If you’re a newbie trader you should start your education on the right track by familiarizing yourself with the fundamental concepts first. Getting a firm grasp on the basics will catapult your education faster when you really start to dig into the higher level concepts. Here are a few videos to get you started on the right path.
Why You Should Focus On The Best Plays
When trading stocks, it’s important to trade the best plays. Sometimes there’s so much action happening in the market that a trader can get overwhelmed. A major symptom of erratic traders is paralysis by analysis. Be careful of how many stocks you’re trying to get in and out of in one time. Focusing in on a handful of the best ones will allow you to get more elongated gains.
How To Trade Stocks Reacting To News
With so many stocks out there, what successful day traders tend to do is focus on stocks with momentum. To us, volatility is our lifeblood. Without it, we will perish. The most volatile stocks tend to be those reacting to major news. We love trading stocks reacting to either good news or bad news.
Post Earnings Drift
What we’re essentially doing in these plays is marrying the underlying fundamentals of a stock with the technical price action in the stock. The best news to play is earnings and earnings season is one of our favorite times of the year. When a stock gaps up or down after earnings is released, it can setup intraday for some really powerful moves. Check out our trade in KITE, where the stock gapped down and we waited for the perfect intraday setup.
Intermediate Time Frames
Trading earnings gappers is not the only plays we bank on. In fact, we have a toolbox of setups that help us analyze a stock’s price action and look for opportunities in a variety of different ways. One of the other ways we trade is by aligning multiple timeframes to setup a case for a stock. When a stock puts in a significant supply or resistance levels on the daily chart, we can trade around those to put probability in our favor. This is how we trade with an edge.
Trade Moving Average Pullbacks
The daily chart is extremely important because it acts as our starting point when deciding whether or not we enter a trade. We use the overall price movement to dictate the direction of our trade. If we see the intraday price action correspond to our case built from the daily, then we can execute the trade. One of our favorite plays is to align the price with technical indicators like the 20 Day Moving Average.
Mental Capital vs. Financial Capital
Trading is by no means an easy endeavor. In fact, it might be one of the difficult challenges you will ever attempt to undertake. One of the biggest barriers is trading psychology. When a certain trade doesn’t go your way, it’s important to survive for another day. Survival doesn’t rely only on the dollar amount in your wallet, but also the mental fortitude in your mind. When trading, it’s important to preserve both mental and financial capital.
How To Build Your Account
Finally, trading is meaningless unless we can learn to extract money from the market. But an often overlooked concept is that trading is a marathon, not a race. Building wealth is a step by step process, one which requires a new set of skills. Learn how to build your account little by little and one day you might be surprised to see a huge number staring back at your face.
There you have it! 7 Great lessons to get you started on the right track.
Congratulations on completing step 1 of newbie trader roadmap. Now you can move on to step two which is our free Stock market Basics eCourse. Kickstart your trading education with this FREE video course that walks you through market fundamentals and proprietary Bulls on Wall Street material.