Self derived knowledge builds a long term foundation to profitable trading.
Your own understanding of markets and nature and magnitude of moves helps you build trading strategies and fine tune or change them when markets change.
Much like any other field to become good at trading you have to study historical moves and apply lessons from that to current conditions.
Studying immediate past winners tells you what is working in the current market conditions and what kind of setups to look for to find those kind of winners.
This kind of study should be regular habit. It should be daily or weekly habit. That will ensure your understanding of markets and moves is current.
Knowing what worked ten years ago may or may not be useful, but knowing what is working in last one week, month, quarter or year is more helpful as it reflects current market situation.
Markets and nature of moves change as rules and regulations, technology, nature and motivation of large players change.
Historical precedent analysis is a common theme you will see in most successful traders journey to profitability.
Prioritising this kind of study is important. Lot of time we get caught in day to day trading and do not spend sufficient time on developmental work that will generate new setup ideas and help us to be in tune with the market.
Prioritising this kind of study is important. Lot of time we get caught in day to day trading and do not spend sufficient time on developmental work that will generate new setup ideas and help us to be in tune with the market.
I prioritise this kind of an effort at start of the day. First thing in the morning I obsessively study stocks that make 8% moves and 5 dollar plus moves in 5 days and study stocks up 80% plus from 52 week low, I study top 25 to 50 stocks up most YTD. This is a daily habit. I spend around 30 minutes on this.
Doing this regularly alerts you to subtle changes in setups or market environment. doing it daily also helps you see new setup variations.
Doing this regularly alerts you to subtle changes in setups or market environment. doing it daily also helps you see new setup variations.
I focus my efforts on studying the timeframe and magnitude move that fits my trading goal. Those are the kind of stocks I want to be in next week or next quarter.By studying them daily, I remind myself of what works and what to look for in swing moves or longer term moves.
When you do it over and over again you start finding small nuances to look for in successful breakouts or anticipation setups. The process also help to embed in your brain these setup patterns. Sometime while going through them you start questioning some of your own guidelines for selecting trades or you start questioning commonly touted market rules.
One of the best reason for doing this is it is based on actual past winners in immediate time frame. It gives you lot of information on what is working currently. Unlike that you see lot of commonly touted patterns are based on this that may have stopped working.
Most days it takes only 15 to 30 minutes to do this. Some days while going through them you find something and then it can trigger a deeper study. Then it can become a project to develop new trading setups.
In order to master a setup or an idea you need to be at it day in and day out. If you do it for few months , you see things others may not see , or gain insight others may not have. If you do this for six month on your own you will gain more insight in to markets and more importantly find very profitable setup and you will own it up as it is based on your own unique understanding of it.
Study these 8% moves closely to see how the move happens.
What was the setup before the start of the move
What was the 5 day action before start of this move
Was the stock up or down before start of the move
Was it near 52 week high or low
what kind of Trend Intensity it had
what triggered the move
what kind of breakout
How much was it up on first day of breakout
what kind of volume on breakout and pre breakout and post breakout
how did the move progress
what was the magnitude of move in first 3 days
and so on...
A daily effort like this cumulatively builds your understanding of the setup you trade.
In order to do this I run 2 scan for bullish and bearish.
One of the best reason for doing this is it is based on actual past winners in immediate time frame. It gives you lot of information on what is working currently. Unlike that you see lot of commonly touted patterns are based on this that may have stopped working.
Most days it takes only 15 to 30 minutes to do this. Some days while going through them you find something and then it can trigger a deeper study. Then it can become a project to develop new trading setups.
In order to master a setup or an idea you need to be at it day in and day out. If you do it for few months , you see things others may not see , or gain insight others may not have. If you do this for six month on your own you will gain more insight in to markets and more importantly find very profitable setup and you will own it up as it is based on your own unique understanding of it.
Study these 8% moves closely to see how the move happens.
What was the setup before the start of the move
What was the 5 day action before start of this move
Was the stock up or down before start of the move
Was it near 52 week high or low
what kind of Trend Intensity it had
what triggered the move
what kind of breakout
How much was it up on first day of breakout
what kind of volume on breakout and pre breakout and post breakout
how did the move progress
what was the magnitude of move in first 3 days
and so on...
A daily effort like this cumulatively builds your understanding of the setup you trade.
In order to do this I run 2 scan for bullish and bearish.
Bullish 8% plus or 5 dollar plus in 5 days
c/c5>=1.08 or c-c5>5 and minv3.1>100000 and c>=5
Stocks up 80% plus from low
c/minl252>=1.8 and minv3.1>=100000
Bearish 8% plus or 5 dollars plus in 5 days
c/c5<.92 or c5-c>5 and minv3.1>100000 and c>=5
Stocks down 50% plus from high
c<=.5*maxh252 and minv3.1>=100000
After running the scan everyday I study these moves. The first thing in the morning I review these candidates. Write down my observations, capture images of some of them, put notes on those setups and so on.
A daily study of past winners can substantially improve your trading. If you study these moves for 3 months you will discard lot of beliefs and often repeated phrases.
Above all it will help you focus your energy and help you make money....
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