reading: Techniques of tape reading

Professionals take the trade when they are comfortable with the risk, while amateurs do it when they like the potential profit.

I realized that people's perception of the news is what affects the stock price.

trade what you see, not what you think!!!!

If you lose money because of a mistake you've made, and you realized it and never repeat the same mistake again, then the money you lost is not a loss.

trading is about acting in familiar situations on familiar signals.

If you assume you has the possiblity to loss, you should not feel frustrated with the loss. you know it's just part of the game.

limiting risk also limits profit potential. Don't get frustrated with stop losses because they are just part of the game. Also, don't get too excited with winning trades, they are just one more confirmation of you correct approach. As a rule, smart money action can be seen as a slow, gradual price movement with steady or slowly increasing volume. The public’s action is characterized by hysterical and parabolic price spikes, almost vertical movement with a sharp volume increase. Buying at the bottom and selling at the top is actually against the trend. So if you are planning to work with the trend, DO NOT even try to buy at the bottom or sell at the top. Find your own setups, make plans for each setup and you will have discipline to obey. The major idea is that the public is the last to participate, so when public comes to buy, there is no one left to buy from them. Thus majority participation creates the final stage of the movement, which is followed by a reversal. During times of euphoria or capitulation, the majority buys or sells in aggregate and creates herd movement. The public’s action is characterized by hysterical and parabolic price spikes, almost vertical movement with a sharp volume increase. The principles are used to help us see different combinations of the price and volume change and their meaning. There are six major principles: 1.Euphoria/Capitulation: An acceleration in price advance, almost vertical movement accompanied by a volume surge, is usually not sustained and indicates the end of this stage of the move (euphoria stage). An acceleration in price drop, almost vertical movement accompanied by a volume surge, is usually not sustained and indicates the end of this stage of the move (capitulation stage). This principal serves two purposes: First, we use vertical spikes with a volume surge to liquidate our positions, selling our shares into a buying frenzy or covering our shorts into a sharp sell-off. Second, we start hunting for a trend reversal when we see hysterical movement. 2.Trend beginning (aggressive accumulation). Slow, steady movement upward with consistent volume indicates so-called good buying and means the start of upward momentum. 3.Trend confirmation (aggressive accumulation). The trend confirmation principle describes a slow price advance with steady increasing volume that indicates continuing upward momentum. The same can be reversed for the short side. When you see the majority begin to participate, the rate of volume will increase coupled with a steeper angle of the price movement. 4.Shallow retracement trend continuation. This principle entails a relatively big volume increase on the price advance with shallow volume on the pullback, indicating a continuing uptrend. If the pullback is not deep and is accompanied by decreasing volume, it’s usually a sign of trend continuation. The price passing the previous high will confirm the continuation. 5.Decreasing volume reversal. This is a slowing pace of buying with decreasing volume which indicates that the top of this stage movement is near. Buying is drying up. 6.Passive accumulation/distribution. Big buying volume without the price changing indicates distribution and means there is a resistance level (passive distribution). Big Selling volume without price changing indicates accumulation and suggests a support level (passive accumulation). Notice: Passive accumulation is bidding, buying only from active sellers. Often it’s accompanied by a willingness to drop the bidding price if sellers become too strong. Passive accumulation by itself does not lead to a price advance. Rather, it lays the foundation for a future price increase if and when the sellers get exhausted. Aggressive accumulation is characterized by buying at the offered price, chasing the price, and bidding the stock up. Aggressive accumulation does move the price up.