As you know, I’m feeling bullish about this month of December. November was the best month of trading in the S&P 500 and the Dow since 1987.
I don’t think the markets are slowing down anytime soon. So many of our favorite stocks – the same ones we often share our trades about in the 24-Hour Global TradeRoom – are poised to have a big month.
Like I told my TBUZ TV subscribers on Tuesday morning: If the S&P hits 3685 this week, I’ll be smiling all the way to the bank…
It’s edging closer and closer. But to make the most of these favorable conditions and the money to be made from our favorite stocks this month, it seems important to have a refresh on what I call the 15 Rules for Successful Trading.
I don’t want to overwhelm you with information, so we’ll take these rules bit by bit. And if you want to follow any of my advice at your own pace, consider picking up a copy of my book Trade to Win: Proven Strategies to Make Money.
Here are the first 5 (of 15) Rules for Successful Trading:
1. Control Your Emotions
Watching the stock market can be an emotional roller coaster: Don’t let it be. This goes for when the markets are booming in the kind of sugar rush happening now as well as when things are slumping.
If you play too much into your emotions, you’re going to get burned sooner or later. Being too greedy during an upswing or too cautious when the markets pull back are good ways to lose your hat – or miss great opportunities staring you in the face.
Follow your routines. Stick to your plans. And trade with steel in your gut. You have to be positive, and you have to envision your own success for yourself.
2. Connect the Dots
Remember those connect-the-dot pictures from when you were a kid? Maybe you got them for your kids or your grandkids. It’s always funny how they look like nothing or just partial images when they are just dots. But we all feel like artists when we draw the lines between the dots and see the image take full form.
Believe it or not, you can form a clear picture of the markets and the stocks you are watching by connecting the dots with the key price points:
- Year open
- Month open
- Week open
- Tuesday 9:30 a.m. CT
- Current
Connecting these dots on the value of a stock and the broad markets can tell us a lot about where a stock is heading – and help us make good trading decisions accordingly.
3. Understanding Time
It’s important to understand that the markets operate on a few different schedules and time patterns. It doesn’t simply open at 9:30 a.m. and close at 4:00 p.m. each day. In fact, the markets operate according to several different schedules. To be a successful trader, you have to understand all time, big and small:
- Week, month, and year: There are patterns that play out consistently on a weekly, monthly, and yearly basis. For example, Mondays tend to be a bit crazy in the markets. There’s a backlog of order from the weekend, and it’s why Mondays tend to be more volatile. The beginning of every month tends to be important as well. It was again this month, like I told you it would be, as the S&P and the Nasdaq saw new highs on December 1.
- Never put a trade in at 10:16 ET: It’s like putting your finger in a socket. Just don’t do it.
You need to be aware of these things in order to make sound decisions and also make the most of opportunities that most traders miss.
4. Law of Key Numbers
Key numbers tell us when to buy and when to sell. As my longtime subscribers know, I tend to look at pivot numbers to guide a lot of my decision making – particularly in the S&P 500. Sometimes the pivot numbers stay the same throughout the week. Sometimes they move higher, or sometimes lower depending on how the markets are trending. Moving above the pivot number is a buy signal
You’ll find much more success if you are disciplined in the way you follow key numbers. TBUZ TV subscribers get an update on the pivot numbers they should be watching every morning.
5. 24-Hour Global Clock
As I highlighted a couple of weeks back, when the markets close in the U.S., they’re just getting started in Asia. As they’re winding down in Asia, they’re getting ready to open in Europe. When European markets close, that’s when the U.S. markets open. It’s a 24-hour cycle. It never stops. This is why our 24-Hour Global TradeRoom is always open.
I’ve got 10 more rules to successful trading that I’ll be sharing with you over the next few days that will help us make the most of the December rally we’re going to see. In the meantime, get in the habit of thinking about these rules on a daily basis.
And like I always say…
I’ll catch you on the flip side.
Tom