Topstockblog

Blogging to add value. Sharing and discussing helpful websites, money, stocks, etc.

 Topstockblog play book.

1. Use the 50 DMVA (Day Moving Average)  to gain insight.   Be aware of how different Moving averages like the 200 day moving average influences a stocks.  Consolidation takes time and averages influence direction.  The 50 DMVA shows when a lot of money moves into or out of a stock.  Look for stocks ready to break out of consolidating patterns. Look for support and resistance levels.  look at over sold and over bought indicators (VIX) (MACD)  Wait for blood in the water to make trades. Do not buy over bought stocks.  Buy over sold stocks.

2.   Work with liquid and solid stocks only. Hard enough to figure out what a liquid stock will do, let alone one that is controlled by the action of a few people.  Focus on getting price improvement for all trades to slightly improve trading results.  Look at a one day time frame to likely best price of the day to get the best price.  Look at what might be the best price of the week.  Look to what could hold the stock up.  i.e Look to get in at or near the low of the day or week.  Look to trade with the likely direction of the market.

3.  Use a set unit size.  Will help ensure a long run positive return.  Overly investing will significantly increase the chance you eventually go broke.  No matter how much money you accumulate along the ride. 

4.  Look at the potential return on the trade versus the potential loss on the trade.  Look at the likely hood the trade will work, and what I expect to gain from the trade.  A trade that looks like I could earn double my money or better while have a projected likely loss of 1/3 or less is a trade with a positive expectation if it is successful 50% of the time.  

6. Focus on a set or refined list of stocks to better understand how a stock may move in the future to gain an advantage

7.  Always be careful.  Good luck and bad luck are a part of trading markets.   Trading has and will always be difficult. 

8.  Understanding myself is important to deal with mistakes that may be predictable in nature.  Looking to where I may falter. My strength lies in my hard work ethic.  My weaknesses that can side track me are aggression, emotional instability, drinking, negative attitude, lack of financial resources, and lack of patience.   

9. Be patient, and follow my rules. I found it hard to diversify and not add to losing positions.   I find it hard to keep my money in cash.  I have found taking money out on a regular basis helpful to finding balance. Keep some money in cash always, go over my rules repeatedly to stay within the rules.  Do not add more than once to a losing position.    

 10.  Work a schedule of Monday to Friday 9:00-4 and 6-8.  I found it important to set boundaries for hours to work and/or worry about the market.  

11. Use a two step buying process.  Averaging down trading approach may be useful.  A two step exit approach may also be effective. Both to lock in profits and let profits go higher

12. Do not trade options expiring the same week. 

13.  Be aware how progressive an idea may be or how it may be of little importance. 

14. Look at both sides of the trade.

15. Stay focused on the stock market.  Don’t confuse political ideals with where a stock is going or get overly focussed on what you think should happen.  Focus on what is likely to happen. 

16. Take time out when I am emotionally drained .

17. Stocks tend to move the opposite of options volume.  i.e. a lots of put buying in OIH  compared to call buying often indicates a hedge by real buyers and dumb money guessing wrong in my experience.

 18. Use indexes that move with your stock; despite fundamentals stocks will often trade directionally with an underlying index. i.e. XOM or RIG will trade with the OIH index.

20.  Be very selective about trades, takes to try to find profitable opportunities.  Call and Put writers are very intelligent and often time ideas, news is already priced into the price premium of the option.

21.  Go over actual results of trading.  Look improve future trading performance and learn from the past.

Entertainment purposes, and education.

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