"We will either find a way, or make one."
-- Hannibal Barca

13 September 2019

How To Use Subscription Stock Selection Services

"STOCK TRADING INFORMATION IS LIKE BELLYBUTTONS...
EVERYBODY HAS ONE."
"Do you take the first piece of fruit in the case at the supermarket because the produce manager selected it and put it out?"
-- The Trader

This simple trading post isn't about recommending good financial market subscription services to get stock picks. It's about how you use whichever service you choose effectively… better known as profitably. 

There are many market related services operating these days. From newsletters to daily emails; Online chat rooms to Facebook Groups; virtual trading rooms to brick and mortar academies… the list of offerings is pretty extensive... and exhausting. 


These services typically offer opinions education, and/or guidance on the markets, stocks, ETFs, options, futures, etc. They usually make money by charging a fee to access their best information.

By the way, don’t be fooled if there’s no upfront fee… If you’re receiving valuable, useful information the provider will either charge you for it upfront (eventually)… or use your information and behavior to attract advertising dollars ala the (now infamous) Facebook model.

As an unabashed (if somewhat liberal) capitalist, I’m perfectly fine with vendors doing either to be compensated for their work (do YOU work for free?)… as long as they’re (here's that word again) upfront about it. I myself am a former stock market newsletter junkie, and, truth told, I still am to a certain extent.


However, these days I use newsletters, websites and such quite differently. I subscribe to a number of services and run their picks through my own proprietary price action based evaluation process. If a stock makes it through my process, it’s placed on my Stalk List (and sometimes shared with subscribers)… if it doesn’t, it’s discarded like any other stock that didn’t pass muster.

No exceptions for “can’t miss” stocks… 

No room for so called “pet stocks.”

I also read many newsletters because it’s interesting to read and balance the views of people who think the Dow is going to zero versus the views of the people who think the Dow is going to a gazillion. There are rational and ridiculous arguments for both cases. So it’s important to read/listen to all stock picks, trading information and views “with a grain of salt.” 

And above all else only trade price action supported ideas.

Let me say again...


You Should Only Trade Price Action Supported Ideas

You will find that trading this way is far more profitable than any other way.  It also makes it much easier to develop a process.



Information Is Important, But...

It’s important to stay on top of the major trends affecting the world today along with using stock trading information. A few of the topics are:
  • the aging population,
  • The retirement timebomb, 
  • crude oil prices, 
  • commodity prices, 
  • the explosive growth (or lack thereof) of China and India, 
  • the hollowing out of the American class structure 
You get the idea…

These are massive, real trends that affect nearly everything in our lives. And where there are trends, there are opportunities to make money in the securities markets. But at the end of the day it is, as it ever was, all about timing

On Wall Street (as in life), if everyone is expecting the same thing to happen, then it's highly unlikely to actually come to fruition. It’s not unlike watching a pot waiting for the water to boil… or waiting for real estate prices to crash so you can get that property you have your eye on for a “steal.” It only happens (if at all) when you look away.

And then, of course, there's the ever present "round trip" possibility... where you buy a stock at $100... it goes to $200... then starts down again, getting back close to $100.  There are innumerable examples of that very thing across the stock market landscape.  One of the biggest lies ever suggested is that individual stocks mimic the broader indices over time and ultimately move higher... 

They often don't.  

Just have a look at this stock I shared with subscribers a couple of years ago [August 2017].  As you can see from the updated chart below the video, it went on a very nice run.  But looks to be in serious peril now.



Here's a recently updated weekly chart... 


As you can see, the high the week I posted it to subscribers was $55.22... It went on to eclipse a double before folding along with the rest of the market last year.  


In My Opinion


The main thing to keep in mind is that everyone [including yours truly] is offering an opinion.

Stock trading information is almost never factual information, and it's truly never factual when it's regarding a specific trade recommendation. The writer may sound absolutely convinced it’s the best trade on the planet, and his information/conviction can easily pass into the brain of the reader. 

And he can also still be very, very wrong.

I don't have a personal opinion where the stock market is going to be by March 27, 2023. 

I'm more interested in where it's going to be by the end of next week... for swing trading purposes anyway. 

In fact, most of the time I really only care where it will be by the end of the day [lest you forget, I am a day trader after all].

My point here is there’s a tendency for newer traders to feel more confident in a trade because it’s recommended by someone… a guru... a talking head. 


In reality, it's just a trade suggestion like any other, and it’s important that a trader not get lured in with a false sense of security that this particular trade is going to work out exactly as planned... or, more often, hoped.


The Bottom Line


The bottom line is this: If you take stock trading information from a subscription service, YOU must still set appropriate risk parameters and decide how much you’re willing to lose on the trade. That's the most important component of trading... not from whence your stock selection comes. 

Again... YOU must still set appropriate risk parameters and decide how much you’re willing to lose on the trade.

Just because a guru thinks the market is going to crash doesn't mean that it will. I've heard too many stories to count about people blowing out their accounts because "they put it all in a pick from a newsletter recommendation." 

That's no different from "bet the stack on black."
Don’t be one of them.

Whether you found a trade setup for yourself, or whether you’re following an idea recommended in a newsletter, on a blog or presented to you by "the force", the ultimate responsibility is on you. 


Don't get over confident just because you read about it online.

You’re welcome.

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