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Professional trader of Options and Futures. Market analysis and trading education and coaching. Read my blog,
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Ticks 2 Candlesticks
  • Wait For The Pullback

    One valuable piece of advice is not to chase a trade. The temptation is to buy after a large up move or sell after a flush down. This usually leads to losing trades.

    My tip today is to make sure you wait for pullbacks before you enter a trade. Pick a level that you are comfortable entering the trade at and plan to enter there.

    Stocks never go up for ever, on their way up there are pullbacks that make for good entries, try using a moving average as a point of support for entry. The faster the moving average the smaller the pullback needs to be for entry. For example a stock doesn't have to pull back as far to get to the 8 EMA as it does to get to the 100 EMA.

    The smaller the pullback the more chance you have to get in the trade but also you have more of a chance of being stopped out by a deeper pullback. If you wait for a larger pullback price might never make it there, the risk is missing too many good trades.

    You need to find a balance between aggressive entries that result in more stop outs and too conservative an entry that leads to many missed trades.

    The same is true for short side trades.

    Nov 05 1:08 PM | Link | Comment!
  • Caution – Earnings!

    With earnings season upon us, there is an extra step needed when placing a trade. Consult an earnings calendar like the Yahoo Earnings Calendar:

    Traders will look at the high implied volatility of certain stocks and think that the excess premium is ripe for the taking. But with efficient markets there is usually a reason for the low hanging fruit. At this time of the year a spike in implied volatility is generally an indication of an earnings announcement.

    You may choose to trade, or not to trade the announcement, that is up to you. What every trader needs to do is know that there is an announcement coming up prior to the expiry of the option.

    When placing trades around this time of year, make sure you know when the company you are trading is releasing earnings. If the high implied volatility looks too good to be true, it probably is.

    Nov 05 1:08 PM | Link | Comment!
  • When Will You Not Trade?

    I have always believed that a solid trading plan is essential for success. As traders we always want to be in the market and actively trading. Not trading is difficult to do, but a necessary skill to master for trading success.

    Cash is a position, and is just as appropriate at times as being long or short the market.

    Along with listing when you will place a trade, try adding a section to your trading plan outlining times when you will not trade. See if this helps reduce the number of losing trades you have.

    Nov 05 11:33 AM | Link | Comment!
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