Taz Trader Blog
Swing Trading Tips and Strategies
This is my personal swing trading blog featuring the Traders Action Zone strategy. Here you will find swing trading tips, stock market news, trading ideas, and general technical analysis information.
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Written on 08-03-2010 5:29 pm by Craig
How to Find Explosive Stocks for Swing Trading
My best trades are always those stocks that are at the beginning of trend. They are stocks that have recently exploded our of a base, double bottom, trend line break, etc.Many times these stocks will just continue moving up. But, every now and then they will pull back giving me a nice opportunity at my favorite chart set up - the first pull back trade.
But how do you find these explosive stocks?
The best way to find these stocks is to scan for a wide range candle that closes near the top of the intra day range.
But, it depends on where this wide range candle is located on the chart to determine its significance. You have to be able to tell the difference between a wide range candle that ignites a new trend and one that ends a trend (exhaustion move).
Here is an example of s stock that starts a new trend:
This stock has exploded through the upper trend line. It has completely erased the previous down trend and has just begun a new up trend. So, this is a stock that I would add to my watch list and wait to see if it sets up a first pull back scenario.
Here is an example of a stock that is showing signs of an exhaustion move:
This stock has a nice wide range candle (compared to previous candles) but it has happened after an already extended move to the upside. So, I would not trade this stock.
Now, let's look at how this would work in the real world. Take a look at the following chart:
The black arrows are wide range candles that have started a new trend. See how they have exploded up through the down trend? So, these are stocks that you would add to your watch list. Then you would just look to buy the first pull back (green, circled).
At the top of the chart you will see a good example of an exhaustion move. This is a nice wide range candle but it has formed after an already extended move to the upside - not a good time to trade this stock!
So, to find these explosive stocks, all you have to do is create a scan that looks for wide range candles that close near the top of the intra day range. Then, you will have to sift through the scan results to find those stocks that are igniting a new trend.
It takes some time to find these stocks but it is time well spent!
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Written on 01-02-2010 7:56 am by Craig
A Friendly Reminder: Don't Fight the Market
The stock market has taken a beating lately. Don't try to fight the market with trading on the long side. You'll lose. Perfectly good trading setups can and will fail. This is the beginning of the year so you don't want to spend the rest of the year trying to recover from dumb mistakes now!
The market is very oversold, so you may want to play a long side bounce this week if you can find very low risk setups and you are nimble enough to get out if the market continues to tank. Otherwise, just wait for a bounce to play the short side.
There is plenty of work to be done if you are not actually trading. You can be running scans to look for topping patterns (double tops, triple tops, head and shoulders tops, etc.) so that you will be ready to trade on the short side if the market does indeed bounce.
One last note:
It is possible that the market will fully recover from this recent drop (the weekly charts of the major indices still look fine). So, if you do not trade on the short side, you can just stay in cash and wait to see if that actually does happen.
Good Trading
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Written on 19-01-2010 9:06 am by Craig
How the Serenity Prayer Can Help You Become a Better Trader
My mother is a recovering alcoholic.
She's been sober now for 20+ years. Not only did she beat that awful addiction to alcohol, but she made it her profession. She went on to become an alcoholism and drug counselor.
Over the years, she's helped hundreds (maybe thousands) of people overcome their addiction to alcohol and drugs. She is retired now but still holds a group once a week to help others with their addictions.
There is no telling how many people owe their life to my mother. She is an amazing woman, indeed!
Growing up, my brother and I got to know the Serenity Prayer quite well. This is the prayer adopted by Alcoholics Anonymous and other 12-step programs...
God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.
That one little sentence was scattered all over our house.
It was on printed on paintings, pictures, coffee mugs, t-shirts...everywhere! Not only was it printed on just about everything in our house, but every time there was a problem in our family, my mother would chant those words, "God grant me the serenity...".
My brother and I became really annoyed by this prayer. Every time my mother got a new picture with the Serenity Prayer on it or say those words aloud we would roll our eyes!
I'm older now. I'm married and have a house of my own. You would think that I wouldn't have anything in my house with the Serenity Prayer on it. You would be wrong. Right above my desk is a Thomas Kinkade painting called, The Garden of Prayer. And, it has the Serenity Prayer on it!
I didn't understand the significance of this prayer when I was younger. But I do now. It's amazing how this prayer can help you with all kinds of problems - including trading stocks.
God grant me the serenity to accept the things I cannot change,
There are things that you cannot change as a trader.
1. You can't avoid losses.
Everyone has losing trades. That's just part of the game. Learn to accept that or quit trading. Simple as that.
2. You can't predict what the market will do.
Forget trying to predict what the market will do in the future. There are too many factors that can influence the direction of the market. Prediction is not necessary, anyway.
the courage to change the things I can,
You can't change the fact that you will have losing trades, but you can avoid having big losses. Being able to take a small loss versus letting a trade turn into a big loss is the hallmark of a seasoned trader.
You can't change the fact that the market will be unpredictable, but you can follow the direction of the market. Yes, at some point you will be wrong and the market will tank - and you may have a losing trade (see number one above).
and the wisdom to know the difference.
Having the wisdom to know the difference between what you can change about your trading (and what you cannot) will go a long way towards eliminating the stress and anxiety that seems to get in the way of making sound trading decisions.
Then you can trade with the calm serenity of a professional trader.
All you have to do is chant those words: "God, grant me the serenity...".
That's what my mom would do.
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