Lessons from the Pros


Focus on Making Money

Today’s piece will be somewhat short and sweet. One of the most important things you need to do to be successful when short term trading for income is to have proper focus. What I mean is this… as a short term income trader, all you need to do each day is look at a chart, apply the Supply/Demand strategy and focus on where banks are buying and selling that day. The hard part is to only focus on that.

Below is an S&P trade that we took in my live trading session with our members. One of the levels we focused on was the supply zone highlighted as special. These buy and sell areas are found by locating on a chart exactly where banks and financial institutions are willing buyers and sellers. The key is to follow our rules and perform our rule-based analysis well before the market gets going and well before our trades take place.

How to see high probability trades on a price chart.

Bank supply that day in the S&P was in the range you see above. With an entry at the supply zone, a protective buy stop above it and a profit target at the blue line below, this was a 5:1 trading opportunity (risk 1 to make 5).

On the chart below, once the market got going, price rallied to our supply zone and then proceeded to decline from that level to our profit target, risking 1 to make at least 5. Had the trade not worked out, not a big deal, it was a risk we were willing to take because the chart suggested a high probability opportunity.

stock trade chart illustration

What makes this focus so hard for most people is all the other things they let sneak into their decision making process. They also let emotion play into the trade which will typically lead to a smaller trading account. They overcomplicate what is really not that complicated. The focus needs to be 100% on where the bank and financial institution’s buy and sell orders are that day and then buying and selling there, nothing else. When it comes to profitable trading, knowing the details of what is happening to the European economy or with the Fed is as important as knowing which black socks I’m going to wear that day, who cares…

Free Trading WorkshopWhen people use the term 100%, most of the time it’s a figure of speech, I am not using it as a figure of speech. Profitable trading goes hand in hand with profitable thinking, 100% of your focus needs to be on one thing and one thing only: where the significant institutional buy and sell orders are, period. As I always write about, we do this by learning how to identify supply and demand zones on a chart. We look for the picture that represents a major supply and demand imbalance and then take action at that zone. Some people will want to also include some indicators: Fibonacci levels, maybe the latest oscillator… wrong again… you need to have a razor sharp focus on where the major buy and sell orders are, nothing else matters.

Now that I have repeated myself a few times, hopefully you get the point and I will not waste your time with more repetition. This is just my opinion, of course, but from my experience nothing else matters when you know where institutions are buying and selling in a market, and that’s the focus of Supply and Demand. If you don’t agree, that’s fine as well, this is what makes a market. Next week we will focus on why that zone was special and how the order flow behind the candles work.

Hope this was helpful, have a great day.

Sam Seiden – sseiden@tradingacademy.com

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.