Online Stock Trader Tips - Discipline And Tape Reading

By Pete Renzulli

• What does it mean to be a disciplined trader?
• Tape reading.

- What does it mean to be a disciplined trader?

In virtually every trading book or course, there is at some point talk about the need to be a disciplined trader. Of course there is the most basic and popular definition of “execute your stop losses when price gets to your number.”

I have a slightly more detailed version that I feel every active short term stock trader should know.

Trading Discipline:
• To exit a trade immediately when your stop loss is reached. To exit a trade when your profit target is reached
• To not trade when market conditions do not match your style, to trade actively when market conditions meet your criteria.
• To always manage risk appropriately for the particular stock you are trading. One share size does not fit all.
• To review your performance every day some time after the close.

I am sure everyone reading this is well schooled in taking a loss when you are supposed to. It is not however widely talked about how important it is to book a profit, when its time has come. If you are a scalper you must book profits on your entire position into momentum, there is no last second decision to scale out, get out and go to the next trade. If you are an intra day position trader and the trend is obvious, scale out and maximize the remainder of the trade. You shouldn’t be afraid of a temporary pullback and get out of your entire position because of noise.

One of the first considerations you should make before you write your trading plan is deciding what style of trader you want to be. This is important because you will then be able to fill out your plan with scenarios to enter and exit your stocks based on your style. It is very hard to make money in all market conditions. What conditions suit your style? What does the stock action need to look like for your method?

Once you have a clear answer, you should only trade actively when conditions match your method.

I have seen more position traders get chopped up in a market that is in consolidation, and scalpers lose their shirt when a trend has formed. Position traders keep trying to guess when the trend will start and scalpers, who make most of their money through sniper like attacks of the markets ebb and flow, get hammered when the market picks a direction. Discipline means waiting for the market to present the conditions that suit your plan, don’t try to force your plan on the market.

I once watched a very successful and long time trader complaining he was getting horrible fills for about a week. After listening to this for what seemed like an eternity because of the way he was carrying on, I decided to watch his trades.

He was normally a short term scalper who traded very liquid stocks. He decided he would trade faster moving stocks that were less liquid because there was a new trader in the room who was trading that style. After about 3 seconds of watching him trade it was obvious he was not trading in a disciplined manner. He was trading the same size blocks in the new stocks that he was trading in his old style.

There was no possible way he was going to get the same fills. The stock was too thin to warrant the size he was trading. It was trading 100 -400 share lots consistently in time and sales (quoting the same size as well) and he was trading 5,000 share blocks. To make a long story short, he lacked the disciple to adjust his old share size to the new stocks.

To be a discipline trader you must never just trade one size fits all for every stock. Stop loss parameters and liquidity vary from stock to stock.

Keep a trading Journal. You must have a method help yourself improve. Professional athletes have coaches, you should too. Your journal is your coach. Having the discipline to write entries every day after the close and reading your entries daily to monitor progress is the only for the average trader to improve. If you don’t keep a journal you will be depriving yourself of the most valuable class you will ever pay for, your own experience.

- Tape Reading

Tape reading is a method of forecasting the next immediate move in your stock

- A method of forecasting, from what is taking place now, to anticipate what is likely to happen in the future.
- The essence of tape reading is interpreting the action of the volume (the prints), combined with bids and offers.
- Are they “marking up” or “marking down” their inventory? (bid/offer quotes) Securities are similar to inventory in a department store. Is it flying off the shelf or is it being offered at a discount?
- How urgent are the participants? How do we see this? From the size and consistency of the prints.

One of the most common opinions our instructors hear during our Equity Trader 101 course is this:

“I don’t need to learn to read the tape, I trade off charts.” Well my trader friend, how are the charts formed? That’s right, from the trades (prints)

Let’s say your stock is trading at new highs, but all the prints are on the bid, and for size. Do you think you should look to tighten up a trailing stop on a good position or should you keep your eyes closed and wait till the stock breaks down on the chart and you give back half your profits?

One more example, let’s say you are short and your stock has a fast move against you. The stock normally trades 2,000- 4,000 share prints on the tape. During this bounce against you, I notice the only prints that went off were of the 100-300 variety. I stay in the trade and you bail out. What did I see? The circumstances did not change. The tape told me nobody stepped up to the plate and did any buying of significance.

Next time you are at your screen, give the tape a little more “eye time.” Watch for significant prints that actually move the stock, not every trade. Pay attention to where they are happening. Are the significant prints occurring at the end of a move or out of a breakout? These are all necessary observations to become a good tape reader and a better trader. Until next time, have a great week trading.

Professional traders maximize intra day leverage, if you are not trading with 10-1 leverage; send us an e mail to learn how. info@keystonetradinggroup.com in the subject line put “extra leverage”

The founders and instructors of Keystone Trading Group have managed a profitable short term trading desk for the last seven years. Our specialty is short term intra day-five day stock trades.

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A Personal Loan Can Be a Good Choice

By Kathryn Lang

A personal loan is often one of the most expensive loan options available. Most personal loans are not secured with any type of property (car, home, land, etc); instead it is just the guarantee of the individual that secures the loan. This is a high risk for the lender because the borrower has nothing tangible to keep them from defaulting on the loan. The cost comes in the higher interest rate.

At one time all loans were a type of personal loan. It was the word of the borrower that secured the loan. If a person defaulted – for any reason – he was imprisoned in debtor’s jail until the debt was paid in full. It is only in modern history that this practice has been abolished. For many of today’s borrowers, there is not even shame in being unable to pay a debt.

Because of the trend that the lending industry has seen towards bankruptcy, many companies no longer do any unsecured loans – even personal loans have to have some collateral. It the borrowers do not get back on track with repayment, it is likely that the types of personal loans given will continue to decrease. The requirements and guidelines will continue to tighten as well.

A personal loan can have its place in a financial portfolio. If it is secured by existing money (a CD or savings account) then the interest rate will often be lower than many credit cards (the interest drawn on the CD or savings account will also help to offset the costs of the loan). This could be the best option for consolidating those types of loans into one payment. A personal loan can also be great for doing small renovation jobs or home improvement projects.

It’s always a good idea to shop around when searching for any loan. Finding a personal loan that has the flexibility and payment parameters you need means the search is even more valuable.

Kathryn Lang is a freelance writer covering the loans industry. She has written various articles on Personal Loan issues and regularly writes on all forms of Loans news.

Article Source: http://EzineArticles.com/?expert=Kathryn_Lang

Why Oil Stocks May be Good for Your Portfolio

By Mayoor Patel

Stock markets love a consensus, but the oil market is one where consensus is very hard to achieve. There is much battle going about oil stocks. Some expect them to keep rising. Some expect them to peak soon. Others expect them to go down in the not-so near future, but down nevertheless. So, who to listen to?

Regarding oil stocks, a fundamental that has to be understood about the oil market is that is it driven by the market laws of demand and supply. Demand for oil is on the increase slope. Economic recovery by major world players means that there is more demand for oil. Other emerging big players, like China, are in more and more need of oil, thus raising demand. Countries like China, India and South Korea are also into building their own oil reserves in prediction for increased need in their own economy. This in turn, leads to an increase in demand. However, while supply of oil is still satisfactory, it is however to be noted that there is a tightening of supply on the market. Added to this is the fact that experts are remarking that oil supplies are dwindling. Combined with the other pertinent fact that there is an absence of supply growth, it all leads to imply that supply may not be able to meet the requirements of demand in the future.

Since the price mechanism is determined by these market laws, what happens when demand exceeds supply? Prices go up. Needless to say, increasing prices mean increase in value of oil stocks. This is why it is a good idea to hold on to those stocks.

A number of stock investment and stock broking companies provide advice and handling of stocks portfolios. These qualified companies thus look into the screening, research, and analysis needed to ensure the best oil investment for one’s portfolio and needs. However, in recent times, and especially due to the Internet, the layman can also attempt to invest on his own in oil stocks. Use of tools such as specialized web sites and business search trackers on the Web allow for screening and analysis of major market players. However, there is not much of a security net when one uses one’s own counsel for investment. Careful analysis and diligence is thus the key for these transactions.

Mayoor Patel is the writer for the website http://www.oil.oil-universe.com. Please visit for information on all things concerned with Oil Stocks

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