You Must Evolve With the Market
Stockscores.com Perspectives for the week ending January 9, 2011
|
| Upcoming Events |
2011 Live Trader Training
We are planning a few courses for the early Spring, taught by Stockscores.com founder Tyler Bollhorn. If you would like to be alerted when these classes have been confirmed, please send an email to tylerb@stockscores.com and include the City where you live.
|
| Tradescores.com |
Subscribe to Tradescores Alerts and receive our newsletter each night plus Tyler Bollhorn's trading ideas as he finds them. To see the performance of all of his closed trades, log in to Tradescores and go to the Alerts and Analysis tab, Trade Tracker, Closed Trades. Subscribers get to see the open trades as well. You can do a 14 day trial from the links in the right column of these pages.
|
|
In this week's issue:
One of the things that I enjoy doing most is researching and developing new ways to trade the market. I spend many hours looking at stock charts, seeking out patterns that can be used to predict future price movement. This is an important part of being a trader because the market is always evolving. There is a lot of competition among traders seeking to take money out of the market and if you are not always looking for ways to beat the market it will not be long before you get beat.
Despite the ever evolving nature of the stock market, there are some things that have changed very little in the 21 years that I have been trading. Human emotion is still the dominant part of what makes prices move. Stocks still move faster than the overall market when they do something to catch the attention of the buyers. Most of all, listening to the market itself is still the best way to find winning stocks.
Most of my trading strategies revolve around abnormal price and volume action and predictive price patterns. At its simplest, I buy stocks that are trading abnormally in price patterns which signal investors are optimistic and confident about the stock's future. In this regard, my approach has changed very little over the past 20 years.
What has to constantly change is how I find the opportunities. When I first started trading, real time price quotes and charts were hard to come by. I would go down to the stock exchange in the city where I lived. There I could use one of the three real time price quote computers that they made available to the public. Using these terminals, I would find the stocks that were making abnormal price moves and write down their symbols. However, these terminals did not have stock charts available on them and there was no such thing as a lap top computer that you could open up to look at charts.
So, I would race back home where I could download price data for the stock symbols that I had written down. With the data, I could then create a stock chart and get the important visual picture I needed to determine if the chart pattern set up was a good one. All this before the market closed for the day.
If I liked the trade set up, I would then pick up the telephone and call my broker to make the trade. The entire process to find that one stock that I would buy might take two hours. My approach was very unusual and it gave me an advantage over the typical stock market investor who was waiting for their newspaper to give them investment ideas.
Today, I can do a more in depth research process in only seconds, but so too can others.
20 years ago, stock chart analysis was very uncommon. Today even most fundamental analysts will take a look at a price chart of some sort before they invest in a stock. The market is more competitive now so anyone looking at charts has to be better.
While my basic approach to trading has not changed very much, how I find the trades has changed and continues to do so. Information moves much more quickly and trading opportunities are exploited in a shorter period of time. As a result, I have to trade differently today than I did even a year ago. How I find and execute the trades has to change in order for me to stay competitive. That is why I spend so much time coming up with new trading methods.
Things that worked a year ago may not work today but, oddly perhaps, things that I did 5 years ago work again after not working for a while. The process that I use to find the trades may have changed but what I am looking for may not have.
If you are, or aspire to be, a trader, I encourage you to spend an hour a day working on ways to improve your trading. Don't change the core principles of your trading but work on the details of how you execute the process to be better. Never stop learning because the market is teaching us new methods every day.
My best students are those who do not stop with what I teach them but who are also taking the spirit of what they have been taught and advancing their methods as the market evolves.
The basic concepts that I use to trade would fit on the back of a paper napkin. However, there are many ways to apply those concepts and the trader who works hard to adapt their approach will have the best chance of consistently beating the market.
Back To Top
This week, I ran the Stockscores Simple strategy using the Market Scan tool at Stockscores.com. This is a scan that anyone with an Advanced or higher membership to Stockscores can use. It has been my favorite strategy for finding position trading opportunities for years.
I inspect the charts of the stocks found with the Market Scan, looking for breaks from predictive patterns. I did that today and found a couple that stand out.
Back To Top
1. NCTY
NCTY broke out from an ascending triangle pattern on Friday with good volume supporting the upside price move. Support at $6.75.
Back To Top
2. T.CDV
The downward trend on T.CDV ended in October of last year and the stock has been building an optimistic base since then. This week began a break out of that trading range and through resistance. The stock looks like it wants to continue higher in the weeks and months ahead, but if support at $2.12 is broken, the chart will no longer be as positive.
Back To Top
References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
Back To Top
|
