Review of Chapter 2 of @investorslive Tandem Trader

Link to notes and review of Chapter 1

Link to notes and review of Chapter 2

Link to notes and review of Chapter 3

Link to notes and review of Chapter 4

Link to notes and review of Chapter 5

Link to notes and review of Chapter 6

Link to notes and review of Chapter 7

Link to notes and review of Chapter 8

Link to notes and review of Chapter 9

PAID AFFILIATE LINK to Tandem Trader DVD

Summary of Chapter 2

Another very solid chapter, still a lot of housekeeping and foundation work but Nate mentions the hardcore trading starts in Chapter 3. Discussion focuses on trading the right stocks with movement and volume. Again this is something I know and practice myself, but a lot of traders get lured into low volume stocks and then can’t figure out how they were right but didn’t make money because of slippage.

timing

More discussion of risk management and scaling in, this I found very valuable, I have a bad habit of going all in on entry, then getting spooked out, even though I am eventually right. Nate preaches going in on your plan, then adding in only when confirmation of your idea is made.

Good real word description of short selling and what setups to focus on when short selling. Also a preview of coming chapters:

Only Short these setups:
– Parabolics – Chapter 4
– Intraday Shorts – Chapter 5
– Faders – Chapter 5

Good description of common IU terms, “Former Runners” and “Float Rotation”, these are both confusing and frequently misunderstood terms. Nate does a solid job of taking the time to explain these terms in detail as well as pulls up numerous past charts to visually represent them as well.

momo

The chapter wraps up with a couple warnings about fighting trends and the danger of following alert services especially in low volume stocks.

Another very solid chapter, lots of preaching about being your own trader and finding what works for you. And yes I used the word “preaching” on purpose (Definition of Preach: earnestly advocate (a belief or course of action). Sooo many traders need this lesson pounded into their heads, and Nate does a solid job of this in this chapter.

Linked at the top are the reviews of the other chapters. Below is my notes, and I’ll be back tomorrow (12/6/2014) with a review and notes from Chapter 3.

Notes:

Trading Concepts

Only trade stocks with volume
Only trade stocks with big daily range 50 cents to dollar. In one day or couple days

Reduce risk with solid support
Focus on stocks that ran in the past

If move works, pay yourself and take some off, reduces risk and stress. Puts money in the bank, then you can let the rest ride.

Short description of short selling
Just because a stock is up big DOES NOT make it a short.

Only Short these setups:
– Parabolics – Chapter 4
– Intraday Shorts – Chapter 5
– Faders – Chapter 5

Focus on overextend charts.

Think about risk to reward, if you want bigger winners you have to be ok with bigger risk.

Description of scaling in, vs going all in.
Add to winners, use house’s money as risk.

Bigger daily range, means more scaling in

Be careful adding if a stock won’t crack support, when it reverses you are more likely to be emotional and cover quickly.

Especially when your shorting, be sure to respect, support and resistance levels.

Be patient and wait for support or resistance to crack before adding.

“Always stick to your plan”

“Stay away from random trades, your results will be random”

Description of former runners and how to remember them
– Big past moves, watch for big volume again, good potential to run again if the volume is there.

Sympathy play – description and themes

Description of recent IPO moves.
-secondary runs

Look for hot sectors/themes

Good description of what a short squeeze is

Float rotation
-description – what the float is
-what rotation is
-more volume = more shares in few hands to little shares in lots of hands
-big spikes on low floats attract a lot of buyers AND shorts, and if it keeps going, only the shorts panic.

Do not fight the trend when float is rotating. Wait for backside and short pops.

“A stock price is just a number in time.”

Have rules and respect the trend.

“Need to be able to anticipate moves and make a plan” for long term success.

Danger of subscription alert services, especially in thin stocks.

Need to find out who you are as a trader.

Recap of Traders4ACause

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