Trading Lesson of the Week

• December 7, 2025
• V.SOMA | T.IAU

In This Week’s Issue:

• Market Outlook – Interest Rate Focus
• This Week’s Market Minutes video – Why You MUST Approach Stock Trading Differently from Investing
• Trader Training – Simple Tactics for Stock Market Success
• Strategy – Strong Sector Strong Stocks

Market Outlook – Interest Rate Focus

Investors focused on the US Fed this week as Wednesday brings the next decision on interest rates. The markets are predicting an 87% chance that we will see a 0.25 point cut to interest rates. This expectation has helped the Small Cap stocks improve and trend upward over the past two weeks, improving day trading. If the upward trend continues, swing and position trading, which has been quiet for the past two months, should see an improvement as well.

This Week’s Market Minutes Video – Why You MUST Approach Stock Trading Differently from Investing

Stock traders who think like investors will make mistakes that cost them money. In this week's video, I explain the right mindset to approach trading with and how to change your outlook to be good at trading and investing. Then, I provide my analysis of the stock, bond, currency and commodity markets and look at the trade of the week on SMX.

Click here to watch the video on YouTube

https://youtu.be/v1cIALJmumo

Commentary – Simple Tactics for Stock Market Success

Over 30 years of trading, thousands and thousands of trades and many 10s of thousands of hours looking at stock charts. You might think that this has led me to extremely sophisticated or complex analysis, difficult for most people to understand. Instead, it is quite the opposite. I find that the simple things continue to work the best, here is a breakdown of the Basics.

Focus on Abnormal Activity – to beat the market, you have to trade Alpha stocks. Alpha stocks are those that come alive with abnormal price and volume activity and strong liquidity. Find the stocks that are just starting to attract a crowd but before everyone knows about the stock.

Practice Good Risk Management – losing is part of successful trading. Good traders don’t take big losses. This means sizing your positions to reflect the risk and planning to lose at the price point where the market will have proven you wrong.

Be Patient with Winners – since we are all going to take some losses, we must also ensure that our winners pay for our losers. Don’t sell a winning trade because it feels good or because of a fear that the winner is going to turn into a loser. Practice good exit strategy and hold on to the winners as long as they are trending higher. Exit when the trend is broken and an exit signal is triggered. Remember that up trends start slowly and end quickly so be patient with a stock when it is just starting to gather momentum.

Don’t Listen to What People Say – I never read news, listen to stock tips, trust the advice of others. The only thing that matters to me is what people are DOING with their money, not what they are saying. If the stock is going down, there is something wrong, no matter how good the story sounds. Buy stocks that the market is optimistic about, not those that are in the control of the sellers.

Avoid FOMO – the Fear of Missing Out is one of the biggest reasons aspiring traders fail. We must not chase strength, even when our emotions are telling us to buy because the stock is going up so quickly. Buy breaks from low volatility or breaks of pullbacks in longer term upward trends. Don’t chase parabolic trends.