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Two philosophies with big implications

Posted on 2/27/2019

Two philosophies with big implications

Less number of trades is good
More number of trades is good

Some "believe " less number of trades is good. The approach requires very careful stock selection, wider stops, and more concentrated positions and willingness to have drawdowns or willingness to give back lots of open profits.

Some "believe"  more and frequent trades with smaller profit potential is good. The approach requires willingness to do hundreds of rades. Requires less risk per trade. Your returns are not dependent on few trades. Drawdowns are small. You can make money irrespective of market conditions as the anomaly you are exploiting is on smaller time frame.

Confusion between the two approach is common for beginner traders. 

To improve your profits develop Situational Awareness (SA) skills

Posted on 2/07/2019

What is Situational Awareness (SA)

SA or Situational Awareness is aviation term. Pilots and airlines use it all the time. The pilots are trained in SA.
SA improves safety and avoids accident. There is daily SA briefings for pilots in most good airlines.
The objective of SA is to be constantly aware of your surrounding, weather , equipment, landing conditions and so on to change your tactics when warranted.
I first heard the term when I was heading marketing function in packages delivery company (Fedex franchise in India) which used to operate cargo plane.
One day early morning one of the plane overshot a runway and got stuck in mud while landing and it so happened that live television cameras that were around for some other function at the airport caught the action live.
So early morning this was a breaking news on all news channel. I was the marketing and PR contact for the company so all kinds of journalist started calling me asking for reaction.
I called the pilot and asked him what happened he said he lost SA (situational awareness). I had never heard of SA so I asked him what the f.... is SA. So he explained it to me.

The US Air Force coined the term SA during the Vietnam war.

In the long and frustrating war lot of pilots were losing SA and doing stupid things and so they established the SA training program for all pilots.
Situational Awareness. An all-encompassing term for keeping track of what’s happening when flying.
SA involves knowing what your airplane is doing relative to its envelope, where your adversary is and what he’s up to, where the ground is, the status of enemy threats on the ground, and hundreds of other variables.
Loss of situational awareness is often cited as a contributing factor to many military-aviation mishaps.
If you have seen the movie Topgun it is basically based on the training methodology developed during Vietnam war.
United States Navy Strike Fighter Tactics Instructor program (SFTI program), more popularly known as TOPGUN was first program designed to emphasize SA for fighter pilot.
In modern plane there is lot of technology to assist pilots in SA and from time to time you will see the Airforce will award contracts for SA technology development.

What is situational awareness in stock markey

The key role of a trader is to operate successfully in a complex and ever changing market environment by making appropriate decisions and taking effective action.
This includes not only responding to opportunities in the market but also to proactively anticipate markets next move.
The Psychological or technical name for a skill like that is called Situational awareness (SA). (SA) refers to all the situation-specific information and inferences represented in a persons mind which he or she uses to make such decisions.
Or in simple words SA is knowing what is going on so you can figure out what to do . It is what you need to know not to be surprised
SA consists of whatever answers one currently has in mind to such questions as:
What is happening in the market?
Why is it happening?
What will happen next?
What does it mean in terms of my trading objectives?
What can I do about it?
Is it a good environment for breakouts
Is it time to put more size or reduce size
Is it time to proactively close position or give them more room.
Is it time to look for reversal setups

Situational Awareness

You need to develop SA before a situation arrives.
That is why day in and day out pilots are drilled on SA.
You can not ask for exit or stop rules when in emergency.
SA can only be developed by everyday consciously working on it.
You need a mental plan for all situations.
SA is one of the most critical skill you need to develop if you want to be successful in trading.
Lack of SA skills often lead to disaster in trading . It leads to late entries or buying aggressively just before major reversal or panicking near bottoms.
Setup+SA= consistent profit

Write your own ACTIONABLE Situational Awareness Daily

Make a habit of writing your own SA everyday. It should be actionable SA like say be aggressive on long side, stay out of market till reversal happen, or anticipate a turn, or tighten stop on existing position, or sell in to strength, or fade this move.
Situational Awareness is very critical for swing traders and position traders. By definition day traders have to trade everyday so it does no matter to them.
Situational Awareness will help you avoid risky periods where your setup is not likely to work.
It will help you identify periods where your setup is likely to do very well and then you can step on gas pedal.
SA will allow you to adjust your tactics like say letting trade run if your SA tells you this is start of a new bull market. Or take profit early if the trend becomes weak or likely to fade.
While some stocks will work independent of the market direction, majority are influenced by the market. Especially at turning points in market this is important.
If you want to be in this game for long term and keep your profits develop SA skills by practicing daily.
You will see that all successful traders have some sort of market timing model which helps them avoid some periods in markets.

Don't focus on what others think.

Develop a logical framework for your own SA. My framework is driven by market breadth trends, but you can develop your own framework based on market structure.
Do your own analysis and write just 4 to 5 lines everyday.
See if market is acting as per your SA. Refine and refine your process over days or months till you are very confident in the game.
In few months you will develop confidence in your own judgement and SA will become integral part of your daily market thinking.
Above all SA will help you to make and keep money.

What is your SA for today

How to find multi year Leaders and Laggards

Posted on 2/06/2019


How to find multi year leaders


Some stocks continue to go up for multi tears. They may not be the fastest growing stocks in the year but they are persistent winners.

If you can identify such stocks , they can be good candidates for buying on pullbacks and offer working people to trade them as many of them are often more stable and less volatile movers.

Multi Year leaders tend to be businesses with stable underlying growth or market position and tend to be in sectors that have stable growth.

In order to do this you can scan for stocks ranked in top 25% by price growth for 5 year , 3 year , 2 year , 1 year and half year.

In Telechart it is easy to do this :




Once you have a list of stocks you can use either Stockbee 4% breakout scan , Stockbee $ breakout scan , Stockbee Low Threshold Breakout scan , or Stockbee Anticipation scan to find opportunities.

If you run this scan today morning 2/6/2019 you will get following candidates:

ISRG TDG BA ANTM ROP DPZ WCG COO UNH ADBE BAP TMO LII FICO NOW INTU PANW MA IHI IAC BRKB IGV WDAY TECH VRTX SBAC WDFC SYK ZBRA CME RHT NEE MCD BURL MSCI VRSN AMT EW AON CRM VMW ADSK DXCM GWPH LULU ADP EPAM V SRPT IT HCA AMED MOH IQV SPLK FIVE MASI VRSK MSI STE BFAM VEEV PRI NICE LHCG WIX XLNX FIS NSP UBNT EGP MSA HRC SNPS MLNX WM RNG YUM COLM ROST GWRE PKI QLYS UAL IRBT HEI EXAS CDW WP FISV WCN NXST FTNT WWE GHDX AJG RSG AVAV ICE A BEAT NOVT HEIA ABT NAVG PGR OMCL DLB EBS SIGI FFIN FOXF HLF MRCY RGEN MMSI SKYY BPOP LYV BAH EXPO AAN CDNS SMTC CWT ALSN IDTI CSCO ERI RAMP ENSG SCI MBUU VCRA MCS AJRD TRNO BSX ROL SNBR XNCR CHGG REXR CWST MSB REGI KDP NYT VNDA LPSN CRCM AMD NMIH CDXS QNST DENN WEN FLWS VCEL NEO ANGI AMRN KTOS AUDC FATE BSBR ABR FBP TPNL SMTX CRNT ATAI

How to find multi year laggards

Same way we can create a scan to find multi year lagging stocks. These neglected stocks often go on to make big moves if they turn around.





If you are a turn around investor or value investor this scan can find you good candidates for further study.

For active traders using Stockbee 4% b/o or Stockbee $ breakout , and Stockbee Trend Intensity Ranking will help you identify stocks with momentum from this scan.

Following stocks meet these scan conditions on 2/6/2019

LCI DBD YRCW GE EGO CMP SAEX ALT SLCA CX INFN NFX BGFV GLT WPP SRCL GLRE VET EQT NWL SLB TTM PRTK OMI RLGY IVZ XES DB OIH SEMG MD PBI ASRT CIR PEI PHIIK OPI CRR SPWR ESTE DGAZ COTY RMTI TV PTEN VGR CLB HAIN NBR WETF CHS OIS VOD ACHC GASL AMID LPI HCLP XON TUP FET ONTX PRGO CRZO BAS DF AR UNFI SPN TK AKRX SUP BRS UEPS SDRL INSY MAXR