The Art Of Trading Members Got This Email This Morning

Sent this email to my members when the DOW was up 55 points and Nasdaq up 15: The whole rally just did not look or feel right. Chasing it would have been a big mistake.

"hey guys,

Please be careful chasing new longs here. Relax and be patient. We need to pullback here and need a breather soon. Also, be careful taking my setups i emailed you this morning. They all gapped up and like i tell you guys, do not chase GAP UPS. This is one of the criteria in playing these setups and it is to NOT chase gaps.

Having said all that, do not be surprised if we close lower on the indexes. I am seeing too much weakness under the surface making long positions a little risky."

5 Setups To Watch Today

To take these trades:

PLEASE DO NOT get into a trade if the markets GAPS up above a LONG ENTRY price. NEVER EVER chase a gap above a LONG TRIGGER PRICE and vice versa NEVER EVER chase a short if the markets gaps down below our entry price. If that happens, just let the trade go and we will find a new one later.

For example: if the LONG entry in ABC stock is $10.00 and the next morning the market gaps up and the stock opens at $10.30--- PLEASE DO NOT TAKE THE TRADE! Let it go and we will revisit it later in the chat room. Only take the trades that trigger during market hours without any gaps.

Enjoy and trade em well!


Make sure to check out what long time members are saying about the ART OF TRADING!!


Investimonials

A Fellow ART OF TRADING Member Had a "So-So" Day

Got this email today from another fellow member:

"Hi Stewie;

I am glad to hear that Keith and Ben did so well. I agree the set ups were so good, in fact that I was bombarded with so many alarms I couldn’t keep tract of them. I don’t know what I’m doing wrong. I wasn’t quick enough to catch all those spikes and before I knew it we were going down. To me, the market kept feeling like it was going to sell. I unloaded MOS shortly after 11:00 as it had lost $73.00. I’ll include a pic of my account. I know how much work you do and I really appreciate it. I’m just amazed at my own thickness. If you have any thoughts that might save me from myself please let me know. In the mean time I’ll continue to read and reread all that you have sent us. Regards, Guy

PS spare nothing in telling me exactly what you think; I respect you and I have a thick skin."

My response:

Hi Guy,

Okay, first of all i agree with you that there were MANY alerts that went off this morning and since it was a good day in the market, many alerts did go off and when they went off, they flew right past the trigger prices and some just kept running! THAT"S USUALLY A GOOD THING! LOL. What do i always say about the best trades? THEY WORK RIGHT AWAY! Best trades do not give you breathing room to get in. I am talking about momentum trades of course. Momentum trades that work right away do not end up making you 1-2% RETURNS. These types of trades end up making 5,10,15% gains in a very short period of time!

Ok, now having said all of the blah blah above: I do not think you had a 'bad day'. Why do you think you had a bad day? It is because the market was up 100 points and you were down $73? That means nothing. How many times did you/we have good days when the market was down? MANY TIMES!! Do not judge your performance relative to the market's daily performance! Ever! You will go crazy doing that. Judge your performance based on what the market offered you based on YOUR style of trading and the setups that you planned on trading. For example: My best trading days do not come when the stock market is up 2-3%. As a matter of fact, i usually do poorly on strong market up days. My best trading sessions have come during a quiet market that is flat or slightly up or down because my kind of momentum stocks are moving front and center and trending strongly while the rest of the market is 'quiet'.

I will have to agree with you that even tho we saw a good day in the market and to have a 'good day' today one needed to be attack the stock setups quickly and take profits on the big spikes but overall today was NOT an easy day to make money and i guarantee you a lot of people would agree with me that today was not an easy to make big $$$ trades. Simply because the moves were fast and furious and the trends died quickly! You saw quick spikes and many spikes fizzled away. I am confident that if you trade how you traded today, you will have a better outcome on other days, especially on days where yo catch big trends! I am sure of it

Also, one more piece of advice is: maybe you had too many alerts setup and they all triggered around the same time and you found yourself running around like a chicken with your head cut off! Next time try and setup maybe 5 good quality patterns/setups that you deem of HIGHEST quality/probability(for example VECO yesterday, i told everyone VECO was the best setup in the bunch and today is exploded higher and many member caught it and had good days due to VECO alone) and setup alerts that trigger the prices and quickly judge or (worst come to worst) put BUY STOPS at these levels to trigger the trades for you if a certain price is tagged.

I hope this helps and once again i will repeat: DO NOT JUDGE YOUR DAILY PERFORMANCE RELATIVE TO THE MARKET'S! EVER!

god bless and happy trading tomorrow!

Art Of Trading Members Book Nice Gains From Recent Stock Picks!

"Hi Stewie,

Great call on VECO. It was tricky trading, but I made $1653 in 50 minutes of trading, and I am done for the day. I have been doing very little trading lately. It was your emails and charts over the weekend that prompted me to trade this morning.

I like the emails about how other traders trade. This is really good stuff! Keep up the good work!

Keith"






"Sold out of all my positions a few minutes ago. I booked $277 on Friday and another $1,320 today for a total of $1,597 between the two days and I still left a good $500 on the table with exits and timing. Thanks for the great picks!!!


BEN"




"Hi Stewie,

I also would like to say how much I've been enjoying all of the updates and the variety of emails. And you certainly outdid yourself with the charts this weekend! So keep up the good work.

And I love the chat room. I find it to be very civilized as well as informative, and on occasion, humorous. Great group of people.

Heather"

5 Solid Long Setups To Watch Next Week

I consider these very high probability setups and i am noticing more and more of these setups emerging in my scans. I am hoping this is a harbinger of better things from the bulls.

Hope these setups help you in your trading next week!

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MUCH MORE THAN SIMPLE TRADING ALERTS!

Art Of Trading Member Cleared $1,300 Today!!!

Stewie,

I actually put some trades on today for the first time in almost two months. I woke up at 5:30 this morning and read your "Solid Looking Setups!" email on my iPhone while laying in bed. I thought to myself (half-asleep) "Today could be a good day to trade. I think I will buy some of these.". Right after the open I decided to take all of the trades, but by the time I calculated my stop loss targets, FNSR ran 50 cents without me ( had planned on getting 500 shares), but I did get in on the rest of them.

I planned out a $3,500 total stop loss and weighted size based on my perceived probability of each stock moving up. I ended up with the following positions:

1,000 STP @ $10.88 - Stop @ $10
500 SPWRA @ $16.62 - Stop @ $12.75
500 LPX @ $7.57 - Stop @ $6.75
2000 LLEN @ $10.37 - Stop @ $10
1000 JAZZ @ $8.75 - Stop @ $8.25
250 CAGC @ $12.00 - Stop @ $11
500 RINO @ $14.15 - Stop @ $13

The first hour of holding the trades was a PnL roller coaster but by lunch LLEN started to move in the right direction. I had an $800 profit on it so I sold half to book my gains and decided to hold the rest over the weekend. I was not seeing any positive action in SPWRA, so I got rid of it with -$95 and moved on.

So, after the close I am sitting on about $1,300 in profits from setups that you recommended. Although RINO is the only trade that triggered, you deserve all the credit once again. Sometimes your best ideas are the ones that you don't take. Here's hoping that we get a gap up on Monday and I can sell for a nice profit.

Thanks again!


BEN

P.S. I have attached screenshots of my PnL and trades for the day. Feel free to share with the community.

Art Of Trading Member Asks Me A Good Question

I have been working on trading the crude oil futures and have been doing okay.

I trade one or two contracts. Today I saw I pattern I got very excited about so I thought I would do 4 contracts (about 10,000 shares of USO).

The trade fired off and I had an $800 stop. It moved about 12 cents in my favorite so I thought to bring my stop to close to break even.

I still do not know how I did it in Trade Station but the stop became like a sell limit instead and I got sold with a $80 gain.

By the time I tried to get back in, crude was running really fast.

You can see crude moved close to 2 more dollars two. One trade and I could have made my quarter in two hours

I got to be more calm when I trade.

I feel like a tight end in football (real football not the crap you get excited about) that dropped a game winning touchdown pass.

==============================================================================================

I do not know if you have had this happened but with me the less I have to lose the easier it is to take on risk.

When I was newly divorced, I had to use my credit cards to make ends meet. I knew of a good company that just went public that was very under valued.

I had about $2000 in cash. I borrowed $2500 off my credit cards and took a $2500 loan out against my car.

I put it in a margin account and bought 2000 shares of a $7 dollar stock. Totally insane.

I sold the stock 4 months later at $12 and paid everything off. The stock later went to $30 about 18 months later.

That 18 years ago. 5 years ago I could day trade an account of 25k where many times I would buy 50-75k worth of stock making or losing 1,000 a day - no big deal.

Now I finally have an large account to trade with 150k. No debt other than a small mortgage. My only kid is out of school. I have a decent retire nest egg. But now I find myself out being able to stomach a $200 loss. 10 years ago I had many losses of 2 or 3k and it was no big deal. I also had wins that size too.

I have seem to lost my balls in my older age. I wonder if it has to do anything with my Blood Pressure meds of the last 5 years.

I do know if has to do with the fact that most of my trades are done in minutes or hours instead of days or weeks or months.

Any thoughts? It is driving me crazy that I went from being way too aggressive to not being able to handle the pressures of normal risk.

Jeff.





Here's my response:


Hi jeff.
Your story is awesome and i will tell you one thing: i can relate and i know EXACTLY why!! A few years ago, i used to swing hard for the fences with 5 figure swings in my PnLs almost daily. It's simple:: you are getting older! LOL. As traders when we are young we are fast, furious, aggressive, cocky and well......'DUMB'!! Also, in your younger years to take those kinds of risks shows that you had a 'nothing to lose' attitude!! Now, you have a nice nest egg and a sweet size of a trading account, no debt, YOU HAVE A LOT to lose!! You instinctively want to keep what you worked so hard to build!! I think what you could do is pull out about 20K from your 150K account and use that 20K as your aggressive portfolio. That will help your "gambler's high" going! But as always as i preach here daily: Whether you TRADE conservatively or trade aggressively just MAKE SURE TO TRADE WITH DISCIPLINE!! Know your risks, know your setups, know your stop losses and always factor in worst case scenarios.

hope this help jeff!

p.s. I love Jeff but i think he is a little misguided about soccer: It is the number one sport on planet earth!! ;-)



As always guys, i am here to help in any way i can! I will always give my truest honest answers for better or for worst.

Happy trading!!

Making Lemonade Out Of Lemons!

A new comer here at the ART OF TRADING shares his day's PnL and made all these calls live in the chat room!


Nice gains he managed to pull out of this very stingy market!

Talk about making Lemonade out of lemons!

Congrats 'Yellowbuddha'!!

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http://artoftrading.net/

Longs Setups To Watch

Higher Low Playing Out Like A Charm

Hi readers,

Earlier today i posted a chart of the SPX and pointed out that we could be dealing with a HIGHER LOW scenario which if true would be quite bullish for the indexes in my opinion. Here's an updated chart of SPX showing today close. We indeed do now have a higher low!

Notice how the market rallied in the midst of horrible news from GS, TXN and IBM. When the market rallies on 'bad news' then this is your cue that is ready to rally.

Possible Higher Low

hey guys,

Watch the SPX as it works thru this zone here over the next few days. A Higher low in here would be bullish for this index. A bullish close would be a good first clue that this market might be firming up for higher price action.

The Art Of War(Trading)

Today i was watching a TV show on this well known Chinese Military strategist named Sun Tzu who dates back hundreds of years ago and i could not but help notice the incredible similarities between trading and WAR. So here's a very unique post that you are only likely to see here at the ART OF TRADING. Please enjoy as it took me a few hours to put this together for you.



Who is Sun Tzu?

Sun Wu better known as Sun Tzu was an ancient Chinese military general, strategist and philosopher who is traditionally believed to have authored The Art of War, an influential ancient Chinese book on military strategy. Sun Tzu has had a significant impact on Chinese and Asian history and culture, both as an author of The Art of War and through legend. During the 19th and 20th centuries, Sun Tzu's The Art of War grew in popularity and saw practical use in Western society, and his work has continued to influence both Asian and Western culture and politics.

Historians have questioned whether or not Sun Tzu was an authentic historical figure. Traditional accounts place him in the Spring and Autumn Period of China (722–481 BC) as a military general serving under King Helü of Wu, who lived c. 544—496 BC. Scholars accepting his historicity place his supposed writing The Art of War in the Warring States Period (476–221 BC), based on the descriptions of warfare in the text. Traditional accounts state that his descendant, Sun Bin, also wrote a treatise on military tactics, titled Sun Bin's Art of War. (Both Sun Wu and Sun Bin were referred to as Sun Tzu in classical Chinese writings, and some historians thought that Sun Wu was in fact Sun Bin until Sun Bin's own treatise was discovered in 1972.)




Here are some his quotes from his book ART OF WAR which were originally written on bamboo sticks: Also, underneath the quote is my interpretation of how i relate the quote to trading.





Invincibility lies in the defense; the possibility of victory in the attack.
Sun Tzu

<<< CASH IS KING: The best offense is defense: We all heard this one before but think about it in trading terms: when you are dealing with a market that is hard to navigate, many good traders will simply stand aside, move to cash and play 'defense'. They will attack when the opportunities arise but overall know when a battle is worth fighting.



The general who advances without coveting fame and retreats without fearing disgrace, whose only thought is to protect his country and do good service for his sovereign, is the jewel of the kingdom.
Sun Tzu

<<< Once again, this goes hand in hand with managing losing trades, it's okay to be wrong and walking away from a wrong trades with grace and poise is needed to long term survival in trading battles. No shame in taking losing trades: it's part of the game we play: In every war that was won, there were battles that we lost. Needless to say that arrogance and large egos have NO PLACE in trading. Refusal to admit mistakes is when traders get themselves into deep waters. It's okay to be wrong but it's not ok to stay wrong. So it's okay and signs of a very mature trader to retreat when the waters are dangerous or treacherous. NO EGO games in trading.




The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.
Sun Tzu

<<< Good traders do their home work and research before tackling on the new market day. Having a watchlist or preset alerts that trigger when certain prices are achieved is the first thing that comes to mind here. Have a battle(game) plan ready and be ready to follow it with strict military precision. Entry, stops and position sizing should be all well calculated within the game plan.




The quality of decision is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.
Sun Tzu

<<< Long time ART OF TRADING members know one quote i repeat here over and over again: THE BEST TRADES WORK RIGHT AWAY! A well timed trade is a trade that hits on all cylinders almost immediately after the entry and starts producing: these are the trades that end up being the big winners and usually cause the least stress and head aches.
THE BEST TRADES WORK RIGHT AWAY!



The supreme art of war is to subdue the enemy without fighting.
Sun Tzu

<<< Why fight in a market that is fighting you back? The best trading days are "EASY": The moves are clear and crisp: movement with confidence. The patterns are clean and sharp: Choppy and difficult to trade markets frustrate everyone(pros and newbies alike). If a market is hard to trade: DO NOT TRADE IT.



Thus it is that in war the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory. Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.
Sun Tzu

<<< Know what your trades are going to do and why you are placing your trades: Do not trade just for the sake of trading. Size up a market well before entering into it's waters. Don't place trades impulsively and ask yourself afterwards: "Why did i do that??" Good traders know what is a good market and what kind of market or environment is best suited for their partcicular style and what market action is best for their edge to be exploited in order to best increase their chance at a win.



If you know the enemy and know yourself you need not fear the results of a hundred battles.
Sun Tzu




<<< Know what kind of trader you are where lies your edge. This is especially true in a market that is tough to trade, choppy and directionless are most trader's enemy. Know yourself and your edge and only deploy capital when your edge has emerged. The best traders trust themselves and trust that they will emerge victorious as they know their capabilities/skills. If you know yourself and how you will react to certain market conditions then you will not afraid of the battles.





He who knows when he can fight and when he cannot, will be victorious.
Sun Tzu


<<<< It's a known fact that the best traders know when there is an edge to trade and take quick decisive action. The best traders are willing to wait and wait til the 'perfect storm' arrives. It's not about how many trades you place but WHEN you trade to exploit an edge that makes all the difference. Know when to NOT trade is the key in my humble opinion.





You have to believe in yourself.

Sun Tzu



<<< You gotta believe in YOURSELF and your skills as a trader otherwise who will?





Trading Is War but NEVER forget TRADING IS AN ART!

Co-movement Mysteries

Hi Stewie:

Here’s some bad stuff. http://www.cnbc.com/id/38057120 It tells how 78% of S&P stocks are now showing co-movement. I think this means that every little wiggle in the chart is moving with the market. And I would guess that this means a stock – that’s been selected for breakout potential – will follow the market instead of behaving individualistically and breaking out like it was supposed to. It could be that the robots are changing the basic rules. Even in the last year or so there may have been significant change.

And here’s a related but different topic that’s been bugging me. I do not understand how co-movement happens. Let’s say you are scalping FAS. Suddenly with no warning there is a sudden drop – which comes back up in two minutes. They call these drops “market maker stop sweeps”. Stops get hit - or the scalper gets scared and sells – and either way the market maker can buy the stock cheaply. OK – that’s probably true. Trouble is – the drop will happen through out the market at exactly the same time. Are all those market makers on the phone with each other coordinating the sweeps? Not a likely explanation. So what is the explanation? I wonder if anybody knows. I googled “co-movement” looking for academic papers. But it was all about longer term co-movement – not second by second.

Tom

Trades Taken Today In The Art Of Trading Chat Room!

Some of the active traders in the ART OF TRADING chat room killed it today! Here are two of the better trades that took place here today.
Both these trades were called live by two members in the chat room.

Setups I Will Be Watching

To take these trades:

PLEASE DO NOT get into a trade if the markets GAPS up above a LONG ENTRY price. NEVER EVER chase a gap above a LONG TRIGGER PRICE and vice versa NEVER EVER chase a short if the markets gaps down below our entry price. If that happens, just let the trade go and we will find a new one later.

For example: if the LONG entry in ABC stock is $10.00 and the next morning the market gaps up and the stock opens at $10.30--- PLEASE DO NOT TAKE THE TRADE! Let it go and we will revisit it later in the chat room. Only take the trades that trigger during market hours without any gaps.

Enjoy and trade em well!


Check out what long time members are saying about the ART OF TRADING!!


Investimonials

RSI in BULL/BEAR Trends

Created this chart a few weeks ago and wanted to update it and share it with you again to see it's progression. Notice: The market stalls out near the RSI 50 mark indicating still lack of bullish power on the upside and we are still in a bearish trend.

Awesome Day At The ART OF TRADING!

"Hi Stewie

Thanks for a great market call and a great day. I could have stayed in any one trade and made more money but right now my belief is once I make decent $$$ to get out as it is bear market.

See you tomorrow in the chat room!

Security	Buy Price	Sell Price	Gain/Loss	Percent
CRUS	$16.10	$16.40	$0.30	1.86%
CRM	$89.60	$90.65	$1.05	1.17%
CREE	$64.00	$65.00	$1.00	1.56%
Apple July 250 Calls	$7.60	$8.30	$0.70	9.21%
Apple July 250 Calls	$8.60	$9.80	$1.20	13.95%

Thanks

Yasien"



"Made $300 on CRUS and i'm holding CPE overnight just to keep it interesting. The chatroom is great. Also thanks for CRM.

Jeannie"



"Stu,

I was bearish coming into the day but your repeated calls to get into longs saved me big! I also enjoy your market commentary and constant guidance through your emails! Overall +$420 on your crm alert and +$790 on cree and swn from the chat room. Please keep up the great work!

Andy"

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Updated Stock Picks Posted Last Week

Last week, i posted these 4 stock picks here on my blog. Here are the updated charts and their performance.