Combine Headlines, Fundamentals To Trade Stock Market
In this article:
- Build structure with news, strategy, fundamentals
- Liquidity defines speed of the trade
- ‘Flip the switch’ to win in bear market
This market seems like a continuous, frustrating quagmire of extreme volatility.
What trader really likes the back-and-forth chop of uncertainty that has persisted for months?
And, what trader really wants to sit on the sidelines and watch all the profit potential of the market pass by?
Traders want to participate actively in the market. Traders want to trade.
The difficulty is finding and trusting a strategy that does well in the market… a strategy that thrives in the boggy chop of this bear market.
(Check out the free video, above, for insight into trading this changing market.)
Headlines, fundamentals combine for traders
There are key factors of this market that traders should understand before trying to overcome this choppy uncertainty. These include:
- News – This is a volatile, headline-driven market. Don’t consider the “hype” of the media, but consider the calendar events that drive the news and pressure the market. These include reports about economics, jobs, and the Federal Reserve (Fed).
- Strategy – Time-tested strategies of old (like buy the dip) are at best faltering in this chop fest. For years the market was bullish – in a continual uptrend – and now the bears are in control and the downtrend is something many traders have never experienced. Traders must adapt strategies to current conditions or learn new methods.
- Fundamentals – The need to learn and put into place the fundamentals of trading never changes. Hearing a “hot” tip and pressing “buy” on the smartphone while hoping for the best should never replace technical chart analysis and proper research. Know how this market breathes, operates, and moves.
- Structure – All markets follow a basic structure with major inflection points (key levels on a chart where a big move in price is likely to occur). One of these important points is liquidity. Traders can build a framework for taking advantage of stock market liquidity and putting together trading setups.
- Zones – These chart patterns combine key levels and map out inflection points and liquidity. This provides a “road map” that the stock has no choice but to follow, one way or another. This helps traders understand where to place trades and where to exit trades, or manage risk.
The market can provide clues for what happens next and traders need the tools to uncover these clues.
Looking to trade with a professional?
This choppy stock market has presented some testy waters for retail traders, especially those looking for a way to trade with a professional.
Simpler Trading put together an online community like never before – a free trading room. This online training chatroom is designed to allow traders to experience the insight from a professional trader during live market hours.
Take a look at this opportunity to meet our team of traders sharing what they experience daily as stock market retail traders. There is no cost to join. Sign up today.
Stock market paints picture for traders
Traders don’t want to guess what the market is going to do and get into trading setups too early.
Learn to let the market paint the picture for you.
Trading tools, like paint brushes used in a painting, allow traders to reveal what the canvas of the market has to offer.
And, there are more tools than just indicators tracking price on the chart.
One of the biggest skills, or tools, traders can apply in this choppy market is the ability to “flip the switch.” This means leaving behind the bull market of old and taking on the challenge of this volatile downtrend.
Knowing market structure and identifying liquidity are the important tools traders can use to flip the switch.
“The market is smart,” said Chandler Horton, Director of Day Trading Strategies at Simpler Trading. “It created a bunch of ‘dip-buying’ traders. The market will manipulate you if you don’t flip the switch – fall back on the fundamentals of structure and liquidity.”
This framework helps traders adjust and shift trading strategies to adapt to the market, and is a foundational method for any trader. This framework can be adjusted even when the market turns bullish someday.
Liquidity exposes market, price action
A simple reality about the stock market that many traders don’t understand is that stocks travel back and forth to liquidity.
Liquidity in stock market trading is, according to the U.S. Securities and Exchange Commission, how easily or quickly a security can be bought or sold. Liquidity generally refers to how rapidly shares of a stock can be bought or sold without substantially impacting the stock price. Stocks with low liquidity may be difficult to sell and may cause bigger losses if traders cannot sell when they want to.
Liquidity defines how fast you can get into and out of a trade.
A simple way to track liquidity is using point of control (POC). This is a free indicator in trading software that indicates a price point on a chart. POC reflects where the most amount of volume has occurred in a stock over a certain period of time.
“Liquidity is where price moves to and from,” said Chandler.
Knowing liquidity and understanding its movement can unlock a powerful trading edge.
“I’ve used these fundamentals for consistent wins in all environments,” said Chandler.
Volatility can be a trader’s best friend
Chandler doesn’t let the rough spells of the market get to him, and encourages other traders to make the best of the current bear environment.
“This market is offering a chance – painting a picture for us – to master the fundamental elements of trading that really matter and will provide an edge for the rest of our careers,” said Chandler.
“Even if the market chops in place, the ranges are still very large and opportunities are always present,” Chandler said. “Volatility is a trader’s best friend if you approach it properly.”
Is day trading an option for you?
All the chaos of this market has created a new level of stress for traders.
One strategy to consider is day trading. While day trading is considered a higher level of risk, the team at Simpler Trading understands what traders go through when the market maintains an extended level of uncertainty.
Simpler Day Trading allows members to follow experienced traders as they “get in, get out” with trades that limit capital exposure. What is appealing to traders in this market is the community of professional traders delivering live-trading insights during market sessions.
Avoid the stagnation of trading alone, and check out this daily training and learning option.
Flipping the switch in a bear market
Traders who follow Chandler’s lead can learn how he develops his flip-the-switch framework that allows him to decode market structure and reveal liquidity.
No one can predict exact movement in the stock market, but traders can learn to understand how and why the market moves like it does. This market is volatile and tough, and conditions won’t change anytime soon.
“When the going gets tough, the tough get fundamental,” Chandler said. “We know where the liquidity is.”
Chandler kicks off his “Liquidity Framework” class tomorrow, and there is still time to grab a seat. Get started HERE.