The Shift from Technical Analysis to Mental Analysis

The stock market attracts a lot of people because they think they may be the lucky ones to pick the right stock or stocks and hit it rich quick. In some cases, that has happened and probably will happen again. If you purchase an individual stock and hold it long enough, chances are you will make money over time.

The question is trying to determine which stock to buy, the right time to purchase the stock, and the optimum time to sell the stock. If the stock you purchased has increased in price by 10% will it continue to increase? Should you sell now and take the profit? If you sell the stock now, what are the tax implications? In some cases, people establish a daily stock market routine that may help them achieve greater success in trading.

Generally, there are three separate time periods each day that need attention and analysis, the first is the pre-market timeframe. For your pre-market routine, consider that the stock market opens for trading each day (except weekends and holidays) at 9:30 AM Eastern Standard Time, pre-market trading normally occurs from 8:00 AM – 9:30 AM. During this timeframe, you can place trades or orders, you can review new company announcements, watch for earnings updates, check the futures market, review major analysis ratings of specific stocks, monitor price changes, etc. This will help you locate potential buying opportunities and develop your plan of attack for the day.

The next routine you should consider incorporating into your stock trading system is the intraday routine. The intraday routine is important because the market is open; you are able to evaluate activity, the volume of trading, pricing trends for the day, and to use that information to predict where the stock is headed for the rest of the day as you move toward the market closing. The decisions you make based on your intraday analysis are critical, they can make or break your success for the day.

The final routine you should add to your personal trading system is the after-market routine. At this point in time the market has ceased trading for the day and you can review and evaluate the performance. How did your strategies work out? From a financial standpoint, are you ahead compared to where you were this morning? Take this opportunity to record trades, tax information, and other pertinent information you may need later. You can also take this opportunity to catch up on after market quotes and message boards to stay ahead of the trend. Whether you are a day trader or in the market for the longer haul, if you establish pre-market, intraday, and after-market routines they will likely help you meet your goals faster than just random, unfocused trading.

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Effective Trade Plans delivered daily from AccendoTraders.com. Here is our video technical analysis trade plan for Sunday, August 24th.

Oh Where, oh where did our Volume Go.  Oh where or where could it be.  Yes, the volume for the month of August has dropped off considerably since the beginning of the month.  Gone with the volume is the conviction of the market.  There is no trend.  We have consolidated for the last week or so.  So, what will be the catalyst to move the market one way or the other?

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DOS:

1) Be patient–don’t just dive into a trade
2) Develop a proven strategy–don’t just trade blindly
3) Trade what you know and understand–if you cannot explain it, why trade it?
4) Check the daily news on your stock before you trade–stay informed on upgrades/downgrades/earnings etc…
5) Do a quick risk/reward analysis before you place the trade–put yourself in a good position to make money
6) Watch a stock’s trading behavior for a while–learn its “personality”
7) Cut your losses short and let your winners run–basic, but effective
Get into a pairs trade if your initial trade is not working–reduce your risk
9) Trade with the markets that day–shift your deltas according to market conditions
10) Anticipatre the unanticipated–always have some offsetting position just in case events reverse
11) Live to fight another day–no cash means no trading
12) If you have a hot hand then work it, if you don’t then consider folding–recognize your rhythm
13) Know yourself–trade within your comfort zone
14) Stay focused–rid yourself of distractions
15) Trade with simplicity–don’t overthink things
16) Stay positive–negative energy can impact your trading behavior and results
17) Learn from your mistakes–mistakes are inevitable so use them to your advantage
18) Drop your ego at the door–it’s ok to take a loss, it’s part of the game
19) Take a deep breath–it’s going to be ok
20) Read as much material as you can on day-trading strategies–knowledge is power

list provided by Think or Swim

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Effective Trade Plans delivered daily from AccendoTraders.com. Here is our video technical analysis trade plan for Sunday, August 3rd.

The market has put in the first higher low in a long while.  We are once again in the short term caustiously bullish; however, remember we still have strong resistance of the 50 XMA above.  This would setup a potential double top if we fail to breakthrough.  On Tuesday, we have the FOMC Policy Statement.  Perhaps this will be the catalyst to push us through resistance or send us back to the March lows.

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Just as your pre-market routine is critical to your trading success, your after-market routine plays an equally important role.  Although after hours trading isn’t as common (due to lack of liquidity), the most important thing you will do is evaluate the days performance.  This will allow you to record all of your trades for performance evaluation (and tax records) and identify positions that might need further review.

Your after market routine will not only consist of determining your successes of the day, but your early preparations for the following days trades.  You’ll want to pay attention to any after hours announcements (especially earnings) to determine if they will impact your trading strategies for the following trading day, you will want to take time to review your newsletters (free and fee based subscriptions) and see if there are securities you should be considering adding to or dropping from your portfolio.

After reviewing all of the information that you need, you will want to review your trade plan and see if any adjustments need to be made or if your current strategies are still valid.  Recalculate your portfolio and see if any of your positions have gone outside of your trading plan boundaries, prepare your buys/sell, and tactics that are outlined in your trade plan.

If you are satisfied with your positions, there is no need to modify your trade plan, however if you feel that different sectors need to be explored this is a good time to decide what moves will improve your overall trading position.

Keep in mind that a solid foundation that you develop for both pre and after market routines will help you reach your trading objectives whether you are a seasoned day trader or brand new to trading.

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Effective Trade Plans delivered daily from AccendoTraders.com. Here is our video technical analysis trade plan for Sunday, July 27th.

The market failed to continue its upswing.  Many would say that the market just moved too fast and too far; however, those who watched our videos know that it was simply a case of the major indexes (S&P500, NASDAQ, and DOW JONES) coming into resistance of the 50 XMA.  The market has since fallen back to approximately 50% of the short term high and the bottom of the multi month consolidation pattern.  If the market continues lower, those who bought long last week will feel the pressure to sell.

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Developing Your Pre-Market Routine

Once you have developed a trading plan that you are comfortable with, you will need to move onto developing your trading routines.  This is done in segments, first beginning with how you’ll start your day (pre-market) and how you’ll end your day (after-market).  Both routines will help you gain an edge in your investment and trading goals, and developing these routines early on will allow you to be constantly in control of your portfolio.

Your routine should help you accomplish the following tasks:

• Getting yourself up to date on the market;
• Assessing your portfolio;
• Getting ideas as to what stocks might be ‘hot’ that day;
• Knowing if your positions have any new news that could cause volatility;
• Being ready to trade when the market opens at 9:30 AM EST.

Initially you’ll want to start your pre-market routine by reviewing your portfolio positions and determining if there are positions you wish to change.  There are many tools available to you to assess the strengths (or weaknesses) of your positions.  You’ll want to do a ‘sector search’ to see if there is news that has broken in the overnight hours that may affect your positions, you’ll want to search for a current quote on the securities and you’ll perhaps want to check the Edgar database to see if there were any late filings which may affect the price of your positions.  Once you’ve done your research you can determine if you will need to adjust any stop loss orders you may have placed.

Now you will want to review the overall market news.  This can be done online or through television (stations such as CNBC) and determine what the overall market sentiment for the day is, find out how overseas markets finished, what currency rates are and other information that might be pertinent to the overall market; check for growing sectors, sectors that may be of particular interest or those that have lost some interest and finally check all of your current holdings for news, earnings, etc.

Now it’s time to develop your trades for the day (if you’re doing day trading) and you can do this by searching for possible opportunities that might include buyouts, takeovers, mergers or other types of events that can affect a particular position.  There are many avenues that you can use for this including websites who track SEC filings or even by reviewing SECFilings.com which sent out notifications as soon as a new filing occurs.  The other analysis you will want to review using a reputable financial website is which sectors might be performing well and might be prudent for trading.

You’ll want to check pre-market quotes since pre-market trading takes place from 8:00 am to 9:30 am (EST) to get an idea of what stocks might be moving on early trading.  NASDAQ Pre Market Indicator is typically a good source for this information.

Your pre-market routine will be critical to your success as a trader. Pre-Market routines help you locate trading opportunities and plan your day so that you are not spending market hours devising new plans but rather using your resources and following through with proper planning.

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Effective Trade Plans delivered daily from AccendoTraders.com.  Here is our video technical analysis trade plan for Sunday, July 20th.

The market continued to be exhausting for its participants.  We started off with the uncertainity brought on by the failure of IndyMac Bank.  There was plenty of government testimony in support of the debt of Freddic Mac and Fannie Mae by Secretary Paulson and Fed. Chairman Bernanke.  However, the market technicals of oversold were lessoned by the earnings report by Wells Fargo.  Wells Fargo beat their earnings expectations, but more importantly, they rose their dividend.

The rise of the financial sector continued the next day when JP Morgan followed up with a better than expected earnings report.  Although Microsoft and Google missed their earnings on Friday weighing heavily on the NASDAQ, the broader market of the S&P 500 remained solid off of the earnings report of Citigroup.  Click on the video below to see more of our technical analysis video trade plan for this week.

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Effective Trade Plans delivered daily from AccendoTraders.com.  Here is our video technical analysis trade plan for Sunday, July 13th.

The market had a roller coaster type of week.  The news surronding Freddie Mac and Fannie Mae weighed down the beaten Financial sector.  Oil once again made the market go round and round reaching lows of 135 to new highs of 147.  We had the rebirth of Merger Monday with the announcement of the Dow Chemical Deal and the confirmation that the InBev Anheuser Busch Deal looks to be completing.  Finally, we had the kick of to the new earnings season with the reports from Alcoa and General Electric which were in line.

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Effective Trade Plans delivered daily from AccendoTraders.com.  Here is our video technical analysis trade plan for Sunday, June 29th.

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