Bread and butter trading strategy

Sometimes, traders try to do many different things. Trade intraday, swing trade, short parabolic moves, buy break outs. Most of the time, its too much. If you can find one or a few things that fit your personality and that give you an edge and you hone like crazy, practice and get better, you will find success.

So its no surprise that many of the best traders I know do a small number of things exceptionally well. A couple years back, we wrote a book on the topic called The StockTwits Edge and it has tons of go to and in depth setups from some of the best of the StockTwits community. Here are the specific characteristics I look for:. It has a strong uptrend and a good dividend which makes it an attractive long term position. Despite the good dividend yield it also occasionally offers the opportunity to add income.

As it gets extended from the Simple Moving Averages SMA it generally pulls back and finds support.

That is when the trade adjustment kicks in. This is like buying a Call Spread for the rebound and also selling a Covered Call. What makes this trade one of my favorites is that it can often be put on for free or a small credit.

Anywhere between 47 and 48 I sell the Call Spread for what I can get and let the Covered Call expire. Below 47 at expiry everything expires and i still own the stock. For a long term position this is a win only trade! Kids, do not try this at home. This shows there is still potential buying or selling pressure.

It starts with sentiment leaning in one direction.

So in a downtrend, for example, the extreme bearishness would first catch my attention. New lows are put in to extend the downtrend, while momentum I use RSI puts in a higher low. You can make the same argument and trade with extreme bullishness in sentiment while a security is in an overextended uptrend that is not confirmed by momentum. In that case, I would look to short it. The Euro and European stocks in summer of are a great example.

Attached is the bearish cover of Barrons July 16, representing the sentiment at the time. This is my favorite trade setup.

And I was writing about it as it took place. See here and here. As the stock becomes neutral on short term, the 5DMA begins to flatten out and I then look for a short term higher high again identified on 10 minute timeframe and then purchase at that level. I am also of the belief that if the company is able to report better than expected results when they report Q3 earnings in mid to late Oct that the stock has another leg higher, possibly to the highs made on its iPO day back in May Phil is the Marketing Director at Bank of the Ozarks.

Previously, he was the interactive editor at Yahoo Finance and developed the Finance Contributors Program there. Before that, he was the executive editor at StockTwits. Phil Pearlman's Blog 8 Fat Swine, 12 Fat Sheep, 2 Hogsheads of Wine…. Skip to content Phil Pearlman's Blog 8 Fat Swine, 12 Fat Sheep, 2 Hogsheads of Wine…. Wednesday, August 21, Sometimes, traders try to do many different things.

System update: Bread and Butter Trader Traders Bulletin | Free Trading Systems

Here are the specific characteristics I look for: New all-time highs is even better. Such types of stocks tend to outperform substantially. This setup often provides the best entry to a swingtrade because we can catch it as the short term momentum turns higher which puts it in alignment with the longer term uptrend.

Which Chart Pattern Is Your "Bread and Butter?" - The Lazy Trader

We also minimize the risk of time because we do not buy in the neutral zone but instead join the trade as buyers re-establish control of the stock. Once the trade is entered the job is then to manage the position, the initial stop assures us that any loss we may experience will be a small one. The process of raising stops up under higher lows allows us to stay in the position while the pattern of higher highs and higher lows remains intact.

This is where the calendar comes into play, I sell a shorter dated option of the same strike that I buy in the longer dated period.

If this works out this week, I may look to then sell a higher strike call, in a shorter dated expiration or actually in Oct and create a vertical spread. The whole point of the calendar spread is to lower the cost basis for the call that I want to own and minimize the potential for decay hurting your directional thesis.

Finance Bloggers Should Be Using Google Plus. Max and Me Giving a Shit About the NASDAQ Outage.