High Performance Trading

Quick and Simple Steps to High-Performance Trading

High-Performance Trading

Quick & Simple Steps to High-Performance Trading

Grateful to be asked to write a guest blog post for TraderLion. I am going to keep this brief and simple because being succinct yields a very high probability of success (this applies to all areas in life).

MarketSmith Chart

I have faced almost all the challenges that traders face on an ongoing basis, including the enormous stress that part-time retail traders go through with their day job. If you can think of a particular type of stress you are facing in your trading – I can assure you that I have gone through it.

First 2 Simple Steps to High-Performance Trading

1) Above 50DMA / 10WMA

Just focus on stocks with price above 50 DMA / 10 WMA plain and simple. This is where you have to start from. Don’t argue with the chart.

Your probability of success in buying stocks with proper patterns above this moving average will increase your odds of success. Say no to stocks below this moving average, especially if you are a part-time trader or just starting out.

2) Top 40 Industry Groups

Just like music record charts – aim to find stocks in the top 40 industry groups of IBD/MarketSmith’s 197 list of Industry Groups. Maybe you can push it to the Top 50.

Don’t buy stocks in laggard groups; don’t waste your time or money on laggards. If you are gonna waste money – just PayPal/Venmo it to me.

This concludes my 2 main points for this blog post. Your probability of trading success can increase dramatically by understanding the 2 steps mentioned above.

You still have to find the patterns, the setups, etc — “Do the work” for your own trading success. These 2 points will get you more focused and closer to being a successful trader.

In-depth Analysis

Congratulations, I am very grateful that you have managed to take time out of your day to read the in-depth portion of this blog post. I will do my best to make it super insightful.

Let’s take a look at BABA from 2014. This was one of the most anticipated Stock IPOs in 2014 but one of the best entries was to buy it at the IPO base entry around $100.

Chart Markups

  • IPO Base Breakout Area – Heavy volume breakout
  • After a solid run up, this stock does come down and one can see it struggling on the 50 DMA / 10 WMA. What is even more special at this area is that this is BABA’s first time on 50 DMA / 10 WMA and one can see that the price action is all over the map. This type of price action increases the odds of a potential price downside.

Now, this is the larger picture of the stock’s move.

Look at the area marked 2.

2. Stock is trying to stay up and forms a consolidation or base or potential VCP —- it depends on how you look at it. Either way, there is a price range pattern
and the stock runs up to 43% approx from the $80 price area. The stock has been above the 50 DMA / 10 WMA the whole time.

3. Now there is a small pullback after the 43% run-up and many will get shaken out on this steep pull back but the clues in the chart are there —— Look at the
Weekly Volume. The stock is being pulled in low volume. This alone is a massive clue. You have to start paying attention to it.

4. Now the price pattern really tightens up – super extreme and the stock runs up 100% straight.

If you look at the big picture – you will see all the good moves happen when the stock price is above 50 DMA / 10 WMA. This doesn’t mean to buy at any random point of a stock’s move when it is above 50 DMA / 10 WMA. You have to find proper entry points.

It is always a bonus if the industry group moves with the chart, but there are times when the best stocks move faster than the entire industry group and these
industry groups can be laggards. You may think that this contradicts what I said above but this is the reality: The art of trading at times is full of contradiction, but you do have to trade in the direction of the trend.

Written By: Anish Sikri

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