I always believe that prices move first and fundamentals come second
For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it's going up.
When I was an institutional broker in a former life, I was a believer in the merits of using technical analysis. I found that it was a very useful tool that complemented the much more mainstream tools generically referred to as fundamental analysis.
What you will be looking for is a day that closes above the prior day's high and most likely 'breaks' out to the upside to close above a trading range. This is the twitching worm that causes the public to leap before they look.
The next time you see an outside day with a down close lower than the previous day, don't get scared, get ready to buy!
Basically, what I do is place a stop, generally 10 to 20 percent below the current price, whenever I buy a stock. The exact level depends on my own analysis of a stock's trading pattern. If a stock violates this stop, I'm out.
Trading demands total concentration and the ability to do several things at once while instantly recalling trading prices from the day, or week, before.
The trend is your friend.
The best traders are simply slaves to the market's price action
The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements.
Tape reading is a lost art that today is not very useful.
When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion.
The market is like a language, and you have to be able to understand what they're saying.
I mean I'm not smarter than the market, but I can recognize a good tape and a bad tape. I recognize when it's right and when it's wrong and that's what my strength is.
Selling high or low doesn't mean anything. It has to do purely with the market.
