Powerful Trading Lesson During Extreme Volatility

Trading Lesson

Today’s trading lesson walks you through preparation, and what it takes to succeed

The weeks of January 11 and 18, 2016, offered stock traders double the money, and double the experience to grow.

Or… double the frustration, for traders without a system. Double the confusion and anger, for those without simple trading criteria, that define opportunity.

Powerful Trading Lessons

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Experienced day traders were in heaven, volatility was expanding, but more important, stocks traded in an obvious direction.

For clueless bottom-fishers, the stock market was an exhausting 2 weeks, that separated them from their money.

Imploding crude oil prices, China, and earnings season, became the perfect storm, the “catalyst” in trader lingo, for the increase in volatility.

This was a 2 week period to print money, if you were prepared…

Why Most Traders Struggled and Lost Money During this Golden 10 Days of Stock Market Volatility

There is a delicate balance traders need to assess, before choosing stocks to trade. The balance between; profit potential and risk.

How much can I earn, in exchange for the risk I need to accept?

Struggling traders choose volatility, as the only criteria. The desire to make money takes control. This is like driving without brakes. This type of trading gets your heart pumping, but doesn’t keep you safe.

Most traders struggled, or lost money, because their criteria is random. Successful trading is structured. If this, then this… This applies before the trade AND during the trade.

  • If the stock meets this criteria, I will consider trading it.
  • If a stock meets these up trend identifiers, I will be a buyer.
  • If the stock is in a down trend, but is strong today, this is my profit taking strategy, for today.
  • If the stock moves higher, this is what I plan to do.
  • If the stock moves lower, this is my plan.

If you struggled, your criteria is fuzzy. You are missing, “this is exactly what I am looking for…”

If you struggled you chased price, without the proper context of institutional order flow. You could not clearly answer, “what is the big money doing?”

If you were honest, you would not have been a knuckle-head, trying to pick a bottom during a crystal clear down trend.

The big money was selling. You should have joined them.

How to Benefit from this Powerful Trading Lesson

Powerful Trading Lessons


Today’s podcast walks you through preparation, and what it takes to succeed.

Before you choose a stock to trade, you need to determine your personal balance, between volatility and safety.

This is done in your scans. First, choose, a minimum number of average shares traded per day, for me it’s 2 million.

This tells me institutions are active in the stock. This tells me I can manage risk. This tells me the stock will be supported by supply or demand often enough to justify watching for a trend.

The second criteria is volatility; giving yourself a chance to make money. If volume is the brakes, volatility is the gas. Average true range shows you profit potential. For me, I use $1.50 over a 14 day period. This means the stocks in my game plan, offer consistent money-making opportunities.

Only after you decide on this criteria, then do you scan for trading ideas.

If you missed out on the incredible trading opportunities the last 2 weeks, pour a cup of coffee and get clear on your criteria…

If you enjoy the podcast, join us in the trading room...

Pete Renzulli

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