You have two choices for locating good trades: find them yourself or have someone else do it for you. Chat room picks and web site scans offer great opportunities when they match individual trading styles, but pose serious dangers when they don't. Always perform your own personal analysis and never rely solely on someone else's opinion for any stock pick. It's very lazy and will do great harm to your trading account. Besides, this course teaches you how to build original strategies to locate and trade profitable opportunities. That web site operator or stock board guru doesn't have a clue how you manage your trades. And what works for him (or her) will likely not work for you.
The US markets give you over 10,000 trading choices each day. Unfortunately, most of them need to be avoided if you're trying to get in and out quickly. Traders need liquid stocks. This limits you to about 2,000 issues. At any given time, 90% of these aren't going anywhere fast enough or predictably enough to warrant your attention. So your challenge is to uncover the 10% (200 or so stocks) that show profit potential, with the understanding that yesterday's 10% probably won't be tomorrows.
Build an automatic filtering process to review each stock pick for the right characteristics. Identify promising patterns, measure reward:risk, and locate appropriate execution levels. Your pre-market preparation must uncover setups that support all three considerations. Realize that a single major flaw that doesn't fit into your trading plan will negate the opportunity.
Watch out for the tendency to see something that isn't there. Detailed review often uncovers the basic elements of a successful setup but offers no attractive entry. Unfortunately the analysis itself induces a form of secondary reinforcement. It relaxes you, puts the brain into game theory mode and soothes the ego that sees all those past trades that could have been entered with perfect hindsight. This unconscious enjoyment encourages the mind to fill in the missing pieces on questionable new setups. Successful traders always exercise rigid self-discipline when asking the eyes to see opportunity.
Know when a setup has no potential and be willing to move on to the next chart. The most important job you have in preparing for the next trading day is to throw out almost everything that looked great the first time you saw it. Nightly preparation must uncover stocks that show so much promise that you just can't wait for the next session to begin. But before you finally pull the trigger, take a second look at every setup that rang the dinner bell just the night before. Good prospects should not lose their luster in the morning glare.
The best trading opportunities will turn out to be the easiest ones to find. When your charts look like mud and your vision starts to fail, remember this golden rule: if you have to look, it isn't there. Forget your college degree and trust your instincts.
