Traders Top 12 Favorite Trading Blogs

I conducted a poll titled “What is your favorite trading Blog?”  looking for the top trading blogs online. I was trying to get the poll out there and have some diverse voting. I looked around online to find other top trading blog lists to build my original poll. Thanks to everyone who cast a vote and also to those that took the time to fill in a blog under ‘other’ that allowed us to discover new blogs I had not heard of but seem great. I ended up getting 389 people to participate and I am happy with the results. My original plan was a top ten list but three blogs ended up in a tie for 10th, not wanting to leave out any of the three great blogs that tied I expanded this to a top twelve list. I had heard of many of these blogs before and read some of them at times. I believe this list could provide a great starting point to quickly find a few blogs that fit your trading style. I know I will start checking them out myself and find the ones that want to read going forward.

#1 www.NewTraderU.com

#2 www.MarketChess.com

#3 www.BenCBanks.com

#4 www.joefahmy.com

#5 www.seeitmarket.com

#6 www.smbtraining.com

#7 www.bclund.com

#8  www.dragonflycap.com

#9 www.jonboorman.com

#10 www.trendfollowing.com

#11 www.chartlearning.com

#12 www.fat-pitch.blogspot.com

Find a Monster Stock in 15 steps

Monster stocks are those wonderful beasts that make you look like a genius trader.

Shorts think that they are way too expensive and will crash, so they go short and have to cover en-mass after another 10 point run; they create even more buying pressure. Traders that short monster stocks do not understand the momentum that earnings expectations and growth cause for a stock’s price. They do not understand supply and demand. A stock that is $300, $400, or $500 based on earnings per share, could still be fundamentally cheaper than a $10 junk stock that has billions of shares floating around with tiny earnings per share.

Sounds great, but where do we find these beasts?

Many times, they are right under our noses. What about your new favorite energy drink, your favorite store at the mall, a new drug you are using with amazing results, your favorite restaurant, or the fact that you love everything Apple? Choosing a company you love is just the start of the process. Next you have to find out if it is a growth story, or if it is in decline. A stock’s price can only increase in conjunction with earnings growth or future earnings expectations.An old, giant, low growth big cap stock can only grow through innovation and not size.

“Buy the best, forget the rest.”

How to Find a Monster Stock

1. Review the IBD 50 each week for the best stocks in the market. The list is in the Monday edition of Investor’s Business Daily and available by subscription to www.Investors.com.
2. Look for higher priced stocks, with a minimum above $20. The best are often times the most expensive before splitting: $200, $300, $500 and up.
3. Earnings should be greater than 25% for the past few quarters, and growing steadily.
4. Sales should be close to equal with earnings and growing at +25%.
5. The best stocks should have a return on equity between 25% and 50%.
6. Look for growing industries where profits are expanding.
7. Monster stocks are the #1 company in its industry. Buy the best, forget the rest.
8. The stock should trade at least 500,000 shares a day, preferably a million.
9. Monster stocks are currently loved by mutual funds, and there are holders and buyers.
10. Monster stocks are special. They have a new product, service, innovation, or business model that is hard to copy or compete with.
11. Monster stocks have their best price action in bull markets with their key moving averages price supports at the 5 day ema or 10 day sma.
12. Even in bear markets or corrections, monster stocks bounce at the 50 day or 200 day sma creating a high probability entry point.
13. The majority of monster stocks have high volume options traded on them, creating liquidity that can be traded with little bid/ask spreads.
14. The majority of monster stocks are household names or most people know about their product.
15. Find and trade the very best monster stocks. You only need 5 to watch and trade.

Recommended reading: Monster stocks book by John Boik.

(Never risk more than 1% of your total trading capital on any one trade, always plan your position sizing carefully and have a planned stop loss along with a trailing stop to lock in profits.)

Trading in the Dark

This is a great point and article shared in my Facebook trading group:

From Simon Vuko: The below principles have massive trading implications for newbies:

‘The Dunning-Kruger effect explains that the problem isn’t just that they are misinformed; it’s that they are completely unaware that they are misinformed. This creates a double burden.”

“Studies have shown that people who lack expertise in some area of knowledge often have a cognitive bias that prevents them from realizing that they lack expertise. As psychologist David Dunning puts it in an op-ed for Politico, “The knowledge and intelligence that are required to be good at a task are often the same qualities needed to recognize that one is not good at that task — and if one lacks such knowledge and intelligence, one remains ignorant that one is not good at the task. This includes political judgment.” Essentially, they’re not smart enough to realize they’re dumb.”

– Psychology Today, 13th September 2016

Too many new traders rush into trading after a string of luck confuse luck with skill. Or they study a bunch of information and confuse knowledge with experience, actionable skills, and the right process. One of the most dangerous things for new traders and investors is to be ignorant of their own ignorance. The first steps in education in the finance world is learning what the right questions are to ask. Then understanding that so much of trading and investing is a psychological game more than a game of math.

Here are some warning signs of new traders that are blind to important market dynamics:

1. They think big returns can be consistent and easy.
2. They do not understand that bull market and bear market price action is very different.
3. They do not see the importance of position sizing and risk management because they are over confident in their trading.
4. They see no need for talking about trading psychology.
5. They think trading is all about making a prediction and betting big on it and letting it play out with conviction.
6. They have never heard of the term risk of ruin.
7. They think successful traders are either flaunting mansions, girls, and sports cars or they are not successful.

3 Dimensional Trading

Trading is not really all about stock picking, predictions, and opinions. It is not even just about a winning system. Yes, first you have to understand how to trade and put the odds in your favor of winning, but that is not enough. You must also add in risk management so when you lose several times in a row your trading career and account does not end there. You also must have  faith in your system and method to be able to keep trading it even when you are losing money, and you will have losing months, maybe even a losing year, can you keep trading through the tough times and stay around for the big wins?

One dimensional traders just have opinions and predictions, if they are right they win for awhile, but eventually they do not stop out when they are wrong because they value their opinions over the stop loss and eventually blow up their account. They also eventually get emotionally frustrated from wild equity swings  and they eventually quit and blame the market.

Two dimensional traders have a good system and cut their losses but have trouble with self confidence and belief in their system. They tend to blame themselves when their accounts have draw downs and have trouble understanding that it is just part of the game. The market environment is determining wins and losses not the trader, two dimensional traders don’t  understand this they are missing the winning trader psychology. All traders can do is take their entries and exits as they come and let the market do what it does. They have not separated themselves from their trading. Generally the two dimensional traders end up giving up due to not being able to handle the psychological ups and downs of trading real money during losing streaks.

The three dimensional trader takes entries and exits based on his methodology that he believes in, he manages risk per trade carefully and never loses more than 1% t0 2% of his capital on any one trade. The 3D trader’s self worth and confidence is not tied up in any one trade, or monthly performance, he understands this is a long term process with ups and downs. Wins and losses do not change the 3D trader’s mindset. It is just a business, trading positions are just inventory, the market gives and the market takes away, and the 3D trader just takes what it is giving.

“Successful trading depends on the 3M`s – Mind, Method and Money. Beginners focus on analysis, but professionals operate in a three dimensional space. They are aware of trading psychology, their own feelings, and the mass psychology of the markets. Each trader needs to have a method for choosing specific stocks, options or futures as well as firm rules for pulling the trigger – deciding when to buy and sell. Money refers to how you manage your trading capital.” – Alexander Elder

40 Steps In The Trader’s Journey

40 steps in the trader’s journey from new trader to rich trader.

They are as follows:

1. We accumulate information, we learn- buying books, asking questions, maybe going to seminars and researching what really works in trading.
2. We begin to trade with our ‘new’  found knowledge.
3. We make profits only to give it back very quickly and then realize we may need more knowledge or information.
4. We accumulate more information.
5. We switch the stocks we are currently following and trading.
6. We go back into the market and trade with our improved system. this time it will work.
7. We lose even more money and begin to lose confidence that we can even be traders. The reality of losing money sets in.
8. We start to listen to other traders and what works for them.
9. We go back into the market and continue to lose more money.
10. We completely switch our style and method.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get ‘over-confident’ in a single trade and put on a big position believing it is a sure thing and the market quickly takes our money.
14. We start to understand that trading successfully is going to take more time and more knowledge than we ever anticipated. MOST PEOPLE WILL GIVE UP AT THIS POINT, AS THEY REALIZE REAL WORK IS INVOLVED AND THAT THIS IS NOT EASY MONEY.
15. We get serious and start concentrating on learning a ‘real’ methodology.
16. We trade our methodology with some success, but realize that something is missing.
17. We begin to understand the need for having rules to apply our methodology.
18. We take a sabbatical from trading to develop and research our trading rules.
19. We start trading again, this time with rules and find some success, but over all we still hesitate when we execute.
20. We add, subtract and modify rules as we see a need to be more proficient with our rules.
21. We feel we are very close to crossing that threshold of successful trading.
22. We start to take responsibility for our trading results as we understand that our success is based on our ability to execute our methodology.
23. We continue to trade and become more proficient with our methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and trade.
28. Our trading results are getting better, but we are still hesitating in executing our rules.
29. We now see the importance of following our rules as we see the results of our trades when we don’t follow the rules.
30. We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We learn smaller positions lower the volume of our emotions so we trade smaller and this surprisingly makes us better with our discipline.
37. We learn that risk management is one of the biggest keys to winning as a trader, we start to understand that big losses will make us unprofitable so we finally trade a smaller and consistent position size.
38. We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our position size only as our account grows.
39. We are making more money than we ever dreamed possible.
40. We go on with our lives and accomplish many of the goals we had always dreamed of. Money is our new tool to do what we have always wanted.