Paul J Singh

Category: strategy

  • The Fallacy of Backtesting and Adapting to Current Market Conditions

    I recently engaged in an interesting chat with a novice trader this weekend. It got me thinking about the fallacy of backtesting and why I don’t rely on past statistics.  You heard me correctly. My take on backtesting is controversial and puts me in the minority. Some have called me…

  • 21 profitable stock trading setups and the optimal conditions to trade them

    Most full-time traders have a basket of “goto” setups that they trade repeatedly. Some do so mindlessly, irrespective of market conditions. You can make money this way, but you will not become wealthy. The best traders optimize their trading by deploying the right setup for the right market. For instance,…

  • Trading "Leak": Impatience and the GS Trade

    One of my mantras is to “set it and forget it” after making a trade. Once a trade is made, I set my stop and target, then forget about the trade until one of the price objectives is hit. At least I usually do . . . My recent GS…

  • STEC Short Entry: Time to Take Profits?

    Is it time to take profits in the STEC short? Entry was made back on September 24th at $30.75., so we are looking at a 15-20 percent gain. My general approach to exits is to set a target based on support/resistance levels and take a partial profit at that level.…

  • Monday Game Plan and Free Trade Report

    To see the report with charts, click here August 24, 2009 Market Notes: In the law there is a term called “de novo”, which means to consider a matter anew. It’s commonly used when an appeals court reviews a lower court decision. The appeals court can review the case with…

  • Apple is a Tough Read

    If it were any other stock, I’d take a stab at shorting AAPL right here, right now. Technically, it shows signs of losing steam and is a good “pioneer short trade.” We see negative divergences in both RSI and Stochastics. Price is making new highs while the two indicators are…

  • Part-time Trader Series (tip 2): Have a Plan

    This is the second in a series of tips for the part-time trader who trades around a full-time job. As a part-time trader, time management is as vital to success as picking stocks or managing my portfolio. Over the years I have developed tricks to streamline what used to take…

  • Pair Trade: RIMM and AMZN

    On Friday I went short AMZN and long RIMM. This is a “pair trade” trade using the folling strategy: 1- enter one stock long and one stock short from similar fields. 2- the short stock should exhibit a very bearish pattern, while the long stock a very bullish pattern. The…

  • On Time Frames and Over-Trading

    Since joining Twitter, I’ve had a number of conversations with Trade Report members who also use twitter. I’ve found a common mistake between twitter users, and that is over-trading and not understanding time frames. Yesterday, a member told me he had entered one of my focus list stocks. I asked…

  • Strategy Session: Using Distribution Patterns to Predict Trends and Trend Failure

    The second most important aspect of my trading strategy (behind support and resistance) is using volume to classify stocks that are under accumulation and distribution. Distribution is under way when, over a period of time, stocks show higher volume on down days and lower volume on up days. In a…

  • One That Got Away: IBN

    A useful tool for improving trading is to analyze trades that you did not take. IBN has been on my radar for since the April breakout. I did not trade it because the volume pattern was not to my liking. However, the risk ratios have been good through out that…

  • Poker, Trading and Making Adjustments

    In my Thursday report to members, I talk about the current market, making adjustments and poker: Before we begin, let me compare what’s going on now to poker. In Texas Hold’em, the best hand pre-flop is pocket Aces. Most players try to get as much money into the pot as…

  • On Probability, Trading and Current Market

    What do I mean by high probability?  In trading, I define a high probability setup as one that gives me a significant edge over an average trade.  For instance, in my back tests, when stochastics hit 90 (extremely overbought) in a bear market, coupled with a few specific trading setups,…

  • A Crappy Picture That Clarifies the Ideal Volume Pattern

    This picture I created ain’t pretty, but it does a good job of showing the type of volume pattern I look for during bottom formations:

  • Trades: VLO, USO and STLD

    Here is the intra-day trade alert I sent to my subcribers (this is not a regular feature of the Trade Report, but I do send trade alerts from time to time): The gap down this morning blew past the entry and stop points I had set for SSO and QLD.…

  • Friday Game Plan

    I’d like to pick up a few long positions in anticipation of an inauguration rally. The fact that we are very oversold increases the chances of a rally. I will still use tight stops with the strategy of taking a small loss with the possibility of a big gain.

  • 10 Market Thoughts to Start the New Year

    1. Be patient with trades and setups. Do not chase trades. Let them come to you. If you miss a trade, that’s okay. 2. The best setups in this market focus on extremes. Buy extreme weakness and sell extreme strength. 3. Watch for accumulation patterns that form as prices base…

  • Buying and Sellng Extremes: The SKF Trade

    My strategy over the past few months has been to be patient and wait for extreme conditions to surface before making both long and short entries. A good example of this type of trade is the SKF position I entered yesterday (detailed in the trade report). Here are my entry…

  • SSO Provides Low Risk Entry

    While the “edge” or probability for the trade may be 50 percent or less (accumulation pattern is not what it was a week ago), SSO does provide a low risk entry point that can be easily managed with a stop under the recent lows. I am willing to take low…

  • The RSI Effect

    As long as the lows hold, the bottoming thesis is in effect. I have focused on more short term 3-6 month charts lately, but here is a two year chart showing the power of the oversold RSI, even in a longer term down trending “topping” market.

  • SSO Chart

    The S&P 500 has clear buy and sell zones that can be played to limit risk and provide optimal entries. I am waiting to enter as near to these zones as possible.