Today's Quote: “A man can do no more than he thinks he can, but he usually does less then he thinks he does." Unknown.

While we are not believers in diversifying among many stocks or sectors at any time; we are believers in diversifying over different time frames. Diversifying over many stocks or sectors is the ‘amateur’ way of watering down results, trying to simply stay caught up with the standard. We advocate trading scalps (minutes to half day), day trades (no longer than one trading day), swings (2-5 days) and cores (weeks to months). However, it is important to know which trade you are looking at and from where the trade derived. Every time frame has plays triggered from charts in different time frames. For example, swing plays come from daily and 60-minute charts. Scalps from the 2, 5, and 15 minute charts. It is important that you use the proper chart to generate the play for the time frame. This is where the target, stop and entry come from. Make sure that you have the mind set to play the time frame you pick.

For example, when you are swing trading, you need to be able to live with pullbacks on the intra-day charts. Many people cannot do that, so they should be day trading. Stocks do not move in one direction only. Even when moving up, they rise by rallying, then pulling back. If the pull back is less than the rally, they tend to go up. If you are not able to live through the pullback, drop down a time frame, or consider doing what you need to so you can participate in all time frames. It is very common for traders to want to be core long. But no matter how well the trade goes, the first pullback on the daily shakes them out. Some want to day trade, but as soon as the 5 minute chart turns red, they are out. Play the time frames you intend based on the proper charts. Stick to your plan unless something changes. The biggest problems come from the trader who uses, let’s say, the 15 minute chart to set the play entry and stop requirements, then takes a target off of the two minute chart. This leads to large stops and small targets, which can be the downfall of many traders.