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The Key To Trading Is Timing



December 07, 2011 – Comments (0) | RELATED TICKERS: GMCR.DL , NFLX , QQQ

How many times in your life have you heard someone tell you that they are bullish or bearish? Personally, I hear it everyday by countless people and even say it myself on a daily basis. These days we are all bombarded by the financial news throughout the day. The Europe Union is blowing up before our eyes on a daily basis, China is starting to slowdown, India is battling massive inflation, and Brazil cannot take the money printing by the central banks any more. The news is all around us causing us to form an opinion about the stocks market. In reality, it is very difficult to escape all of the opinion forming news.

Just think about how many traders made money in stocks such as Netflix Inc (NASDAQ:NFLX), and Green Mountain Coffee Roasters Inc (NASDAQ:GMCR) earlier this year. On the flip slip, just think about how many people lost money buying these stocks near or at their all-time highs. You see, it was the timing that caused these traders to make and lose money in these popular stocks. You could have listened to the story that was being sold in the media, or you could have looked at a chart and read the money flow that was moving that stock.

The charts are what traders need to concern themselves with. There are so many times when people are talking about doom and gloom in the markets and we see a massive rally follow. Then there were times such as 2007 when some famous talking head on the popular cable financial channel was calling for the Dow Jones Industrial Average to reach 15,500. We all know what happened as the markets crashed just a few months later. The bottom line, it is all about timing.

Traders must not care about the news or what the talking heads in the media are saying, they must care about the charts. The charts will ultimately tell you when the Powershares QQQ Trust (NASDAQ:QQQ), or the Proshares Ultra S&P 500 ETF (NYSEARCA:SSO) is going to make a move to the upside or the downside. If by some chance the trader is wrong after reading the charts then the trader must stop out and take the loss. The good thing about using charts is that you should know where to place the stop loss and it should not hurt you. Nobody can predict every stock market move, however, when you become good at reading charts you will put the odds in your favor to make money. If you use good stops and take good chart setups you give yourself a chance to make money in the market. If you listen to the talking heads with an opinion then you are simply gambling. Learn the charts if you want to have an advantage in the trading business.  

Nicholas Santiago

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