Often we find stock market educators and experts showing off charts after charts that seem to make a lot of profit if only you entered the trade at the right time. They seem to have an uncanny ability to find profitable trades in hindsight.
When asked how they did it, they seem to almost always come down to the concept of "years of experience and practice and gut feeling and being in the Zone etc. etc. etc.".
What they are not able to do is to crystallize their expertise in simple charts. That any layman can follow. Either they are not able to express their trading rules. Or that they don't know the exact rule themselves. They work from a level of knowledge that is not easy to be passed down ... from them to others.
Can that be done?
In Superior Profit's experience, it can certainly be done. But it does take a lot of research and effort and experimentation. To be able to come up with a simple set of rules that work again and again. And that does not rely on gut feeling. That does not even rely on using a set of parameters for one stock, another set of parameters for another stock.
Let us illustrate with a recent example. Below is a stock chart. As of 28th April 2015. Just a few days ago. Given this chart, most stock market gurus will scratch their head. They would not be able to tell whether to go Long, go Short, or Stand Aside. I would guess that most retail traders will be in the same position. However much we fiddle with parameters of whatever system you are using, you would find it difficult to say what action to take. Confidently. Have a look at the chart. And try ... !
If you are like most traders and trading gurus, you would fumble. Thinking might be any of the following:
1) Stock is clearly going down. So I will short ...
2) Well, it has already fallen a lot ... may be it will reverse.
3) The Candle two days ago has a Lower Tail and the last Candle went up ... so for now it went up for two days.
4) However, the downtrend is still intact very much ...
5) Well, I won't be able to decide what to do.
If your thinking went along that line, you are a perfectly normal trader.
However, not a Superior Profit Trader. Superior Profit traders use specific ready made template to decide whether to go Long, Short or Stand Aside. This template is aptly called "Hop On" template. Superior Profit trader will simply put on the Hop On Template on the stock.
Now, as you may find out from the chart below suddenly there is huge amount of information that can be interpreted readily. These doe not need use of any parameter. This does not actually leave much to subjective interpretation.
These are commented in the Hop On template chart below.
Simply based on the color coded signals, our Superior Profit trader would readily decide that surely this is not a time to go Short. And based on the very powerful and unique and effective Headwind (reversal) signal, most of our Superior Profit traders would actually take Long.
This is very different from what an otherwise trading guru or most retail traders without an "unambiguous and easy" system would do.
One common question is: "how would I find the stocks with Headwind signal". Superior Profit traders find it in few minutes using Superior Profit Sonar program. They can do it on any stock on any exchange of the world.
How did it play out? Below chart shows the data as of end of Friday, 22nd May.
There are some important and valuable takeaways from this study. Here they are:
1) At the right side of the chart it is almost always confusing about what action to take.
2) Only some experts seem to be able to take the trade confidently "in the heat of the moment" at the right edge of the chart and keep making profit time and again. However, most of them cannot crystallize it into "simple and unambiguous" rules.
3) It is difficult, but possible actually to crystallize the trading expertise into simple and unambiguous color coded rules - Superior Profit System Designers has done it as can be seen from this example.
4) With the help of simple and unambiguous rules we can take a Long trade where most other traders would either Short (and lose money) or Stand Aside (and give up an opportunity to profit).
5) Headwind is a unique and powerful signal - as it is simple - to catch the bottom or top of a move. At least for a long enough ride to make significant profit as Swing Trader.
6) Sometimes the Headwind signal appears in Weekly chart and could be used as a Long Term Trend Reversal trade - catching the bottom and beginning of a major move.
Overall - it illustrates that trading with a trading system could be made easy and unambiguous.
You are welcome to study the materials in Superior Profit Education Center and familiarize yourself with the tools in Superior Profit System. You may be surprised at its simplicity and unambiguity. As most traders who have studied them have found out.
We suggest strongly that whatever system you use for your investment and trading decisions, make sure that your trading system is simple to use and unambiguous. We are confident that with that you will be more than halfway toward making profit. More and more - day by day. Remaining part? That will be your discipline and money management of course !
Keep it simple and Invest well. You can !
[Did you wonder - what stock was it? It was Tech Mahindra (TEML.NS) - a large IT company in National Stock Exchange of India.]
What if you could buy stock of a company that was founded in 1837 and is in business worldwide in Beauty Care, Grooming, Baby Care, Feminine Care and Baby Care?
It had revenue of more than 83 billion USD in 2014. And if you are reading this, high chances are that you are their customer in some way or other.
This company is Proctor & Gamble (PG.N).
Here is a brief history. William Procter, a candle maker, and James Gamble, a soap maker, both born in the United Kingdom, emigrated from England and Ireland respectively. They settled in Cincinnati initially and met when they married sisters, Olivia and Elizabeth Norris. Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was created. The company is in operation for 178 years now !
How was their stock performance in last 1 year? In last 1 year, P&G has increased by less than 1%. Whereas S&P500 has gone up by 13%+. That is, it has significantly under performed the market.
In Superior Profit Way, when we are looking for stocks to invest in, we look for precisely such companies. Solid companies which underperformed the market. We wait for such stocks to fall at Low Pendulum level - meaning falling "significantly". We can see that from the Daily chart below where the Pendulum Candle color turned red. Indicating that the stock is "low enough" for us to keep tracking and see if there is a potential buy point.
Now, we don't go and catch a falling knife. We want the stock to show signs of moving up after a sharp decline. In the Pendulum Candle color in above chart, the change of color from red to yellow shows that it may be getting ready to go up.
We like to get that confirmed from Hop On template. Which tells us if we can go Long (buy the Stock or buy Call Options) - both for Swing Trading as well as for Long Term Investment.
Here is the what the Hop On template tells us as of 15th May 2015.
Well, so we have all signals go for taking a Long position.
What about looking at some other fundamental information of the company?
Being in Consumer Staples Sector and Housing Products Industry group, the company's business is stable. That is reflected in the stock's Earning Per Share (EPS) and Revenue history and projections.
We could probably add more pieces of information. However, in our view, keeping it simple makes it easier for investors to grab an opportunity without too much delay.
"Feel Great Every Single Day" - as P&G says !
And today, it does feel like a good opportunity to buy a solid company at a discounted price. Doesn't it?
Citizen of Main Street.