My Own Stock Guru
Are you looking to get started trading stocks or have you started but feel a bit lost then stay and read this post, we will show you how we read and interpret the chart and what we are looking for before we enter new trades.
Every time I take a trade it goes against me right away, why?
Most of the time people are not taking the time to really understand the movement of a stock, instead they jump in because it looks like it's going to jump up and they don't want to miss the move. They buy the stock only to see price drop and then because of the fear of losing money, they hold the stock and all it does is continuing to lose more money; at this point some people start buying more thinking it will turn soon and I will double my money. Instead, it continues to hurt them, and they keep holding, this is the fear of losing but frozen at the point of hope, hoping it will come back. Don't worry, you are not alone, even we here at MoSoG (My Own Stock Guru) does it sometimes, and we have been trading since early 90's, we all get caught doing this and if someone tells you they don't, then they are lying. Just look at some of the hedge funds that folded in the last year, they all got stuck in trades where they didn't follow their trade rules, it happens to everyone, so you are not alone.
When you are thinking about taking a trade, you really have to create a good view of the stock that you are about to buy. This starts with looking at higher timeframes first, such as monthly, weekly, daily, 4 hours, 1 hour and then down to 10 min timeframes. This will give you a better view of where the stock has been before, where it sold off fast and hard and did it create gaps, this will lead to you having a better understanding of your entry point. Imagine you see that the stock is right at a monthly resistance level, last time it was here it sold off fast and hard, if you enter at this spot, you stand a chance of seeing your stock potentially taking a dive and you will enter into a losing trade. Additionally, if a stock is trading at an all-time high, there is a chance that it will sell off a bit because people are taking profit and closing out their trades and this will cause the stock to drop, over time it could continue higher if the company has good products/services, this is why it is also important to understand the business a bit, look into if the stock has had some bad news recently or if there has been a lot of inside selling by executives, if so, why? Is it just part of the stock package that they have or is it something else?
Have you ever noticed gaps in the price/chart? Do you wonder why they happen? Some people will tell you that this happens because of data flow was missing, sure, it could be but think about it, do you think a HFT (high frequency trader) company would be ok with missing data? ABSOLUTELY NOT, so what is happening, most of the time there is a reason behind it, such as big order blocks, bad news, etc; so how are you supposed to trade with all of this happening around you and you being a retail trader that can't really move the market?
Supply and Demand drives the price in everything you see around you, so why not in the stock market or Forex market?
Price action is a known concept of only looking at the chart without all the distractions of indicators, this is what we will show you in a couple of pictures in this post. If you can learn how to read a chart "naked" then you can add whatever you want after that. We use indicators when we show people how we take trades based on our proprietary trade signals, we do this in order to give people some tools to look at that may help them; however, when we trade, we usually do this without indicators since they are lagging, meaning the data they are showing are in the past, but they can be good for some directional support.
Let's take a look at picture #1, this is a chart from OXY (Occidental Petroleum Corp), start date is August 31st, 2022. We have painted out the different areas that have gaps and we then ask you "how would you trade the stock from here?", we will traverse through some days and show you why the stock was moving like it was and this is beyond the "news". Price action will give you a direction of where the stock could move to, the news is used to move a stock into areas where institutional buyers would like to enter or exit the stock (most of the time).
In the image above we can see that the price of OXY dropped but then it looks like it is going to bounce and start climbing back up again; we are willing to bet that it is even around a fib level that some people would use, lets take a look.
There you go, it retraced back to a 50% fib, so this baby is going up. This is what a lot of people would agree with and its around support, so this should be a good bullish trade, right?
Well, that didn't play out the way you thought, price dropped and created a gap, why didn't the fib lines work? Well, look left and you see an earlier gap that was repeated twice, it did close once but then another gap in the same area. This is potentially a DEMAND ZONE, price is driven down to this place and then it flies up, is that what could happen here? Let's check what happens as time moves forward.
Is it starting to become overwhelming? Our drawings show you how we really are looking at charts and trying to determine what is going to happen, it gives you a good insight into how we think and where we start to look at areas of entries and profit zones. Ok, lets take a look at the last image and see if we can get this even better for you.
As you can see here, a lot of things are going on. Gaps are created and filled, supply and demand zones are displayed, but how do we know what are supply and demand zones? If you ask 100 traders about supply and demand zone you will probably get 100 different answers, here is our answer. We look for areas where price suddenly took off aggressively and fast, this is usually depicting an area where a order book is built or an area where people are taking profit; a supply zone is where profit is taken and price usually drops from here, the demand zone is where an order book is built, meaning institutional investors are buying up the inventory and price is getting ready to take off. The rule for these zones is that price had to move aggressively and fast away from this area, when it moves so fast it usually indicates that some orders were not filled before price took off and price will most likely come back to fill those orders as well. The more times price hit a zone, the weaker the zone gets because all profit or demand has been addressed and people move on to new things.
Keep coming back to our pictures that we have included here; you will start to see the things we see before we jump into a trade; does this mean we don't get on the wrong side of a trade? No, not at all but we look at getting out at our pain level with our stop loss established at a certain % of loss, this level has to be something you set in your trading rule book but think about how many bad trades you can have before you blow your account, additionally, your profit level (TP = take profit) zone should always be at least 2:1. This means you can have 2 losing trades while 1 trade will cover those 2 trades, or if you use $100 you expect to get at least $200 in profit which would then give you $300 to trade with on the next trade.
If you take a look at our Alert Result page, you can see the % gains that we get from a lot of our alerts, some of these are running into 100's of % gains. It all comes down to timing, this is why it is important to understand if you are at the right place to take a trade and where do you think the price is going and once it gets there, get out or lock in 90% of your profit and let it ride.
We recommend (of course we do) that you join our service and try it out for 15 days for free, you will find that what we are providing will give you good insight and you don't have to sit and find the next mover, we do that for you. You get 15 days for free without any credit card commitment and if you don't want to renew, you don't have to, and we are certainly not renewing it without your consent. JOIN NOW
