First, please understand that our newsletter is a basic blueprint on setting up your trading day. Not only does it save you time of charting and research but it's a second set of eyes and another opinion. Also, think of yourself as the player and I'm the coach. I can provide the foundation, the gameplan, and the strategy but during real time trading you have to execute the plays. I would hope that anyone who is using this platform has at least a fair level of trading experience and always has an exit strategy. Feel free to tweak the entries and exits based on changing market conditions or anything else you feel may not have been apparent when the plan was formulated. Don't force trades or feel you HAVE to participate in every stock swing we mention. Let trades come to you, don't chase them... be picky.... and do your best to allow the newsletter to help take the emotion out of the trade. I had a discussion with one of the members earlier via email and he made some suggestions and we conversed back and forth. In my email I told him that I've noticed that I've actually become a better trader since I started the newsletter. I find myself more disciplined if I actually put my strategy in writing and follow the script if that makes sense. It takes a little of the emotion out of it. That's what I want to provide for you the subscriber, a way to remove some of the emotion from the trade.
Second, if you're a beginning trader understand that the emotion we just discussed will be your worst enemy. With time and experience you'll learn to tap into your gut and become better at blocking out the emotion. You will find over time that your best trades will be almost an inverse of your emotion. When you're feeling really good about a stock it's probably time to set that stop market sell order. When you're ecstatic, it's probably time to get the heck out. A recent trade in AEZS was that kind of trade. A lot of greed and emotion but no substance yet. This was a stock we mentioned traders may jump on after the huge run in KBIO. We were in this in the 4s (post reverse split) and had a strategy to sell this into strength before the market even opened. I'm sure once it started running the excitement overtook a lot of novice traders and it was hard to unload into that enthusiasm but that's the plan that we laid out ...without the emotion involved.... and we stuck to the plan. At one point I had to set that stop and step away from the screen for a bit and clear my head. If you've ever painted or sketched a piece of art it's the same principle. You stare at the canvas or pad for so long your perception of the picture gets distorted. It can help to walk away from it and I'm guessing it will probably look different when you get back. I've noticed sometimes when I stare at every tick of a stock I miss the bigger picture and lose my sense for the direction its headed. It consumes me on many levels. Yet, when I step away and check on it (stops in) every 10 minutes or so I can feel the strength or weakness in my gut and can make a much better judgment. Veteran traders know what I'm talking about. Technically I often look for a massive volume candle and that's usually my signal to sell at least part of my position. This is often more than not an indicator that everyone watching can't stand it any more and they have to jump in... no matter what the price. For our intraday trades we almost always enter speculative trades in one whole buy and sell in pieces. Entry targets are usually more strategic and technically oriented while exits can vary with tops much harder to pinpoint. And for beginners ...if you're ever not totally comfortable with a potential trade do a paper trade and write down your entry and where you would exit and track your progress. I've been trading over 20 years and still do this. And finally, don't over-trade. Some days are better spent sitting on the sidelines. Those forced trades are the ones that kill your P&L The great thing about the market is every day there's something new and things are constantly evolving and changing. Bad earnings, good earnings, buyouts, sell ratings, buy ratings, macro news, Fed news, economy news, ISIS, Russia, Greece, terror attacks. .... it never ends. Just think about it....one trade like AEZS or KBIO can make a whole year's profit. Let's not waste our bullets shooting squirrels when we can stalk big game (sorry to the animal lovers that's just an analogy. ..I don't hunt). What I'm saying is if we can hold our emotions and avoid 5 mediocre trades and catch one big high probability trade we will surely put in some better numbers over time. In closing, the strategy is patience and low risk entries with stops and at least 2 to 1 reward to risk ratios. I'll discuss more strategies later and get macro and stock specific in the next letter tonight or tomorrow morning.