Spotting opportunities

1. There are so many opportunities in the markets that it is important to be able to pare them down so as not become overloaded and be put into a blank state of inaction.

Opportunities can be harvested from many different kinds of lists such as daily gainers and losers, hi volume, hitting new highs or lows. I follow maybe 30 stocks that I am familiar with but don’t have favourite stocks that I’m married to. I couldn’t care less what the company does or what news there is. All that sort of information is useless to my momo trading style. I need to be quick on my feet and able to react to the changes that happen throughout the day, not wondering why they are happening.

The trick is to get hooked up into a stock that is either in play or has natural volatility. But when the market is rocketing up or piledriving down the challenge is to process the explosion of information and act on the opportunities instead of staring dumbly at your monitors. I don’t know or care if the market is up or down 300 or 400 points. I don’t know or care if the markets are nearing some support level. What makes money is trading the plays that are moving. Pare down your plays to 2 or 3 different stocks that have shown you in the past that they can move. I like to play several stocks at the some time so I don’t have all my eggs in one basket. I’d have to be right 100% of the time to make money if I traded only one stock at the same time. That’s impossible.

You may have noticed that when the markets are moving, stocks are moving in sync with them. This is momentum in action and my signal to jump aboard and trade my plan. I know that trends continue for different time spans and so am prepared to either keep with them or look for the signals it is running out of gas. Take profits as the market makes them available. If the trend indicates a reversal then the smart strategy is to go with it instead of looking at a bunch of unrealized profit draining away from you.

Be ready at all times to trade the plays that you see dancing across your screens. Use the time of market momentum to ride the easy winners that are presented.

 

2. Have a positive attitude when you are trading. Believe that your edge is a good one and that you can follow your trading plan to take profits and keep you out of trouble.

When you trade from a negative attitude by trying to avoid losses, they actually become attracted to you instead. By this I mean that you are not trying to make money you are trying not to lose it. It’s a big difference. As an example, have you ever seen a football game where the winning team goes into a prevent defense shortly before the end of the game. And have you ever seen the former losing team gain the momentum of the few crumbs they have been given and turn the game into a nail biting finale? Talk about snatching defeat from the jaws of victory. This is because the psychology has changed a winning attitude to a losing attitude.

Whether you think you can or cannot, you are right.