How To Spot Trading Opportunities
Sometimes as a trader it
is easy to lose sight of what really gives you an edge in the
market. Each day we are bombarded with advertisements showing us how we can
scan the market for “profit opportunities” or some other gee whiz approach. It
is easy to have ones curiosity piqued by this, it seems to fit in nicely with
how we have approached most tasks in other professions or endeavors.
Unfortunately, trading plays by a set of rules that are quite contrary to the
typical success formula, although when you boils success down in any field, the
word focus usually comes up in the conversation.
Focus is not attained by spreading yourself too
thin, however, in the present market it is so easy to get distracted. Many
times we feel as though if we went on a quest we might just find the promised
land. A trade I took yesterday reinforced for me just how important focus is.
I waited from 11 AM PST till almost 12:30 PM PST until I finally spotted the
“ideal” entry point on Citigroup (C). Was
it boring and tempting? Boring? No. Tempting to press the button on marginal
set-ups? Yes. Time has taught me to fight those temptations off. However, at
12:30 something came together. To be perfectly honest, I cannot say
specifically that it was a chart pattern or something tangible that got me into
the trade. Rather it was a culmination of digested observations from the last
90-minutes that finally came together on some sub-conscious level. I know this
sounds odd, but suddenly the trade just felt right. My patience was rewarded,
C shot up over the next few minutes and I
was rewarded with a late day winner. I closed up shop right after that.
I hope that I was able to convey just how
important focus is. More importantly, I want to show you that spotting trading
opportunities is not a function of a scan, but good old-fashioned hard work.
That trade in C was effortless and I never
flinched on pressing the button, I knew deep down that this was the time.
The only way traders can achieve this is to
change their mind-set and approach to the market. Staring and focusing is what
is required, it will be a tough change for some, but I feel it is imperative.
Too many give up before any rewards or tangible signs of progress are seen — do
not become one of those statistics.
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As always, feel free to send me your comments and
questions.