STEP 2 – Make the Trade

This is pretty straight forward, after the parameters that I was watching for are met, I make the trade.

Once the trade is made, I start categorizing the posts as “Stocks I Own”. I title the post with my position type, long or short and which day of ownership I’m on. Also, I continue to tag each post with the ticker symbol to link all actions on that ticker together no matter what category they are posted in.

In the book I mentioned previously, the author lays out a three step process for analyzing a stock, so I try to follow that. She breaks it down into a micro analysis, macro analysis and global analysis.

I like doing my analysis in the 15 minute, daily and weekly time frames. So, accordingly, I use each to do each of the three analyses.

The micro analysis is a look at the days action in the 15 minute time frame. I get a good look at the flow of the day. I don’t make any real decisions here. It is too short a time span for me, but it helps me understand what happened in the day to better understand the bigger pictures as I move to my macro analysis.

For the macro analysis, I use the daily time frame. My big picture is in the weekly, so I generally look at the day’s action along with the previous five days to see what happened in context to the last week of trading. However, if I see something interesting I will expand that range of days. Here I first want to see if the day was valid or an anomaly. A valid day is when the price action was in proportion to the volume behind it. That is a sign of a normal day of retail (you and me) trading without manipulation by wholesalers (market makers). An anomaly would be when one is high and the other is low. This is something to take note of, it is a sign of wholesale manipulation. It’s hard to always determine what it means, but knowing where you are in the context to the previous week of trading helps. Also, looking at the volume of similar size candles in those 6 days will give you a benchmark to judge if the volume was high or low in relation to the price movement.

Global analysis is the bigger picture. This is just my birds eye view of the landscape. Sometimes the macro analysis still isn’t broad enough. This analysis gives more clarity and has less noise.

I end it with a game plan. What’s the point of doing all this analysis if it doesn’t lead to anything actionable? So, based on what I’m seeing I like to try to predict what will happen the next day and in the next week or so.

The fun part of this is tracking my good calls and bad calls concerning my game plan. After the next day, I go back and see if what happened is inline with what I laid out in the game plan of the previous day. If what I predicted was generally right, I subcategorize that post as a Good Call, otherwise as a Bad Call. I also like to edit the post to add a little synopsis of why it was a good or bad call.

Once the target is met, or the whole analysis blows up, I move to step 3 and close the position.