We espouse a belief that it’s not what you learn about successful trading, it’s HOW you LEARN it. In other words, until you’re actually trading stock or financial assets, all you’ve learned is theory.
As a new trader you read voraciously and start off thinking, a stock should do this or that, given a pattern or strategy. However, until you’ve actually put money to work, you’ll never really learn how to be a successful trader. While that might seem obvious, trust me, there’s more to trading than what you’ll learn in a book.
One of the most important rules I’ve learned in my 32 years of trading and investing has to do with price. Arguing that a stock price should do this or that, isn’t as important as what price actually does.
Price is king. Only price pays!
Considering the above, bullish traders or investors want “to see” price moving higher before getting into a long position. Therefore, if price action is above a bullish 9ema, or 21d moving average, we can be pretty comfortable with a bullish setup. We like buying pullbacks to the 9ema or 21d for initial entry.
Canopy Growth – Changing Trend
Canopy (CGC) appears to be changing trend as price action spends more time above the relatively flat 21d moving average. We also see a potential inverted head and shoulders reversal pattern, with the head defined by the November low. The neckline was pierced on Monday.
MACD and RSI give us a bit more edge as both are rising (as a function of price) while suggesting more potential. Since we have 50/50 odds at the point of entry, that a stock will do what we think it “should” do, we need to “see it” follow through first before adding to our position. So, with CGC we’ve seen numerous days where the stock is being bought along the 21d. Volume started increasing intraday, giving us a confirmation that the stock was “in play” as we took a tier-one entry. We’ll add if it rises.
Canopy Volume – Just Do It!
We started this blog post talking about learning and doing. Until you actually enter a trade and exercise what you’ve learned, you’ll always have questions. Did I enter at the right time? Why did my entry fail?
We’ve found paying attention to volume and price action between 11:00 AM and 2 PM is a good practice to get into. In other words, wait for price action to mature and for VWAP to confirm. Volume usually tapers off dramatically after 10:30 AM ~ 11:00 AM when a stock is NOT IN PLAY.
Note the “Relative Volume” (RVOL) on Monday compared to Thursday, and Friday. When we entered our position, we saw elevated RVOL. This gave us an “edge” as we could clearly “see it.” The stock was “in play.”
A few more points confirmed our decision.
- Price action remained above the bullish VWAP.
- Price action exploded out of a tight squeeze (Bollinger Bands).
Finally, consistency breeds success. Find a strategy that works and stick with it. If the strategy is a good one, it should be repeatable. Until you actually put that money to work, you’re just learning.
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Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional investment advisor in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Trades and or positions listed and taken from the watchlist are my own and should not be considered “advice” to enter any particular position or asset.
We would like to draw your attention to the following important investment warnings. The value of shares and investments and the income derived from them can go down as well as up; Investors may not get back the amount they invested – losing one’s shirt is a real risk; past performance is not a guide to future performance.
Live broadcasts are educational in their content. Proper risk management is considered on every trade or asset mentioned.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.
As always, the use of technical and fundamental analysis is encouraged in order to fine-tune entry and exit points to average seasonal trends.
These mentions are stocks that we may or may not decide to trade as outlined in the watchlist. Always use a stop.