Free Newsletter - January 15, 2007

Join Our Free Newsletter Mailing List!

January 15, 2007

In this week's free newsletter, we'll discuss how our technical approach to trading results in Trading on the Winning Team.

I loved baseball as a kid. I wanted to be great at it, so I practiced a lot and looked forward to every game. The problem was, my teammates didn't! They didn't share my passion for it, so they didn't put in the work to succeed and we struggled when it was game time. That was my first personal experience with teams, and my enthusiasm for baseball faded. On the other hand, friends of mine on other teams were surrounded by talent, and they brought home trophies because of it.

Fast forward a few years to my second experience with a team. I had started playing golf, and our team was loaded with talent. In fact, we rarely lost. My senior year in high school marked the 5th straight year that our school won the 5A state championship. It was a blast! Even better, because my teammates were so good, they could carry me when I wasn't at my best. Playing on the winning team meant success for me, even at times when I was far from stellar.

Fast forward again to trading. Armed with the knowledge that the winning team has the wind at its back, I'm always seeking to first determine which way the market is heading and then trade in that same direction. If a rising tide lifts all boats, then a rising stock market lifts more stocks (and vice-versa)!

Trading based on chart patterns lets me determine this with ease. Not only do the patterns show precise entry and exit levels, but they also help me stay positioned on the right side of the market - a huge advantage. If we'd all agree that playing on a winning team is easiest, then we're probably also in agreement that trading on the winning team is most profitable.

I love how stronger markets naturally provide more setups of the bullish variety. The opposite is also true, as bear markets and downtrends provide plenty of short selling opportunities.

Just this week, the NAZ broke out, and I got net long in the process. A number of bullish patterns had set up for new entries, and when the market strengthened, several trades triggered and I became a buyer.

The lesson: stay aware of the market conditions and don't fight them! Determine the direction of the trend (in the market or in your stock), and wait for new entry levels to present themselves in that same direction. Don't trade until they do! You'll see increased success in your trading because of it.

Free Trade Idea:

Here's a free trading idea in a stock which is starting to break out of a nice falling wedge pattern. This stock looks to be completing a healthy pullback and now is turning higher to resume its uptrend. There's plenty of room for it to climb higher, and if the first advance after it went public is any hint of things to come, then this could be the start of another big push.

Trade Strategy: Long above Friday's high with a stop loss set just below Friday's low. (Our members get precise entry levels and we update our stop loss levels daily).

Here's the chart: