Trading and Investing Imperatives

January 27, 2021 at 11:55 am Leave a comment

Summary: We explain what is needed to be a consistent trader or investor and formulate the action steps to chose and follow. Read on and watch the video.

We distinguish trading or investing by the time of holding a position:

  • Trading: shorter-term like day trading (opening and closing positions the same day or Swing-Trading (holding position for a couple of days)>
  • Investing: holding positions for multiple days, weeks, months.

About 80 million people have IRA or 401 (k) accounts in the US, mostly focused buy-and-hold. About 25 million margin accounts are held, with about five million frequent traders trying to control their financial destiny and do not leave it up to a money manager.

Unfortunately, only a small percentage of the traders/investors understand trading imperatives and why they are essential for long-term success.

At a 50:50 chance, 76% of the private investors lose money, even by copying the most successful traders’ entries.

If you want to receive the background on 76% of retail traders lose money: Subj.: 76%

What is missing?

An easy explanation:

When you know or can copy successful entry strategies: Stop, and positive exit are still unknown variables that need to be controlled to achieve trading and investing success.

Let us talk about stops first:

  • Tight stops lead to always being stopped, and then trades commences in the desired direction, and you are not part of it.
  • Wide stops: then risk and reward get out of balance, and you lose more than you win, and such, trading has a negative outlook.

This is where you need a system that tells you how far a price move most-probably will last and where to place your stop for bringing your trade to target without being stopped on the way.

In essence: Perfect entry conditions, like in stock tips, still will not make you a profitable trader.

Bringing the critical variables together: Mechanical, clearly defined rules are needed from your system to make you a profitable trader or investor:

  • System defined entry
  • System defined exit
  • System defined stop

Important: Rules are of need, regardless of the time you intend to hold a position.

Let us talk about average attainments of money managers and private investors in IRA and 401(k) accounts, where most leave their financial future up to money managers:

95% barely make it to produce results as the index: S&P 500, DOW, NASDAQ, Russell, others:

Fidelity Software and IT Fund compared to S&P 500

Fidelity and SPY compared

The chart shows a six-month comparison, and the Fidelity Fund performed negative 3.1% below the overall market. However, for technology, we should compare against a technology index and do so:

Fidelity Software & IT Fund compared to XLK (SPDR ETF)

Fidelity and XLK compared

Compared to XLK, the SPDR Technology ETF, Fidelity had a negative 9.2% development.

If you do not care about your money, nobody else will!

The key to successful longer-term investing is operating with a system to tell when to buy or sell:

Swing Trading Example: AAPL Daily Chart

AAPL on a Daily NLT Top-Line Chart

On January 20, 2021, the NLT Top-Line indicator and scanner reported an opportunity:

  • Buy if the price development of the next candle > $132.49
  • The price threshold was surpassed on January 21, 2021
  • The second dot on the chart indicated the exit or target: 138.47 (4.5% return on cash, 9% on margin in one day)
  • This target was reached on January 21, and the trade either was closed or trailed with the red stop-line on the chart, and you would still be in it.

Swing Trading Example: JPM Daily Chart

JPM on a Daily NLT Top-Line Chart

On January 6, 2021, the NLT Top-Line indicator and scanner reported an opportunity:

  • Buy if the price development of the next candle > $132.77
  • The price threshold was surpassed on January 7, 2021
  • The second dot on the chart indicated the exit or target: $140.13 (5.5% return on cash, 11% on margin in 5 days)
  • This target was reached on January 12, and the trade either was closed
  • On January 15, 2020, the alarm bells were ringing on JPM, indicating that the stock has a high tendency for falling prices, and it happened when the system spelled out price threshold was surpassed to the downside

This shall show you how we systematically find and execute investment opportunities with quality stocks that allow risk limited trading strategies, executable from any account.

Day trading in itself is another limited risk strategy by preventing the risk of overnight gaps. Here is a recent example:

E-Mini S&P 500 Trading Chart, January 25, 2021

E-Mini S&P Futures, January 25, 2021 on the NLT Top-Line Chart

The chart shows eight trade situations, where seven were winners. To get all the details involved, please watch the video.

When you work with us, we offer you two configurations of NLT Top-Line with either 10 or 20 hours of training.

Trust me; you want the training; it will be eye-opening!

You learn how to operate with mechanical trading decisions in all of your accounts, covering the topics laid out in the following chart:  

NLT Learning Program Overview

Elements to Apply for Trading and Investing Success

Let us be your guide to a consistent trader and investor and schedule a free consulting session, where you can see live what our systems can do for you: Subj: Consulting Hour

Working one-on-one spots are extremely limited: Do not miss out!

For more of our free publications and webinars…sign up here.

We are looking forward to hearing back from you.

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Entry filed under: activity based trading, Algorithmic Trading, Day Trading, Financial Market Investment, Futures Trading, high probability trading, Institutional Money Moves, Investor Education, IRA Trading, making money trading, never loss trading, Stock Market Index, Swing Trading, Technical Analysis, Trading Education, Trading plan, trading system.

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