likely be a pullback and test of the lows.


If you would like to learn more about how I trade, receive my nightly focus list with market analysis,setups and trade alerts, sign up for a 14 day free trial at BullsonWallStreet.com.  

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