Wednesday, June 16, 2010

Trading Talk

Similar to our copper tell for market bottom  fertilizer stocks have also proved to be great tells for us in the past.    We posted the first chart last week on just as POT was breaking the trend-line:

Look how the stock successfully tested the trend-line/20 SMA before going higher.  Text book.  Next target 50SMA.

This brings us back to the super-focus theme of trading.  We focus on two patterns (bases, and trend-lines) only, no cup and handle, no head and shoulders, nothing else.  We only use a few indicators (moving average on daily and intraday, Pivot lines, volume).   We only have a few intraday set-ups we use and all our trades can be contained within the strategy of buying breakouts/shorting breakdowns and buying support/shorting resistance.   We have followed the same bulk of stocks now for over a decade.  We've traded together for over a decade without any additions/subtractions.

Everything we do is contained in a small trading universe.  But we know every nuance of our world.    We don't spread ourselves thin and we are experts in what we do.    You've heard it a thousand times -- find something you're good at and then get better. But nothing could be more true in trading.  Biggest mistake of new traders is going into a chat room and following different trades by different traders using different strategies.    Find your voice and then learn to sing.