Last month I wrote a post about SMB Fundamental #7–Reviewing Your Important Trades. Today I would like to discuss #1–Proper Preparation. All trading success begins with proper preparation and that is why it is #1 on our list of trading principles that must be followed for each trade. Part of my morning pre-market preparation is to review the price action … Read More
Technicals Trump The Tape in Financials
We consider three things when making an intra-day trade: The Tape, The Technicals, and the News. How each of these factors is weighed depends on the particular setup, the type of stock and current market conditions. JPM was the first large financial to report numbers on Friday. The numbers were not particularly good and it was showing weak price action … Read More
What Do You See?
As traders it is our job to trade what we see. But as humans we may have difficulty being objective evaluating the amount of opportunity the market is offering intra-day. Perhaps you read headlines talking about how “quiet” the market is or that the level of volatility is so low it is too difficult to make money. That information may … Read More
Goldman Sachs Showing Influence Again?
Identifying short term trading patterns is the lifeblood of professional traders. By patterns I don’t simply mean a simple pattern one might draw on a chart. I am referring more broadly to catalysts that will in turn lead to price action that I can use my trading skills to take advantage. Yesterday Goldman Sachs (GS) downgraded SNDK. This downgrade occurred … Read More
SMB Fundamental #7: Replaying Your Important Trades
Back in early 2006 we established what have become known as the SMB Fundamentals. They are a list of 7 trading principles that SMB believes should be followed for every single trade. Fundamental #7–Replaying your important trades–trades that offered a ton of opportunity—help you mentally prepare and execute at a higher level when faced with a similar trading scenario in … Read More
Not Much In Play—Be Very Selective
This is a time to be cautious as a short term trader. Volume is light and there is not much In Play. The SMB Radar is our insurance policy during slow market times to make sure we focus our energy on the stocks with the best risk/reward setups. When I look at the Radar during the day and most of … Read More
Trading Lesson #2: Don’t Trade Cash Takeovers
Trading Lesson #2: Do not trade stocks that are purchased in an all cash transaction. There is very little intra-day movement. Here is the chart for BCSI on December 9th 2011. It spent almost the entire day in a 5 cent range. Not exactly a treasure trove of opportunity for directional traders. Steven Spencer is the co-founder of SMB Capital … Read More
The Risk of Closing a Position That is Working For You
I was watching DRI trade on the Open today. To say that the price action was “whippy” would be an understatement. It seemed to be touching every price and there was no way I could possibly control my risk. So I waited. After 10:00AM I initiated a short position at 43.25. I saw some selling a couple of minutes earlier … Read More