To be a successful trader means to find an approach with mirrors your own identity. That’s very hard, because the most traders start their career when they are young. Often they have not the needed self-awareness and are in the middle of the journey to find out more about themselves. How do you want to know what suits you at that point in time?

What’s my personality?

It all begins with some basic assumptions. Look into yourself and ask yourself:

• Do I have fun with analytics?
• Am I a solver of abstract problems and challenges?
• Do I like programming software or mathematical algorithms?
• Am I an artist and do I like music, arts or graphic design?
• Is economics and economic relations one of my favorite topics?

This is very basic, but a point to start with. You must find something which suits you and where you already have some experience with. From biologic point of view: Where did you already build paths in your brain?

In that situation books about success and self-improvement can help. They often contain methods to find your personal strengths.

If you don’t work on that topic, you will never become a successful trader because you will never find an approach which suits you.

Forget predefined trading methods

I am very sure that the most traders will fail if they use trading systems from other people. They don’t mirror your personality and that’s the point where you start to sabotage it.

It doesn’t matter if you use an automatic trading system or a discretionary trading approach. If you can’t accept the outcome and decisions you will start to sabotage it. That’s why it’s so important to find a compatible approach.

You must start the journey of finding your own approach. In that journey trading approaches of other people can be an inspiration. Sometimes they match your personality to a high degree and you only have to adjust just a small parameter. In other cases you have to develop a complete trading system by yourself to accept it completely.

There is no shortcut

Finding you own trading style is a difficult thing and there is no shortcut. Often it means to get familiar with yourself and your identify.

Mistakes are unavoidable on that path. But every frustration and mistake will bring you closer to your goal. It is important to reflect your mistakes and your actions to learn from them. And be sure: Your journey is never finished because your personality will change over time. I am sure that you will be a different trader in 10, 20 or 30 years.

There are some sources which helps a lot:

• Books and videos about success, psychology, motivation etc.
• Biographies of other people.
• Spiritual books, videos and courses.
• A good mentor or coach which helps you.

In a nutshell: Use everything which helps you to know more about yourself!

My personal experiences

If I look back I can’t say exactly where I started as a trader. My interest in trading got stronger over time until it started to be my passion.

At the beginning I struggled a lot and tried every approach and every trading instrument. One month I was a pure technical and the other I was a fundamental technical trader. The next months I traded stocks, the other I traded certificates (popular in Germany). I tried different subscriptions of German trader platforms and newsletter …

But when I look back, certain things always accompany my trading career:

• Cutting losses with a stop-loss order always made sense to me. Maybe that based on my thinking about a businesses. You must make bets, but the bets must be small enough not to lose everything you own.
• Trading stocks. Although I traded every trading instrument on earth, I tended always to trade stocks. I like to understand what the company is doing and I have a strong attraction to technology and innovation. I have a lot of knowledge in this field and can assess how important a special technology is.
• Technical analysis. I am a very visual person because I started in the graphic design business. That means I have a trained eye and can quickly find patterns inside a chaotic image. I also like music very much. That makes me familiar with patterns and rhythms.
• Rule based discretionary trading. Although I make some analysis, this is not my strength. I believe in experience, craft and rules. Rules helps me to improve my work and experience helps me to find rules. I can develop simple own screener and indicators, but I can’t develop automatic trading systems. That’s why I always used a rule based discretionary approach. I tried some more systematic approaches in the past but I can’t stick to them. It doesn’t feel right and was not compatible with me.

I never would say that I am at the end of the journey. I always have fields where I struggle with. In the last months I tried to find out how important fundamentals are in my approach. Today I can say: Not so much. But I am very sure that there will be some challenges in the future. As long as my personality growths and changes I will be in the journey to find my own trading style.

Recommended books

Here is a small list of recommended trading books about this topic.

[amazon box=”007174908X,1118273052,0062315005″]

Der Beitrag The Hardest Thing About Trading … erschien zuerst auf Trading Blog - Julian Komar.

For a lot of people it goes against their beliefs to buy new highs. Why? Because the stock seems to be expensive in that moment. But the stock market works not like a supermarket. Cheap stocks are mostly not a bargain, they are rotten eggs.

The most persuading argument for me to buy a stock on a new all-time high is: What must a stock do if it should move up 10.000% in a row? Answer: It must take out old highs and reach new highs.

Example: Amazon – New highs are buying opportunities

Amazon is one of the most successful stocks in the last years. I put a simple 52 week high line (with a Donchian Channel) on the chart. You can see clearly that every 52 week high was a buy opportunity.

Of course the stock had some seriously corrections, but that’s why you need a trading system with risk management and not only one indicator.

There are plenty of similar charts next to Amazon like Apple, Netflix, Nvdia and many more. All these super stocks have in common that they continuously reaching new 52 week highs and especially all-time highs.

The difference between a 52 week high and an all-time high: Overhead resistance

Not in all cases is there a difference between a 52 week high and an all-time high. Because if a stock is priced on an all-time high, it is automatically a 52 week high. The only difference is “overhead resistance“.

With overhead resistance I mean all potential seller that would sell a stock at higher prices. These traders had bought a stock at a higher price and now their trading positions show a loss. If the price returns now to a higher price they maybe close their position for break-even. The problem is that a seller is a seller and they are able to stop a price move.

If a stock is priced on an all-time high, the stock has “blue sky potential“. That means every trader has a position that shows a profit. No one is urged to sell because the trading position hurts.

But there are situations where the overhead resistance is absorbed by other traders. In these situations the stock quickly moves to new highs and afterwards maybe to new all-time highs.

All-time high trends lasting longer as you think

A stock with “blue sky potential” can trend longer as you think. If there is no serious selling pressure, the stock can move a long time until it hits resistance.

Stocks on new all-time highs have no technical resistance because there is no trading history. A trader cannot look back and search for important price barriers other similar. The only situation where an all-time high stock can reverse is if the bias in the stock changes. This normally takes a longer time and is caused by bad news.

You will see a change in an all-time high stock quickly. Normally it is gapping down or moves quickly to the downside. In that situation new overhead-resistance is created.

But if there is no bad news or anything similar, the stock can move much longer as you think.

Bull markets and new highs

Of course all upper examples are selected in hindsight. But normally bull markets produces a lot of similar examples.

It’s not possible to catch every superstock but you may ask yourself: Where do I want to fish?

• Do I want to fish in a sea with small, stinky fishes and where my odds are bad to fish a big one?
• Or do I want to fish in a sea where some really big fishes are swimming.

I prefer the last one.

So you can see that the important question is about the odds. That’s what stock selection is about. If you combine multiple criteria, the odds will increase and you maybe fish a really big fish out of the sea of stocks.

Should I trade in the weekly chart because of 52 week highs?

You can do it if weekly charts are your preferred time-frame. But it’s not necessary. I personally prefer the daily chart. And you should not blindly use a 52 week high as a trading signal.

The upper examples should give you an idea about stock selection. It’s much easier to trade a stock on a new all-time high. The selection is easier because the stocks are obviously visible, there is no overhead-resistance, often smooth trends emerge and the moves to the up-side are faster. That’s why I look for stocks on new all-time highs.

Recommended books

Here is a small list of recommended trading books about this topic.

[amazon box=”0071494715,0071614133,0071807225″]

Der Beitrag Buy high – sell higher: What must a stock do to rise 10.000%? erschien zuerst auf Trading Blog - Julian Komar.

Yes, I also spend a big portion of my time to find setups. But the methods stay the same. In the past I developed multiple ways to screen the market for interesting setups. Today I only seldom adjust the programming codes.

Do you have to be a programmer to find good setups? I don’t think so. Programming knowledge will help you and you should learn to program, but there are many other ways to discover great trading setups. I will show you 3 …

3 easy ways to discover great momentum trading setups

Here are some simple ways to look for great momentum trading setups. The methods are not complex or science and the tool I use is free!

Looking at biggest winners today/week/year

Momentum stocks have one in common: They are rising fast. So you can use the top gainer lists to look for setups.

I mostly look at these criteria at Finviz:

1. Stocks that moved more than 5% today. These are really strong movers and you maybe want to take some of them on your watchlist.
2. 10% week winners: Here are stocks included that moved more than 10% a week. Mostly strong momentum moves starts with a strong move over a few days. I go trough all stocks in a Finviz chart gallery and maybe add some to my watchlists.
3. Strongest stocks for 1 year: You will make the discovery that all the leading stocks are the most strong movers over 1 year. They always appear on the lists. Why? Because there is a great demand and they are making continuously new all-time highs.

Strongest mover from 52 week low

Another method I use is to look at the strongest movers from their 52 week low. The reason is simple: Good performing momentum stocks hold their acceleration. That means that the distance between the current price and the 52 week low will be the same or getting bigger.

In Finviz you can sort all stocks by their distance from the 52 week low. I normally use a minimum of 70%. That means all stocks should be at minimum 70% away from their 52 week low.

Unusual or high relative volume

I want to find stocks that not only show momentum but strong volume, too. My biggest winners all started with a huge volume. Sometimes 5 or 10 times the average volume.

Here are two ways to find strong volume movers:

• Unsual volume: That is a signal filter in Finviz. It shows you all stocks where the volume is strongly above average. Sometimes here you can find interesting candidates for a watchlist.
• Strong relative volume: This is almost the same, but you can choose your own setting. I run a Finviz filter multiple times per trading session. For my filter I use the value 1.5, which means that I want to see only stocks with at least 1.5 above average volume.

Keep it simple to find good momentum setups

Yes, I run also more complex screeners. But they all come down to two things: Movement and volume. In all screeners I combine different filters. You can do it in Finviz, too.

I sometimes think about to give up my complex screeners and switch to the simpler ones. The more simple the better you can follow your routines.

The upper filters and screeners are good to start with. Especially for beginers. You must find a simple routine and follow it. If you did it for a while, you build up trust and you know what you are looking for.

Filters and screeners help you to focus more on price- and volume-behavior. They are not a trading system, they are just a tool to make the process easier for you.

Although I have multiple screeners running, I went through hundreds of charts per day! In a week I maybe see 2500 or more charts. Some of them I see every day. If I had no routine, screener or filter, I would not be able to do this.

Recommended books

Here is a small list of recommended trading books about this topic.

[amazon box=”0996307923″]

[amazon box=”0071807225,0071614133″]

Der Beitrag 3 easy ways to find momentum stocks with Finviz erschien zuerst auf Trading Blog - Julian Komar.