Dip buying and clock watching

I find when you see something like this, probability says it's a better trade to the upside. Watch the clock to time your entry.

AEM shows big drop and good entry right before  a new 5 minute candle appears...

AEM ends up as nice trade

Clock watching

Different periods of the day provide different levels of market activity. My trading day starts one hour after the open at 7:30 am or so. Since I'm on the west coast I'd rather get an extra hour of sleep than trade the open. I never feel I'm missing out on opportunities as there are so many during the rest of the day I can't advantage of all of them anyway. Although once or twice last fall when the markets were pile driving lower I got up earlier an was rewarded for it.

From 7:30 to about 9 am is what I call the first half of the day. Trends are established or countertrends are formed. 

From 9 -11 am is usually but not always "The Dead ZOne". Slowly trending stocks keep going, volume is lighter, sometimes quick volatility.

At 11 am the second half starts sometimes with very powerful moves. Being prepared for this is important. The moves can be a quick fake out then back to the original trend that continues  to the close. Whatever happens it's important to be fully focused at this time of day.

15 minutes or so before the close I start to reduce positions so I don't get stuck with any over night holds.

Check out todays action at 11 am...

First chart shows SRS in downtrend all day with slowing then reversal providing a long entry, then a pop right before 11 am. Second chart shows pop was shorted and it's heading down again.

The Disciplined Trader

I believe that life is a journey that you should never stop trying to learn new things and make yourself a better person in all areas. In this game, what you think you know now is not so much when compared to how you'll feel about it in the future.
With that in mind I stumbled onto a site a while ago http://thedisciplinedtrader.com
run by Norman Hallett. I'm always on the lookout for information on the mental side of trading and so signed up for his 6 week course.
I was not disappointed by the content or volume of great material that I received. Normans teachings get to the very heart of the psychology required to become a consistently profitable trader. He tackles the common problems that most new and some experienced traders will face. The solutions offered and the techniques used to help you overcome drive right to the very heart of issues. The issues I write briefly about here are some of the same that Norman goes very indepth on. I wholeheartedly endorse his course if you feel lost, if you want to up your game or if your desire is to just keep learning.
His is the first trading link I have on my site and it is well worth signing up for.

Focus to win.

One of the reoccurring themes of my blog is that you need to focus on what the market is doing and make the correct decisions based on this information. I like to simplify things down to their lowest form so I fervently believe that it is my ability to concentrate my attention on what I see whether it be the nuances or obvious signals and then act on it. However it occurs to me that a thing as simple as this concept, can be difficult or impossible to learn if you don't know how to train yourself.

In previous posts I've touched on how top level athletes or musicians practice their respective crafts until their skills are ingrained into their muscles. They don't know how to make a bad play. We traders can strive to attain the same level. Ours is not a physical game but a mental one. So the events we have to train for come our way in the form of patterns and price information. After you spend enough time watching the markets and seeing how they move and you can think in probabilities so that the probabilities are proven correct more often than not, then you will find the missing piece to becoming a successful trader lies in mental focus. 

Having a positive mental attitude should be foremost in your mind. You need to believe 100% in your skills and your system. These two things work together to let you achieve your goals.

Training yourself to concentrate is at the root of all of this.  Concentration is the ability to have control of your thoughts and think on a subject until you decide not to. Being able to filter out unwanted and useless thoughts is a hallmark of a strong mind. In a previous post I suggested to close your eyes and visualize an apple, it's colour, texture, shape and every detail that makes it unique. Can you do this for 5 seconds, 30 seconds or 1 minute before any other type of thought enters into your mind? Concentration and focus let you exclude all non important information to attaining your goals. 

Let's take this a step further and follow a program for training the mind to concentrate.

First off it's going to take the desire to want to put the work in and develop your hidden strengths. If your goal is to be a consistently successful trader then you must want to put in the hard work and effort required. Some work must be done every day so that you can advance closer to your goal. 

 Write down your goal twenty times a day. Then say it out loud to yourself. This turns a thought into a real and tangible thing. Work every day trains the mind and builds the necessary mental pathways.

So start your visualization with a simple object that is in your trading space. Computer speakers, scissors, a pen or a calculator for instance. I’ll use the scissors in front of me as an example. I can see the following, they have two holes and a curved, tapered, finger rest, grey plastic handle, steel blades 4 “ in length with a bevel edge, a rivet makes the pivot point, a reflection from the window lights up the upper plastic surface particularly in the finger holes, there is a horizontal line where the moulds joined when it was manufactured. Now if I close my eyes for 10 seconds and think about this image, I let no unrelated thoughts enter my mind. Concentrate and draw every detail in my mind. Open my eyes and compare my mental image with the actual object. Critique myself honestly. Was I right in remembering all the details? More importantly, did any non scissor related thoughts enter into my mind?

Now you choose an object try it.  

The goal of this exercise is to begin to train your concentration skills. Focus your mental powers on one item at a time. Block out unwanted thoughts and distractions.

Do an exercise like this for 30 minutes a day. Pick different but simple objects. Leave your eyes open and stare at your keys for 1 minute. Can you do this without any other thoughts but the keys for that length of time? If not, do the exercise again and again until you can.

This is just like practicing your golf swing except it’s your brain that’s being trained.

If you’re not used to it, you’ll experience fatigue of a different sort because it’s new to you.

This experience can be directly applied to your trading and your results will improve.

Once you can immerse yourself into the market flow, you can get much more in tuned to the market machinations. You can feel the buy and sell pressure. The momentum. Confidence will increase. Good results beget better ones. You can finally take advantage of the infinite possibilities the market offers up every day. Your system can be put into play and followed without deviation. The power of your will to take the necessary steps in order to meet your expectations is waiting to be used if your desire to succeed is strong. Be your own harshest critic. Did I focus? If not,why not? What steps can I do so that I can.

I listen to chill out music http://www.oemradio.org/ through headphones when I trade. I’ve come to think that this helps me a great deal to concentrate. I believe that the constant rhythms distract some part of my brain and give it data to process without an end. This I think frees up my attention to focus on the visual data I’m getting from the stock charts. Recently when the music feed was dead for 2 days I didn’t have my normal trading days. If you don’t like the music they play, then find something else without commercials or singing as they will distract you.

In the coming days I will post further information on keeping your focus 

Simple is better

When there is no expectations there can be no disappointments. The following 2 posts demonstrate why keeping it simple is a great way to trade. When you don't set profit targets or worry about risk -reward your focus instead is on what you see happening before you. No psychological noise is forcing it's way in and messing up your concentration.

Of course it is a requirement to set your risk before you enter the trade since that is the point at which your decision will be proven wrong, this is something that you can control, but forget about pulling a target number of a hat. Instead use the signals the markets give you that say" I'm finished trending for the moment here, take the profits".

Maintaining your focus is the key to successful trading. Traders need to work hard at this and sometimes it won't be easy. But I know that the less psychological burdens you place on yourself the easier your tasks become.

Classic patterns continued

Check post below first.

When you see some classic signals that say the momentum is finished for the moment , take the profits and trade them the other direction. Keep your eyes open for the trends to continue or reverse.

S&P and QQQQ stalled / stopped.

FAS

SKF

SRS

Classic chart patterns

Markets are moving at the moment and many stocks are exhibiting some clssic chart patterns. Does that mean that normalcy has returned? I can't tell you that but take a look at this high probability setups when they break past the previous daily high/low.

SKF

SRS

JPM

FAZ