A Simple Trading Primer
How Simple Trading Works
In this 2012 video I walk through how simple trading works using just 1 of a multitude of simple trading approaches. Referred to as multi timeframe analysis, it essentially forces you to adopt a methodology that “puts the wind at your back” while simultaneously requiring an exit discipline that minimizes your losses and thus your risk.
The video, while somewhat dated (as of 2018), is just as applicable now as it was then.
If there is such a thing as perfect trading, you’re likely to find it thru the door marked “Process.” In other words, a simple process employed repeatedly and prudently has no choice but to deliver profits into your pockets… where they belong.
The Most Important Aspect Of Simple Trading
Trading risk management is the single most important component of trading securities and is a big determinant of whether your trading strategy makes money.
According to Investopedia and other traditional definitions, Risk includes the possibility of losing some or all of an original investment. If loss is certain, that is not risk… That’s inevitability. Risk involves probability and as such can be managed.
Profitable traders spend the vast majority of their time focused on risk and the management thereof.
Whether you focus on holding long term position trades, you’re a hyperactive market maker style trader or anything in between, proper risk management of each individual trade as well as your overall risk profile is the single largest determinant of your level of success… Also known as your profitability.
In this video, I walk through a single potential trade scenario and how consistently profitable traders would view it. I look at things such as:
– what traders think about most
– determining the path of least resistance
– where I’d consider placing stops if a trade were taken here
– what to do when the market “speaks”
– how important stop losses really are
– how you can control your risk no matter where you place your stop…
A Good Rule For All Investors
Market timing is impossible according to the vast majority of personal finance gurus. In their minds, the price action we traders follow so closely on our screens is random at best and misleading at worst.
Watch this video to see just how wrong that nonsense really is.
Whether you’re looking to do something to salvage your underperforming retirement accounts or you’re looking to begin the journey to financial and time independence through the great art of simple day trading, the first step is to recognize, appreciate and believe the fact that market timing is not only possible… it’s a critical component of a healthy, growing asset mix.
In this video I take a look at AAPL and a bunch of should haves…
Here’s a little of what’s reviewed:
– How using a moving average could have provided useful guidance in the stock
– Why the particular parameters used on an indicator aren’t super important… and what IS important
– The REAL point of technical analysis… or in my case (and more accurately), chart reading
– How the “Line in the Sand” strategy works
– Your chances of “selling highs” and “buying lows”
Market Timing By Another Name
So called fundamental trading is just market timing by another name.
Don’t believe me? Why then do fundamental “investors” wait for certain fundamental parameters to be met before putting money to work? A certain book to sales or p/e ratio to be met… A certain level of sales or cashflow to be reported… A certain industry catalyst to be announced which will expand the pie for all players and thus drive profits higher?
The truth is waiting for a fundamental metric is no different from waiting for a price pivot or a moving average cross. Both require patience and decisiveness… However, simple trading through price action is much more easily verified and immediate for the non-professional.
In this video I take a look at the premise of market timing from the perspective of when the National Bureau of Economic Research declares expansions and contractions in the economy as a proxy for the lag in information.
I also talk about the real path to profit, managing your risk.
How Market Liquidity Works
It’s important for traders to understand how market liquidity works.
Investopedia defines liquidity as “(t)he degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price.”
As such, liquidity helps determine which securities trade actively and which “trade by appointment.” [A stock trades by appointment when it trades sporadically and usually very little at most price levels].
If you want to be a consistently profitable trader, you should spend the majority of your time only swimming in liquid securities…
Why Traders Need Liquidity
In this extension of the previous video, I walk through a brief explanation of why traders need liquidity.
Why Markets Move
Why do markets move? More specifically, why do stocks move in a given way? From where do sudden explosions higher or drops come and, more importantly, can the moves be anticipated?
In this video, I discuss the simple trading principle “markets don’t move because they want to… they move because they must.”
What’s A Chart?
First things first… What is a stock chart? I know… you know what a chart is… But just in case you’re a TRUE beginner, here’s a brief explanation of a basic stock chart followed by introductions to 2 of the simplest chart styles.
The Dot On Close Chart
A brief look at the Dot on Close Chart.
The Line On Close Chart
A brief explanation of the simple Line on Close Chart.
How To Control Your Emotions When Trading
Is it even possible?
How To Control Your Emotions When Trading discusses the perils and difficulty of both containing and utilizing your emotions when trading. Watch closely for the 3 steps to having your emotions work for you.
The Sit On Your Hands Strategy
The Sit On Your Hands Strategy is fundamental to the simple trading methodology… which is at the core of ALL profitable trading. It’s especially important in short-term, directional trading.
In this short video I show the the basics of how and when traders should do nothing. I use a day trading example, but the principle is the same no matter what timeframe is under consideration.
I touch on:
* one of the the hardest parts of trading
* the inversion that kills most traders
* death by a thousand cuts
* a core TAOST (and all directional trading) principle
* positive distraction – how writing a love letter can improve your trading
TAOST Intraday Tools
In this video I share a pre cash market open and a post cash market close look at my primary intraday trading vehicle the S&P 500 Emini. The video features my proprietary support and resistance zones [TAOST High, Low & Balance Zones] along with TAOST Points of Interest [TPOIs] and shows how I “lean” against them during my intraday trading.
Do note… while the zones and points of interest shown here are the tools intraday, the exact same principles and tools apply to swing and position trading.
I hope you’ve enjoyed this primer.
I have a lot more lessons to share with those of you who elect to join my email list… how auction markets work, why that “failure rate” of new traders is nonsense, how to determine the trend of a stock, why compounding is the 8th Wonder of the world, and how much you can make swing and/or day trading to name just a few. I also only offer my small group, application-only training course periodically to folks on my email list.
If you’re interested in any or all of these things, please join my free email list here.
Otherwise, trade well and profitably…
And always KIS [Keep It Simple].