Take Profits When You Can

So just took my profits on Tesla today because of several reasons:

• The 20 period moving average crossed the 50 period moving average
• It’s the beginning of May and people usually “sell in May and go away”
• The stock is starting to get overbought on the slow stochastics

I’m going to wait for the pullback and get back in because I know this stock is going to go higher.  As I said before when you invest in Tesla you are investing in more than just a company you are investing in Elon Musk’s vision.  He is a tenacious owner and he has a way of surviving situations that is commendable.  As they say the best indicator of future behavior is past behavior and his ability to build his businesses and grow them amidst a chorus of naysayers bodes well for the future of Tesla.

Great simplified approach to trading

I know I mentioned this guy's trading technique before but I want to post another one of his more recent videos that describe in more detail his trading style.  He has also developed a software service that gives his daily setups.

Market update 11-12-12

Now that the market is selling off like crazy and even met the 200 period moving average I will say again what I said before… now is not the time to "play" the market.  There is entirely too much volatility and no one knows what the market will do on any given day.  The best bet is to buy up secure (and I mean secure) dividend stocks whose price fluctuations are not too large, and collect your monthly and quarterly payments.

Dividend stocks under $10 to watch:

AINV

BLC

DCT

HIMX

CIM

Market Update #2 7-18-12

I got in and out of my McDonald’s trade early this morning.  It went up from 0.39 to 0.45 and I was able to take profits.  In markets like this it’s best to scalp the upswing.  The playbook: buy on the dips and sell on the tips.  Just make sure you watch your moving averages, support and resistance lines.  That’s how I know when to get in and get out.  Once the price goes down to a main support level, I look to buy on upward strength.  When the price reaches a main resistance level, I sell on weakness.  That’s pretty much the plan. 

In fact as we speak, Walmart just came off a support level.  I may get in if it breaks through the $73 resistance again.  It broke through this morning and I saw it go up.  But as we know what goes up, must come down.  I don’t trust it right now yet because it only broke through that resistance level once and it tumbled back down underneath it.  The strength hasn’t been confirmed yet.

Stay Focused

Here are some key things to focus on for all equity trades (stocks, options, forex):

• pick one or two stocks (whose industry that your familiar with) to follow at first so you can see how they move and react to market conditions.
• mark the trend... is it going up, down or sideways (not changing price) - the trend is your friend
• mark the areas of support and resistance (where does the price consistently stop rising or stop falling)
• use technical indicators to time your trade (stochastics, RSI, MACD, Moving Averages, Bollinger Bands, Candlestick setups)
• set your entry and exit points (limit and stop loss) and monitor daily to make adjustments if necessary
• take profits even if it seems it may go higher - a trade completed is better than a trade defeated or a bird in the hand, etc....
• take emotion out of the game, the market will play you like a fiddle if you don't have a plan
• stick to the plan unless all hell breaks loose... otherwise if the setup was there and you took it, don't get out just because of one bad candlestick...let the trade develop... you have your stop loss there for a reason, it will take you out of the trade if necessary

And in the words of Kenny Rogers:

know when to hold em, know when to fold em, know when to walk away and know when to run....

How to Manage Daily Trading Anxiety

So you are into you’re trade and you are watching it go up and down during the day.  The best thing to do is set your chart to the 5 minute chart and look at it periodically while you go about your day.  If you watch the minute chart you will get freaked out every time you see a bearish candlestick.  You can also check the 15 minute, 30 minute and 60 minute charts to see where your moving averages are lining up and do you see another technical set up forming.  

Also, do not panic if you see the candlestick going below a line of support or a moving average.  If the trend is strong and your indicators are right the price will go back above those support lines and push higher.  However, don’t wait around too long if the set up wasn’t that strong to begin with.  If the market has been pulling price down consistently that may be your cue to take profits or exit the trade to prevent losses.