Common Mistakes That Are Hurting Your Stock Market Performance
Stockscores Foundation for the week ending April 3, 2023
In this week’s issue:
In This Week’s Issue:
- Upcoming Events
- Market Outlook – Momentum is Turning
- This Week’s Market Minutes video – Common Mistakes That Are Hurting Your Stock Market Performance
- Trader Training – 3 Ways to Beat the Stock Market
Upcoming Events
HOW TO INVEST IN THE STOCK MARKET PROFITABLY
Tuesday, April 04, 2023 6 PM PT
REGISTER
https://register.gotowebinar.com/register/4328657861477155931
THE THINGS YOU MUST DO TO BE A SUCCESSFUL DAY TRADER
Wednesday, April 05, 2023 6 PM PT
REGISTER
https://register.gotowebinar.com/register/7562564550836164438
HOW STOCKSCORES TOOLS AND KNOWLEDGE CAN HELP YOU MAKE STOCK MARKET PROFITS
Thursday, April 06, 2023 6 PM PTFreePresenter: Tyler Bollhorn
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https://register.gotowebinar.com/register/4929592643103350358
Market Outlook – For this week’s analysis of the stock, commodity, interest rate, and currency markets, I focus on a simple pattern that helps to predict the next change of trend for any market. Then, I apply it for the day trade of the week on BBAI.
Watch this week’s Market Analysis video
https://youtu.be/tL2ZZgg_-Vc
This Week’s Market Minutes video – Common Mistakes That Are Hurting Your Stock Market Performance
Day traders and Investors both battle against themselves in their pursuit to beat the market. Success in the stock market is about more than knowing when to buy and sell, we also have to maintain the emotional control to properly apply our strategy rules. Controlling losses and managing risk starts with emotional control, a necessity for trading success.
Watch This Week’s Market Minutes video
https://youtu.be/yWumMnjSE84
Trader Training – How to Beat the Stock Market
What do I mean when I say, “beat the market”? Simply, it means earning a return that is greater than the market’s return. Historically, the average market return is about 8% but some years are better than others. If the market goes up 10% and my stocks go up 20%, I have beat the market. If the market goes down 10% and my stocks go down 5%, I have beat the market.
To beat the market, we must do one, or all, of three things.
Sell Greed
Investors tend to chase after strength. We believe a company business is better when the stock is going up and if we think the company is good, we want to buy it regardless of price. This is called the law of upticks.
The result is that stocks are pushed up too far and, eventually, they have to correct downward. This creates an opportunity to short sell the stocks that have gone up to irrational price levels when they show signs that they are likely to correct.
The best signal that this is going to happen is to look for stocks have parabolic shaped upward trends and short them when the upward trend line is broken.
Buy Fear
Just as emotion can send stocks up too much, it can also send stocks down too far. This is one of the hardest ways to make money in stocks because our intuition and emotional state will have a very hard time stepping buying in a falling market. Trying to catch a falling knife is a difficult thing to do.
Therefore, don’t try to catch a falling knife, wait for it to bounce off the floor first. This means waiting for panic selling to stop with a break of the downward trend line.
Fear based selling, especially when it is a correction of the overall stock market, create opportunity because everything is sold without much thought about the prices that are being accepted. When investors are feeling a knot in their stomach, they exit just to make the pain go away.
Consider the correct that we had at the end of 2018. Everything was sold lower but, when the downward trend line was broken on Dec 26, prices started an amazing recovery that rewarded those who could buy when everyone else was in a state of panic.
Trade on Inside Information
This sounds like a fast way to go to jail, but it does not have to be. The stock market is not fair, some people get better information than others. They may get their better information because they are experts in an industry, have great sources for information or do good analysis. Usually, the people with the best information are also the largest of investors with greater resources to uncover facts that most investors are not aware of.
When they know something important and act on that information, they create abnormal trading activity. This is the basis of my Action Candle indicator. It can be applied to any chart time frame to identify when there is abnormal buying. It is a tool for following those that have the best information and is extremely useful when combined with some other simple chart reading techniques.
Therefore, any trader who watches for the signs of investors buying with better information can benefit from their information without knowing what it is.
What ever your trading approach, focus on these three types of trading opportunities, combine them with focus and discipline and you will be well on your way to beating the stock market’s returns.
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These Common Mistakes Are Hurting Your Stock Market Performance
