Stalking A Swing Trade

Stalking A Swing Trade

If you want to swing trade, you need to have patience. Like a lion quietly waiting in the bush. You need to stalk your trades.

Then when the time is finally right… YOU POUNCE!

STALKING CYBERARK SOFTWARE ($CYBR)

After riding it up from Jan – June, I kept it on a special “interesting ideas” watch list. This is the spot where I keep all my ideas that i don’t want to lose track of.

I’ll check this list every weekend and see what’s setting up. There’s about 100 ideas on this list.

On Nov 16 I saw $CYBR setting up. I shared my thoughts on this idea in TRADER’S MINDCHAT.

Here’s what I wrote:

Seeing a symmetrical triangle down on the daily and below. I’m aware of the potential resistance at the 200dma and 40wk line. If we bust above there, we’ve got a clear run to highs at 148. Do we get there? Who knows. That’s why we look at the target as a POTENTIAL and we call it “Potential R”. It’s the next major level of resistance. . Always manage your reward:risk throughout the trade.

TICKER EARNINGS (MM-DD-YYYY) SECTOR SENTIMENT SETUP
$CYBR 02-16-2020 Software Bullish Symmetrical Triangle

TIMEFRAME ENTRY STOP LOSS TARGET POTENTIAL ‘R’
Daily and below $115.70 $111.70 $148.00 8.08

 

This gave us a potential 8R trade! I love that s***!

Check out the TRADE-EMOTIONATOR to calculate the right amount to buy every time.

$CYBR broke out Nov 18. Here’s how I’m playing it.

  1. I am playing it on the 2HR. While I’m AWARE of many timeframes (I keep track of monthly, weekly, daily, 2hr, 30min, 15min), when trading, it’s important to trade on just one.
  2. I hit 1R (1x the amount I risked) when CYBR touched 119.76. That prompted me to raise my stop. Support developed just above my entry point and I moved my stop up to 116.10
  3. I’m using the 5ema as a trailing stop for 1/4 of my position. Same deal for the 10ema. If we close below that, I’ll sell another 1/4.
  4. My ultimate profit target for this is 148. IT’S RARE to get there smoothly. With that profit target, this trade started out as an 8:1 reward:risk. IF at any point the price action makes the ratio less than 3:1 w/o creating a fresh area of support, I’ll take 25% off.

swing trade What are your thoughts? Drop’em below or join TRADER’S MINDCHAT and engage with us 24/7!

Avoid The “Gun Show”

Avoid The “Gun Show”

Have you ever gone to a gym or been to a beach and saw those guys with the gigantic arms and scrawny little chicken legs?

This reminds me of a lot of traders… Way too many traders treat their trading like this. They focus on charts and not much else.

Are you guilty of this? I was at one point. 

From my own experience and from the traders I’ve spoken with over the years, this never ends well.

Most blow up their accounts.

Only a few persevere long enough to learn that it takes a helluva lot more than charts to be a successful trader!

What Leads ALL Traders To Success…

mindwheel

Whether they realize it or not, ALL consistently successful traders follow the Trading Mindwheel.

You might be thinking “WTF is a Mindwheel?”

It’s the 7 core things all traders need in order to zoom down the path of success.

When any one of these are missing, it’s like trying to drive on a flat tire.

If you’ve ever felt stuck at any point in your trading, I can guarantee it’s related to a hole in one or more of these areas.

Mastering the Mindwheel IS your ticket to trading success!

Where To Start?

trading chartsAre you a newbie?

If you’re relatively new to trading, start with 1. Environment and work your way around the wheel.

Have you been trading awhile?

If you’ve been in this game a while, do a self assessment. On a scale of 1 (I suck) to 10 (I’ve completely mastered this), how do you rate yourself in each of the 7 Mindwheel categories?

The more honest you are with yourself, the faster you’ll be able to patch those holes and get speeding toward your goals.

The 7 Core Parts Of The Mindwheel

1. Environment

Does your trading environment fit you? When was the last time you checked? Do you have clarity? Could key elements have greater clarity?

2. Trade Style

Have you explored a variety of trading systems and styles?  Have you found the timeframe that works best for you?  That feels right?  There are thousands of tactics, the key is lining it up with your personality.

3. Risk-itudes

Where do your trades fall on the Fear vs Greed spectrum?  Are you closer to the betting the farm type or clinging to pocket change?  Winning traders find balance, leverage, and asymmetric reward:risk. They manage it throughout the trade.

4. Pattern Mastery

The market IS human emotion on parade.  We can see collective hope, fear, & greed materialize before us.  Learn how to read it.

5. The Art Of Trading

Betting the right amount at the right time, and ensuring it happens rests not only on you, but on your team (including your broker).  The Trade-Emotionator can help your figure that out!

6. Write Right

Trading w/ clarity involves writing out your plans, reviewing them, and tracking them.  It helps us learn and evolve.  The Trade Tracker gives you core questions to ask yourself on every trade.

7. Vision-Vestment

You made some great trades, made some money, but riches and wealth aren’t the same thing. What are you doing with it? How is it continuing to grow, to serve you, to serve others?

This is the step that keeps tread on the tires. Keeps you motivated. Helps you enter the top 1% of traders in the world.

Neglect this step and eventually your tire becomes bald. It’ll get a flat. You’ll lose your passion and end up walking the rest of the way.

You Don’t Have To Go It Alone

Trading is akin to learning how to ride a bike. You can learn on your own or have others help you.

Whether you have help or not, you’re still going to take some bumps along the way.

The difference is that you’re FAR more likely to learn how to ride if you get help and you’ll be doing it a helluva lot faster too!

No one talks trading like this.

In all of the trading books I’ve read (my personal favs are here), courses I’ve taken, or seminars I’ve attended over the past 20 years, no one talks about the Mindwheel.

That’s why I’m constructing this blog, developing a course, writing a book (look for it mid-2020), and coach traders one on one.

Want me to be YOUR trading coach?

I’m very picky about which traders I work with. I only work with serious action takers who are open minded.

If that sounds like you, check out the rest of the details on the coaching page.

Book the FREE 20min Sesh and we’ll assess where your trading is at right now. Where you’d like it to be. And the steps needed to get you there.

How To Stop Trades From TURNING SOUR!

How To Stop Trades From TURNING SOUR!

Ever notice that trades are kinda like milk? Hold any of them for too long and they turn sour?

If you’re like me, you’ve had this happen to you more than you’d like to admit.

Well, I’m glad to tell you that those days are over!

That’s right! There’s a few simple steps you can take right now to prevent trades from ever turning sour on you again!

Types Of Sour Trades

These are the 3 trades that leave the worst taste in your mouth. They’re so bad, I’ve given each of them a special name…

  1. Mediocre Employee: Does just enough to keep you holding on but goes nowhere.
  2. Indian Giver: Runs up quickly, giving you nice gains, and then comes in hard, taking them all back.
  3. Half Breed: One minute it’s bullish, the next it’s bearish.

You’ve experienced all 3 of these before. Luckily, the solution to kicking them to the curb is simple.

There are 2 primary ways to kick these kind of trades to the curb when they show up in your portfolio. Trailing Stops and Back Stops.

This video gives you the step by step of how to use them.

When To Use Margin In Trading

When To Use Margin In Trading

When should we use margin?

This fantastic question popped up today in Trader’s Mindchat!

margin trading

Sounds simple enough, right?

But this question touches on soooo many parts of the game! It’s why I love it!

There’s no one right answer. How you handle margin will be determined by your:

  • Trade Style
  • Asset Class
  • Position Sizing Strategy
  • Risk Management Strategy

How I Personally Handle Margin

I use margin only when trading opportunities are abundant and I’m making progress on the trades I’ve already taken.

I’m not using margin to place bigger bets. I’m using it to place more bets.

For example, suppose I have 4 active trades. Each of them have run far enough to where I’ve raised my stops to breakeven or beyond.

A fifth and sixth trade pop on the radar! Amazing! …But all my cash is tied up in the first four trades.

Rather than exiting a trade prematurely to make room for another, I’ll use margin to take the additional trades.

Now you might be thinking “so what is this guy’s trading style? What’s he trading?”

nyc skyline

My bread and butter is short term swing trading stocks. My average holding period ranges from a few days to a few weeks. This means that I’m dealing with overnight risk so that gets factored in.

Hold up… What’s overnight risk?

Overnight risk is this. Suppose you bought shares of AAPL at $260/share and had a stop loss down at $250. You go to sleep thinking everything is honky dory.

You wake up the next day to find something insane happened…

One of Apple’s factories blew up!

OMG! Thankfully no one was injured but Apple won’t be making iPhones anytime soon. The stock takes a bath and opens down at $230/share.

That’s an example of overnight risk and it has to be managed.

How can you manage overnight risk?

The way I do it is by looking at price charts and finding major support levels.

apple chart

Take a look at this weekly chart of AAPL.

The first area of major support that jumps out at me is around $230. That correlates to both its former 2018 high as well as the current 10wk moving average.

If I’m an overnight holder of AAPL, I need to be prepared for the unlikely event that price suddenly retests that level.

How Does Each Trading Style Handle Margin?

margin trading

At this point you might be thinking to yourself “Okay. That’s great for you. But I use ____ trading style. How about that?”

Day traders and Scalpers:

These guys trade extremely frequently. Some can have upwards of 100 trades per day.

They’re able to make so many trades because they’re aiming to make a very small percentage on each trade. Sometimes just a few pennies.

Part of the idea for these guys is that all those pennies will add up to dollars fast through their quick trades.

To make this work, many of them use leverage (margin) on most of their trades. They may use their full account or even go on margin on a single trade.

This may sound risky. However, because they move so quickly in and out and are not dealing with overnight risk, they may not be risking very much at all.

Swing traders

These guys (like me) are holding for a few days or a few weeks and have to deal with overnight risk. They’ll look at every trade in their portfolio and ask the question “What happens if these all s*** the bed at once?”

Intermediate and Long Term Position Traders

They are holding for months or years. These guys are dealing with overnight risk and asset class risk. Since they’re planning to hold for long periods, they need to ask the question, “What if the entire asset class tanks?”

intermediate and long term traders are able to stomach drawdowns. They’re willing to give back 15%, 20% or more if it means they can capture another 100% or more.

They are more concerned about fundamentals than the shorter term guys because this is where the asset class risk kicks in. Things like Trade Wars, the Fed, Brexit, etc… play a much bigger role.

And what about the asset class? How is margin different?

Margin on Stocks vs Margin on Forex

Margin on Stocks

Most stock brokers offer 2:1 margin. Some offer up to 5:1 margin.

For example, suppose you have a $5,000 account. A broker offering 5:1 margin would be willing to loan you $20,000. You’d be able to trade as though you had $25,000.

Margin on Forex

In forex, it’s not uncommon to find brokers offering 100:1 leverage. This is one of the big things that attracts traders with tiny accounts.

Take the same trader with $5,000 and give him 100x leverage. Now all of a sudden he’s trading with $500,000!

These forex traders with small accounts and dollar signs in their eyes are ticking time bombs.

What they need is the beliefs exercises discussed in “The 4-Walled Prison Of A Trader’s Mind” Otherwise they’ll blow themselves up again and again, and have a hard time understanding why.

Conclusion

Margin is a useful tool when used properly. Much like a power tool, there are times and places to use them.

If you want help answering the question “How much should I buy?” checkout the Trade Emotionator. It’ll also let you know if you’re being too aggressive.

Do you use margin? If so, in what ways do you use it?

Comment below.