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Monday, February 07, 2005
Market Recap
On Sunday, the Super Bowl turned out to be a great game and a true Super Bowl but on Monday, we had a Super Bore. The markets were at a stand still today after yesterday's big game. There was not much follow through momentum in the market after last Friday's big rally. I would have liked to have seen some follow through buying today but we did not get it. The markets were essentially flat with the Dow down a fraction, the NASDAQ down 4 points, and the S&P lost 1 point. Although the indices did not do much today, many of our bulletin stocks made decent moves and are looking real good at this point. Charts are setting up for some good advances and some of those charts advanced today even though the markets were flat.
S&P slow and steady
The market has made some nice gains of late and may need to rest a bit. Right now, the chart of the S&P looks super. This index is made up of big cap stocks. As you know, we prefer small cap stocks because of the lower floats and more explosive moves. This is not to say that big caps would not provide you with steady gains in the months to come. For the more conservative traders, the S&P chart looks great and if I wanted to park some money away and have it grow slow and steady; the S&P is a good place right now. I would not do it because it puts me to sleep but holding the right stocks for the longer term can make you very good returns.
What Kind of Trader are You?
I mention this tonight because we have a few conservative traders/investors in our group. There is nothing wrong with that style at all, it is just too slow of a pace for me, however it may be right for you. Our style is not for everyone, but even if you do not trade as aggressively as TWPD, you can still learn from our style. I get many emails from people who have said they have learned a lot about trading as a member or our service, things they never knew before and would never have known if it were not for our service. Most take what we have to say and apply it to there own trading style. However, some tend to drift away and go off on there own. When a discipline is broken, this is when things start to go wrong. I bring this up because if you are going to trade with this style, you must maintain the strict discipline of the system or it does not work. This reminds me of an email I received from a member who left the service and I would like to share it with you.
Scared Money Never Wins
A couple of weeks ago, we talked about terrified losers. People who are scared when they trade. There is an old Wall Street saying; “Scared money never wins.” I believe this to be true. If you lack confidence in the trade you just executed, most of the time it will be a losing trade. Recently, I received an email from one of the terrified losers. I will share this email with you, about someone who made all the wrong moves. Fear and emotion dominated this individual's trading, he was trading scared.
Here is an email I received from a member who recently left the service. I share this because this person made all the mistakes we constantly remind our members not to make. He went against everything we try to teach such as; “No more than 5% of your capital in any one trade”, “Do not force trades just for the sake of trading”, “Do not trade with emotions” and “Do not trade against the advice of our service.” This person continued to trade, even though the TWPD portfolio was 100% cash. Finally, he made the worst mistake a trader can make and that is to accelerate trading to make up for prior losses.
“The main reason I canceled my subscription is that I did not have the proper amount of funds to take advantage of the service. I was putting what limited funds I had into 1 or 2 trades and, as luck would have it, I always seamed to pick the one or two stocks that went the wrong way. Over the past few months, I have lost over 60% of my capital and figured it was time to give it a rest. The final pitfall came the first week of the new year, when the market was down for the 3rd day and I was so sure it would bounce hard. I loaded up on Jan qqqq calls and lost big. I thank you for the outstanding job Dave, Joe and Mike have done to try to help me, but I forced to many trades in large quantity to try to make up my growing losses. When I am able to save up some funds the old fashion way, I am sure I will be back to try again.”
This person is a good person; I do not mean to use this email to degrade anybody. He just was not ready for Wall Streets' ruthless ways. I wish this person the best of luck in the future and I hope that he can find a way to learn how the game is played and enter the market later in life and take back what he lost. His lost money awaits his return and I am sure one day he will return to claim it and take much more than he lost back. It is called an interest payment.
You pay your dues when you are first learning to trade. No trading experience is free, it costs money. Some of the lessons we learn are very costly. If you are committed to learning, I can almost guarantee that you will get the dues you paid back many times over. Learn from your mistakes and keep striving to learn more. You can concur stock trading, I know, I speak from experience. I was in this person's situation at one time in my life. I think we have all been there before. I always remembered what my Grandfather told me when I was a young boy. He had a favorite quote, “A winner never quits and a quitter never wins” When I lost everything a few years back, I remembered this quote. It was my motivation to keep going.
I hope this person finds a way to keep going. God bless him and his family, I hope he can come out of this and learn from his mistakes. Normally, a picture is worth a thousand words and that is why I show charts every night, however, I think this email tonight is worth 1000 charts. I sincerely believe that everyone can succeed in the stock market by trading the TWPD system and following the advice we give. I made all of my money back and much more using this exact same system in my own personal accounts. If you chose to deviate from it like the above individual did, then your results will differ greatly from ours. Trading takes discipline, discipline and patients is the key to a successful trading experience. It requires you to be totally focused on market conditions. Do not let the emotion of the situation distract you and cloud your thinking. Set a goal and strive to achieve it. Zero in on the indicators you want to use to accomplish your goal and keep your eyes on that goal. Here is another of my favorite quotes, “Obstacles are what you see when you take your eyes of the goal”
Please tell a friend about our service. As always, thank you for your support past, present and future! We will see you tomorrow evening.
Do not forget to check your short-term holdings and know when those companies are reporting earnings. Holding a stock through earnings is risky and I do not recommend it. You can always buy the stock back after the dust settles.
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