Description

My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud


Thursday, May 8, 2014

Question: "How Does Your Strategy Change in a Bear Market?"

"Sell in May and go away" is an expression commonly heard in trading circles. Veteran traders know that the summer can tend to be slower, especially in the OTC market. The first few months of 2014 were the craziest three months of trading in the OTC market I have experienced since I began trading. I couldn't believe the number of plays we had on a daily basis, and it seemed that every time one died, another would immediately surface. Finally, we are beginning to see action slow down, and many traders are left wondering what to do.

I have been asked a number of times about how my strategy changes as the market shifts. To be completely honest, my strategy barely changes at all. If anything, I become slightly more short-biased, but this really only applies if it is a very bearish market. However, I am still watching the same chart patterns, I am still looking for the same setups, I continue to take the same approach as I would on any other day.

There are far fewer runners right now than there were in early 2014. All this means is that I must be more selective as a trader. I don't find different setups to play to keep myself entertained. If there's no setup, then there simply is no play. It is perfectly fine to go a day or more without even making a trade if the setups that you're comfortable with don't present themselves.

The natural question you might be left with is, "If I don't trade as much, won't my profit rate decline?" Unless there are a couple of truly spectacular setups in a slow month, yes, this will be the case. Trading does not provide a steady monthly salary. Some months will be great, some months will be a bit slower. The key to making it as a trader is remaining consistently profitable. Every day, no matter what kind of market we're in, I play the same chart setups I've been playing for the past two and a half years. As a result, I have never had a losing month and very rarely even have a losing week. I survive market slowdowns/downturns because I focus ONLY on the patterns that work for me, even when there are very few of them in the market.

I hope this helps clear up any confusion!

16 comments:

  1. Hey,

    I just finished watching Investorslive Texbook Trading DVD. Would you say your setups are similar to his or is your strategy more varied differently?

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    1. Hey,

      Your name tells me you come at least as origin from Albania, just found it interesting to meet another Albanian studying pennystocks. How was the dvd ? Worth it ?

      All the best ( even if you might live somewhere else lol )

      D.A

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    2. Hey, I am from Albania. Moved to the UK long time ago. I would highly recommend the DVD. Its definitely worth a watch to understand when the odds are on your side and when to consider buying/selling.

      Feel free to add me on fb for more info.

      Good luck!

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    3. Sure I will add you soon,

      Good luck to you too !

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  2. I just got the DVD also and I find it very helpful. I am on my 2nd time watching it. What Nate teaches on the DVD makes so much sense that I don't understand how can there be different strategies; unless its just variations of his strategy. The more you watch it the more it sticks. I feel it is very informative and will definitely help me become a better trader. I cant wait to apply the methods. I'm only starting with 1,300. I just have to stick with making good trades and being profitable instead of the amount of profit I can make if i had more to start with.

    I have Tim's DVD's, but feel Nate actually explains what to look out for. Tim's explained the charts patterns to take notice of and why, but it really did not assist with noticing when the entry or exit point's as Nate's DVD..

    Do you implement some of the stuff Nate speaks about though or is your style setup completely different?

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    1. I've also found Tim's explanations a bit broad stroked at times. Which of Nate's DVDs did you find helpful?

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    2. I didn't know he had more than one. I saw the Textbook Trading DVD that my buddy has. I've watched it over at his pace and taken some notes. Which DVDs are you speaking of though?

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  3. Thanks for the Blog Tim, great read!!!

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  4. Thanks Tim. That was a question I had and you answered it perfectly.

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  5. regarding equity feed..what is the difference between the otc/pinkshhet packages and the stocks under 5 package?

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  7. tk's Tim, I move to the Nasdaq S Caps especially close of May 25th through June 5th, a nice historic Window for the Russell 2k.

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  8. Great work, thanks for sharing with us ..
    trading tips

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  11. Hey tim do you have an email in which you answer questions to? I swear I wont spam it lol! Anyways. I was curious of what you use for your indicators while shorting a morning spike. What are your indicators for determining when you feel it is safe to begin your short? and what indicators do you use to determine the bottom?

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