2018 has been an amazing year. Bring on 2019!
[Before I go any further: I write some posts ahead of time due to my travel schedule and so I can spend time with family. When I started writing this post, the market was looking a bit crazy, but…
… as I finish the post, the market has gone completely insane! The worst Christmas Eve in U.S. stock market history followed by the DJIA’s biggest one-day gain ever. It’s madness out there.]
Your trading strategies for this year are more important than ever — it’s not an easy market and a lot of people will lose money.
Does the current market environment change anything in terms of my trading strategies for 2019? Not so much at the strategic level. But rest assured it might change some of the finer details. I’m OK with that because I continue to study and stay prepared.
My students are also prepared. They’ve heard me talking about the need for a big correction for the last six months. We got it in December, even testing bear market waters on the NASDAQ and S&P 500. My students keep studying and listen when I give contrarian advice or ideas. Some of them are even making money in the current market environment.
I hope you understand the importance of the right mindset and killer stock trading strategies. It’s always important, but right now it’s at its peak. If you aren’t prepared, then prepare to lose your ass. Forewarned is forearmed!
Are you ready to step into freedom? I want you to have the freedom I have to travel. In 2018 I’ve visited 20 countries with a couple more to go as I write. I want you to have a nice house and a nice car without having to worry about how to pay for it.
And I want you to give to charity. At Karmagawa, the charity I helped to create, things are growing massively. Our fight to save rhinos from poachers has gone viral. I’m so proud of what we’re doing and of the thousands of people helping to spread the word through social media.
This year is going to friggin’ rock! I’ve made a plan. In some ways, it doesn’t look so different from my plan last year or the year before. When you make a good plan and follow through, it’s about better execution. So saddle up and let’s do this …
I want to start with New Year’s resolutions …
Are you making resolutions? How about this: What do you say we give the middle finger to what most people call New Year’s resolutions? Instead, make a plan and use proven trading strategies to create freedom in your life?
Hell, most people don’t last two weeks with their resolutions!
The single biggest day for quitting on New Year’s resolutions is the second Friday of January. In 2019, that’s Friday the 11th.
That’s right, by the 11th of January, most people will simply forget about their resolutions and carry on …
It gets worse: 80% of New Year’s resolutions go right out the window by the second week of February!
Here’s a big hint: New Year’s resolutions basically suck.
Don’t get me wrong, I make New Year’s resolutions just like many other people. I’d say I have a pretty good track record of accomplishing new goals. I’m really proud when I look at my list for the last few years — goals like help create more millionaires and donate more to charity are on those lists.
Here’s the key …
My New Year’s resolutions are new goals. They’re not some drunken exclamation made in the early hours of New Year’s Day. Nor are they completely unfathomable and unreachable. They are goals.
When I make a goal I start to form a high-level plan — a strategy — to achieve it. Then I start to get more specific: strategies, plans to implement the strategies, and daily steps. I figure out what I can do today, tomorrow, this week, this month, and this year.
So, yeah, make your New Year’s resolution. Then sit down and map out a plan. Develop a strategy to move from where you are now to where you want to be. Go from high-level strategies to specifics. Adjust as necessary to win more than lose.
I want to focus on trading strategies — especially for those of you who are new to this. If you are experienced, don’t let that chase you away. Instead, read this post and apply the concepts to your trading plan in 2019.
Table of Contents
My Stock Trading Strategy and Plans For 2019
Have you opened any emails lately? There’s like a gazillion ‘new year, new you’ emails…
… boring!
Not saying you shouldn’t strive to be a better version of yourself in 2019. But most people simply don’t have the money (read: FREEDOM) to create the ‘new you’ those emails talk about.
Me? I’m going a different direction: new year, new trading strategies. Simple. With that, I can adapt to the market and buy more freedom. Beautiful. Ready to join me? Here’s the plan:
#1 Look for a Catalyst
Penny stock price action is driven by catalysts. What’s a catalyst? Something that speeds things up or creates momentum. When it comes to penny stocks that means an increase in trading volume, volatility, and price action.
When you look for catalysts, start with the news. Each of the catalysts I’m about to drop on you has a slightly different effect. So let me throw this out there right now: Study your butt off this year! This post is high-level strategic planning. It’s not the details you need when you’re about to hit that button to open or close a position.
Here are some catalysts to look for in 2019:
- Earnings winners
- Contract winners
- Pump and dumps
- Plays by big investors (like a Zuckerberg or a Gates)
- A new product release (or in the case of biotechs it might even be a new round of testing.)
Something friggin’ big!
If you actively look for catalysts, you’ll find them. They will tell you what stocks belong on your watch list. You’ll know whether you should put more time into research. That’s what I’m doing? Will you join me?
#2 Stock Float
Focus on low float stocks with high volatility. But remember there’s a sweet spot. Too low and you might get stuck in your position like an out of shape yoga teacher. Too high and you’ll be trading a low volatility stock against institutional investors. Screw that!
How do you identify low float stocks for trading? The number one thing you can do is get yourself a subscription to StocksToTrade. Barring that …
… I recently wrote this post about stock float and why it’s so important. Check it out.
#3 Market Environment
As of writing this, the markets are experiencing some crazy swings. This is a good lesson for those of you who thought this would be easy! Right now you should be prepared and be safe. It’s not easy, but it’s worth it.
For most of December, it looked like we were headed for a bear market. The Nasdaq went full bear on December 21 — otherwise known as triple witching (some call it quadruple witching) Friday. Since then we’ve had the aforementioned worst Christmas Eve ever followed by the single biggest one-day gain on the DJIA. Buckle up!
Here’s my mantra about market environment right now: be prepared or lose big. If you’re not prepared you’re going to get crushed. Yes, you can make money in this market. Focus first on protecting yourself.
What trading strategies will I be using in this market environment? I think the two best patterns right now are dip buying morning panics and buying strong first green days on OTC (over the counter) plays. If you have no clue what those are — apply for the Trading Challenge so you can learn.
Wanna know who’s getting crushed right now? Aggressive shorts and aggressive longs. They’re both getting their teeth knocked in by this battlefield of a market.
Understand market environment. How are you going to do that? Study your ass off. What can you do today? Study. What can you do tomorrow? Study. What can you do next week? Study. What can it bring? Freedom.
#4 Time of The Day
Trading volume peaks in the first and last trading hours of the day …
Look at a chart for any stock on your watchlist and make sure you have volume on the chart below the price action. Notice the trading volume at the beginning of the day and at the end of the day. Notice how it’s higher during those times but things slow down in the middle of the day.
Now, just in case you think it’s a good idea to trade when things are a little calmer, let me point out that you are here to make money. Price action momentum is strongest the first hour of the day — this is when you really want to pay attention.
Does this mean you should never trade in the middle of the day? No. But be aware, in general, volume increases first thing in the morning and last thing in the afternoon as traders get in and out of positions.
#5 Volume and Liquidity
There’s a sweet spot when it comes to volume and liquidity. If there’s not enough liquidity you can get stuck in a position you want to close. Dangerous. If there’s not enough volume, then there won’t be enough liquidity.
Does that make sense?
Let me clarify: When trading volume is high enough — 1,000,000 shares a day is an ideal scenario — it confirms there are both buyers and sellers. This drives liquidity. If there’s not enough interested buyers or sellers, then the stock doesn’t have enough volume.
If there’s not liquidity and volume, then it takes a long time to execute orders. That can be a nightmare. So what will be my trading strategies for volume and liquidity?
Crystal-Clear Breakouts
I want to see crystal-clear breakouts. Why? Because when it’s crystal clear I know I can take a nice profit on a trade. I can get in and out based on my trading plan. No chasing trades and no trading ‘maybe’ breakouts. Wait for confirmation, get in, follow your plan and get out.
Crystal Clear Breakdowns
The same thing goes for breakdowns. Focus on clear, confirmed breakdowns.
Look, this is about making things really simple. It might mean you make fewer trades. That’s OK. As a matter of fact, I think that’s a good idea. So many newbies want to make trade after trade and I think that’s really dangerous based on my experience.
With the current market environment, this is more important than ever. Be safe. Why not make trades based on crystal clear breakouts and breakdowns? Yes, you’ll make fewer trades — yet potentially make a higher percentage of winning trades.
#6 Cut Losses Quickly
Even though this is number 6 on this list …
… it’s my number one trading rule.
Especially now. In any list of day trading strategies that work, this one will be there.
I don’t think enough of you are focused on the potential for loss right now. Everyone wants to make big money, and make it fast. This market is a friggin’ battlefield! Be prepared. Don’t hold and hope like so many people do. They’re asking to get crushed.
If a trade starts to go wrong, get out.
Oh, and if you’re watching CNBC or listening to a financial advisor telling you everything is ok — they are effing lying to you. This is a potentially devastating market. So be prepared to cut losses quickly.
Don’t let your ego get in the way of a trade gone wrong. Stop trying to chase trades. When it goes against you, get the hell out! Live to fight another day.
#7 Mental Preparation
One of the top reasons traders lose is because they don’t have a plan. Your day trading plan for 2019 should include everything from entry and exit points to risk vs reward.
Would you start a business without a business plan? Maybe you would — I wouldn’t. But think about the statistics: According to Investopedia, 50% of new businesses fail within the first five years. I wonder how many of those that failed had a good business plan?
This is about trading strategies to achieve freedom. Don’t start trading in 2019 without a big picture plan AND a plan for every trade.
Mental preparation is more than just making a plan, right? You gotta have the right mindset. If you don’t have the right mindset, take the day off from trading and study. Otherwise, you could lose a lot of money, get your confidence knocked, and be out of the game before you achieve freedom.
One of the best things you can do to maintain the right mindset is to be part of a community and have a mentor. As a Trading Challenge student, you’ll be part of a community where others are going through exactly what you are going through. You’ll be able to ask questions of those who were once in your shoes.
Also, you’ll have a mentor. It’s so important. Sometimes you might just need a pep talk. Other times you’ll need someone to chew your ass out because you keep breaking rules. Don’t think I’m offering to be your friend — I have enough friends. As your mentor, I will guide you with integrity and tell you when you’re acting like an idiot.
#8 Risk Tolerance
This is so important right now. Risk management is one of the most important aspects of trading.
With the recent nosedive in the market, I keep seeing people tweet about making big gains. But I wonder how much risk they’re taking? Are these the kinds of trades other people can do? Not likely.
To create a risk management strategy you have to know your risk tolerance. How much are you willing to lose on any given trade? What is your exit point if the trade goes wrong? How will you manage the entire trade?
Don’t take unnecessary risks! Yes, trading is risky. But so is holding stocks in the current market environment. If you have the right mindset and the right trading strategies you can take advantage of the current market. For that matter, you can take advantage of almost any market.
I suggest you keep a trading journal to track your risk management strategy.
#9 Help More Students to Learn to Trade
You might be thinking, “Tim, how is that part of your strategy? And why?”
I’ll tell you why — there are two reasons:
- First, I want to see more people experience the freedom I have. When you have freedom you can do things that many other people can’t. Plain and simple.
- The other reason is because the more super-successful students I help, the more others will believe it’s possible.*
There are probably some doubters and haters out there right now thinking “I’m not capable of this,” or “you’re not capable of that.” You’re capable of anything, OK?
I know this because I’m not smart, I’m not that good at math, and I’m not a genius. None of my top students are geniuses. We just put in the time and effort and have the right mindset.
That’s it!
Conclusion
What are your dreams? Stop right now and write them down.
Have you done it? No? WTF? Write down your dreams. NOW!
Back? Cool …
What can you do today, what can you do tomorrow, this week, this month, this year to fulfill your dreams?
I’ll tell you what you can do …
You need to study like crazy right now because it’s not an easy market. But if you learn from the past — past patterns, market corrections, bear markets — you’ll be prepared for things to come. At the very least you’ll have an idea what to look for.
If you really want this — and let me tell you I want this for you — then you can learn from anywhere. So long as you have a laptop and an internet connection you can learn. I have over 1,000 videos on YouTube. I have DVD courses. There’s the Trading Challenge. What are you waiting for?
You have one life. How badly do you want success? How badly do you want freedom?
Dreams do come true and this is your reminder. What seems impossible …
… IS possible with enough hard work. I can’t make you successful overnight. But I CAN help speed up your learning curve.
Happy New Year! Now go take it on!
Come on, post your goals for 2019 below! I want to know what you’re going to do to achieve freedom this year.
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