Learn the language of setups | stockbee

1/27/2011

Learn the language of setups

Setup selection is key. Setup selection allows you to condition your behavior. It allows you to develop your procedural memory. It allows you to automate your thinking.
When it comes to setup selection your time frame is very critical. A setup that is good for day trader may not be good for swing trader. A swing trading setup may be extended setup for position trader.
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This is the setup idea behind Stockbee Trend Intensity breakout. Unless a stock fits in to that setup I do not look at it.
While the setup idea for Episodic Pivots is very different . It is for position trading a specific news catalyst on a neglected stock .
The STIB setup is classic swing trading setup which has been around for hundred years. You find a stock with momentum, wait for a sideways move on it and then buy on next b/o.
Same setup a pullback trader can trade as a pullback setup to a MA or channel. Where they buy on a touch to channel or MA.
Tumbler  ( a member) trades a news based day trading setup. His setup idea is similar to the EP, but it is on day time frame. What he looks for is a stock with some news and then buys it on some intraday pattern looking for small moves.
CKbergin (a member)  has described to you a setup idea to trade good fundamental growth stock on pullback. His setup is geared towards position trading.
If you understand a setup and the conceptual logic behind it and the market structure that supports the idea then you can understand it and you can master it.
As against that many are chasing picks. They are constantly looking for someone to highlight stocks to buy or sell. They are dependent.
Your objective in trading is to setup your own trading factory. Once you setup a well designed trade factory, your setup scans will bring you stocks to buy or sell. Then you can take a decision qualitatively to decide between those ideas. The more you do the same thing you become better at it.
Profit is an outcome of such process driven approach.
As against this many are just flirting from one idea to anther, from one pick to another, constantly changing setup. So they are constantly in flux.
Then there are others who have secret setups and are looking to show you how good their system is without telling you the logic. If you want enduring edge you should avoid these traps.
Besides setup the more important things are also how much to risk on a setup. Your profit depend a lot on how you manage that. A trader might boast of a 25% profit on a position but if the size of his trade was just 2% of his account , its not going to move the needle much.
These are all issues which you need to get in to depth and understand them at microscopic level. It will take you 6 month to a year to do that.
If you do that then you will develop self efficacy beliefs and your self talk will change to "hey I can make 50% plus on my own using my setups" "hey I know how market works" "hey I know how to find stocks to buy daily on my own", "hey I know how and why my setup works" "hey I know when to push the pedal and when to play for beer money" "hey I know what is behind any ones claim of secret system" "hey I can do this on my own"
That is the end goal you need to reach. The objective of this site (members site) is to help you reach that goal as fast as possible.
If you can reach that goal then you don't need this site or any one else to tell you how to trade.

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