How to Specialize in a Trading Style

10 Tips on What to Do and How to Do It

Previously in one of my TechniTrader Student support publications, I suggested how to specialize in a Trading Style. I had a student write to me about that publication, and here is what he said: “Over the past few years, I’ve been quite successful in my trading thanks to you and your course. About a year and a half ago, I was able to quit my job, and I now enjoy the freedom and quality of life that full-time trading affords. I thank you for that. In one of your emails, you noted that there are many Trading Styles and suggested that we ‘specialize’ in one to maximize our effectiveness. I did exactly that…”

The TechniTrader Student took my concept of becoming a specialist and created his own unique Trading Style.

A specialist reaps higher returns because they are focused, and certain kinds of stocks behave in a certain way because a small section of Stock Market Participant Groups dominate in those stocks. In other words, certain traders trade certain types of stocks. If you learn to read a type of stock really well, you will be able to anticipate the patterns with far more accuracy.

Here are 10 tips on what to do and how to specialize in a Trading Style:

  1. Choose a price range that you are comfortable trading. Don’t look at every priced stock there is. Select a price range and study only those stocks. Keep the price range relatively narrow. Instead of looking at stocks from $2–$40, narrow that range to under $5 or $20–$40 stocks for example. Each price level of stock reacts differently, and that is why we have different Buy Stop Limit Order price points for different price ranges of stocks.
  2. Choose only a few sectors that you track. All sectors have cycles. Some are yearly cycles, some are 4-year cycles, and some are 6-year cycles or more. If you study and get to know a few sectors instead of trying to learn all of them at once, you will be better able to see the action that indicates a certain kind of price move and the probable duration of that move.
  3. Write down your rules for trading. If you use futures, then set a list of trading parameters around futures numbers. If you don’t use futures, then set a list of trading parameters around scan numbers. Stick to these rules regardless of the scarce few exceptions.

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Trade Wisely,

Martha Stokes CMT

Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses

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