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In this article we highlight Beta Trader - BETAX, authored by equity analyst Jon Henninger , who provides price-based technical setups and specific trading recommendations. BETAX coverage can be found on our Briefing Trader service.
I'm a price-based technical trader that utilizes the shifting dynamics of supply and demand across multiple timeframes as my guide. For the most part, I usually find myself trading individual breakouts/breakdowns that align well within the context of the broader market, gradual and contained pullbacks into key support/resistance areas that fit well within the trend of the issue, or severe short-term overbought/oversold issues that are displaying clear signs of diminished buying/selling near key levels.
I've always considered myself to be a swing-trader -- primarily focusing on 2-5 day moves -- but every setup and its management is a product of the broad action at hand, not just that of the individual issue being traded. When trading price patterns, it doesn't really matter what timeframe you use. What's important is that whatever timeframe you used to develop your primary bias remains that way throughout the course of the trade. Otherwise, micromanagement can become quite problematic as your emotions could perhaps get the best of you in the heat of the moment on smaller timeframes. There are, of course, exceptions, but I use that as a general rule.
I don't really follow any indicators other than price and volume. I went through those phases many years ago and eventually came to the realization that price is the absolute king and everything else is secondary. Don't get me wrong, indicators can provide some information, and I still use a few of them as a means of scanning to build up my watchlists, but other than tracking specific moving averages and its "personality" along price, I don't use them. I also track other asset classes -- primarily crude, gold, and the EUR/USD cross -- to try and get a glimpse of what equities may be on the verge of doing.
Drilling down into the mindset a bit more, I am constantly asking myself what are the other traders thinking? How are they positioning themselves? What are their expectations? And more importantly, how are they likely to respond if those expectations are not met? When you review and reflect on your own feelings in certain trading situations enough, you start to internalize a sense for what others are likely feeling under similar circumstances, and that is vital information that you can use to your advantage. Think of how you responded in the past and you may just have your answer to the next move. Of course, all this takes time because it's entirely experience-based, but you have the ability of accelerating that learning process by simply reviewing and reflecting more.
I'm a big fan of keeping things simple and I think my methodology reflects that. I consider it to be a system that is founded on the basics of logic and psychology that I have essentially personalized through the years. My view is, the less you follow, the easier it is to notice "character change" discrepancies when they show up (in relation to recent action). Again, to me it's about the psychology of who's involved, and when you see a clear shift away from the "norm" in price behavior, that's incredibly valuable information that helps provide clues toward a potential shift in the supply/demand balance.
When all is said and done, it doesn't really matter what type of trader or investor you are because this is a game that all boils down to risk/reward and probabilities. Sometimes the best setups fail, but you can't necessarily control that. All you can do is put yourself in the best possible position to profit and sit back and relax.
If you follow the Setups Page, where I try to highlight some impending high quality trades that are strongly "structured", then you are probably already well aware of most of what I have mentioned above.
--Jon Henninger, Briefing.com