It simply cannot be done. Contrary to what the fu*kwits on CNBC and the Blogosphere will make you believe, it is impossible to Time the market, unless you’re the Architect/GOD/Multi-Dimensional Being, who can bend the fabric of space-time. What you can do instead is, increase your chances of winning/profiting on a trade by methodically analyzing every single aspect of the stock that you plan on trading, creating a plan, and having the balls to fu*kin pull the trigger when required.
In this post, I’ll introduce you to the process that I go through when placing a trade. Now keep in my, since I’ve been doing this for a long time, my way of approaching a trade would be completely different than what’s suitable for your level of expertise. Practice brings you closer to perfection. The more you trade, the better you’ll get at it. Don’t beat yourself up and try to imitate others. Keep your shit original; It’ll take you a long way.
Without further ado, here’s whats-up:
Since I’m a Long-Term-ish trader, my usual time frame is 3-6 months. I tend to look for stocks that are either Oversold/Undervalued or Overbought/Overvalued. Once I find the stocks, I do a little Fundamental Analysis (P/E, Sector Analysis, Macro, Micro, etc…), a lot of Technical Analysis, and after I extrapolate the probable direction of the stock (over my time frame of 3-6 months), I pull the trigger. I’m not one of those traders who wait for a pattern to complete and this to happen and that to not happen. My time frame gives me the confidence/advantage of not getting fu*ked by day-to-day price swings. I set my stops at a reasonable enough distance to not get hunted down by HFTs/ Russian Quants. For ex: If I enter a long position @ $40, and my target is $50, I’ll usually set my stop at $37. That way, I get a reasonable risk-reward, and I don’t run the risk of getting stopped out of the trade pre-maturely.
Also, if you were to ever get stopped out of a Trade, wait for some confirmation, and then re-enter the trade. There’s no set rule that says you shouldn’t trade the stock you got stopped out on. We trade to make money. Leave the Bull-Shit for the academics.
IMPORTANT: Don’t Fuck with your targets. Once you set a target, stick with it. You can exit the trade early, but never LATE. What I mean by that is, if your original target was $50, and the stock trades up to $46, you can take the profit and exit the trade with a huge smile on your face. But if you surrender to GREED, and move your target from $50 to $55, YOU WILL GET FU*KED !!! GUARANTEED !!!
Apart from that, as long as you don’t bet your entire account value on a single trade, I think you’ll be just fine; by Fine I mean Depressed, but not Suicidal.
Stay tuned for the next trading tip.
Wall Street Fool
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