The Market is an easy game to play. It is just that we are hell-bent upon making it so complicated.
That’s how Zen in the Markets (one of my all time favorite books on trading) begins — and I couldn’t agree more.
Successful trading comes down to one thing — managing yourself. Making sure you stay disciplined. Making sure you stay focused. Making sure you stay consistent and working on the task at hand.
For me the task at hand is to notice (and accept) where the market is at all times.
Right now we’re blow the 20 day MA which is a huge red flag for me. It’s not enough to halt trading to the longside — that comes if the 50 MA is breached.
But it is enough to keep me alert. To not take risky trades. To make sure I’m following all of my rules.
Egoless sight is seeing things for what they are and not what our egos would like them to be. Edward Allen Toppel, Zen in the Markets.
With that said, here are my picks for the week.
And remember, my method is a very simple one. It calls for one of three things:
- New highs
You can read more about it here…but in essence, what this means, is that every trade I have on my radar is either in the midst of one of these three actions, or looks to be starting one of them.
Because that’s what the charts of successful trades display.
As a reminder, here’s an awesome looking trade that were were lucky enough to catch a few weeks ago. $FFN.
That’s an hourly chart, and the 44% move took place over one week. That’s exactly what we’re looking for.
You might also be wondering why I trade low priced stocks with all of their inherent volatility and shiftiness (sometimes I even begin to wonder!) — well, something I saw the other day reminded me exactly why I like to focus my efforts on the smaller stocks.
Here are two tables showing returns on a pretty good day a couple weeks ago. The first table shows returns in the top 10 or so big brand companies I follow.
Nice. Gains in the 3% range are nothing to turn up your nose at.
But here are the gains in the low priced stocks I follow on the exact same day.
Wow. Do you see the difference?
The goal is to stay calm in the face of the volatility you are sure to experience trading low priced stocks. Stay calm, alert and aware of the market.
Okay, okay, I’ve rambled on enough. Here are…
This Week’s Charts
Don’t forget to do your homework, and good luck out there.