Your Strategy Needs a Story
Every strategy should explain WHY it works: If you can’t explain it, you won’t trust it.
Most struggling traders don’t lack strategies—they lack belief in the strategies they’re using. That belief doesn’t come from back tests alone. It comes from understanding why a strategy should work in the first place.
On professional trading desks, no strategy survives without a solid story. A clear explanation of what market behavior the strategy exploits and when it should fail.
Why “Story” Matters More Than Signals
When markets move against you (and they will), your reaction depends on whether you understand the logic behind your approach. If you don’t, doubt creeps in. Doubt leads to rule-breaking. Rule-breaking destroys edge.
Behavioral research shows that uncertainty without explanation increases emotional behavior, stress and reduces adherence to plans.
Here’s an example: Let’s say you’re not familiar with the depth and duration of a drawdown your strategy is likely to encounter. When...
Trade Like a Scientist (not a gambler)
Many novice traders believe trading success comes from prediction. If they could just predict what the market will do next, profits would follow. That belief sabotages more trading accounts than bad strategies ever could.
Consider scientists. Do they invent and discover by predicting and hoping?
No, scientists don’t. They observe, form hypotheses, test ideas, and revise their thinking when the evidence demands it. Successful traders operate the same way.
A scientist never says, “I think this experiment will work, so I’ll ignore the data if it doesn’t.” Yet traders do this every day. They fall in love with an idea, defend a bias, or rationalize a loss instead of learning from it. That’s not trading, that’s ego management.
Trading like a scientist starts with replacing opinions with questions. Instead of saying, “The market should go up here,” a scientific trader asks, “Under what conditions does price tend to move higher from this level?” That shift alone changes everything. You’re ...
Bandwagon Stocks
In the stock market, emotions drive price movements just as much as fundamentals and technicals. One dangerous psychological trap you can fall into is the “bandwagon effect” — the tendency to follow the crowd without solid reasoning.
This happens when a stock's price rises rapidly because more and more traders jump in, not necessarily because the company’s fundamentals have improved but because others are buying. This creates a feedback loop where rapidly rising prices attract more buyers, further pushing the stock higher—until reality kicks in, and the price collapses just as quickly.
A classic example of the bandwagon effect are meme stocks (think GameStop in 2021). Traders see a stock soaring and rush in, fearing they’ll miss out (FOMO), only to be left holding the bag when the hype fades.
Here’s how you can spot the bandwagon effect:
Parabolic Price Action – Stocks that rise too fast in a short period, especially without strong news or earnings support.
Unusual Volum...
Who to Follow?
As Thomas Paine said, “Lead, follow, or get out of the way.”
How does this apply to trading? From a stock trading perspective “leading” implies one has performed exhaustive research and has uncovered a stock that has positive fundamental, technical, and marketplace metrics. “Following” on the other hand implies you know this analyst and they shared their findings with you.
Or would you rather know the executives running the company?
Who would you rather follow?
Unfortunately, we don’t have a snowball’s chance in Hell of getting any tips from the insiders. It would be illegal anyway.
But there is one way to legally “follow” the insiders without knowing them at all. Our team does this every day with outstanding results and I want to share this strategy with you.
Join me today, Thursday February 6th @ 1PM for a training session on this strategy. Click here to reserve your seat.
Here’s what we’ll cover on Thursday:
The best leading indicator of stock price explosions.
The r...
No Catalyst, No Gain
It’s easy to get lost in the price charts, technical indicators, price patterns, and economic data looking for trade setups. However, when it comes to identifying why any tradable asset may move significantly in price, few factors are as influential as a catalyst.
Today, the FOMC releases an interest rate decision and holds a press conference announcing their view on the economy and future interest rate direction. A catalyst like this is easy to manage. We can prepare our response since we know when it’s coming.
If you’re trading stocks or options your primary catalyst is earnings season (MSFT, META & TSLA report tonight). We don’t know the direction a stock will take until after the announcement, but like the FOMC release, we can prepare ourselves for a trade decision in either direction.
The best catalysts are those that are unknown to the public: the “surprise” news announcements. The price reaction to these can be extreme because traders are caught off guard.
Here’s the good ...
Manipulation by Trade Aptitude
Yesterday’s results: No trades triggered.
Today’s Best S&P Futures Turning Points: Short 5954.50 stop 5960.25. Buy 5965.25 stop 5959.50 if price retraces down from above. (Filtered out during PCE release).
The World Index: (+100/-100) dips from -50 to -64 with all major world markets Bearish on increasing volatility.
Catalysts: PCE, Personal Income & Spending and Fed’s Williams @ 8:30. UofM Consumer Sentiment (revised).
Quick Tip: Manipulation
Courtesy of the WSJ newsletter – “On December 19, 1868, Cornelius Vanderbilt bought additional shares of the New York Central Railroad. He then convened an emergency meeting of the board of directors, which declared an 80% dividend. The stock shot up over the next two days, at which point Vanderbilt dumped his new shares for a $5.5 million profit.”
Today we have the SEC and regulations to prevent blatant manipulation like Vanderbilt did. But manipulation still exists, just more subtle.
Insiders are still buying shares ahead of good ne...
Off The Chart by Trade Aptitude
Yesterday’s results: Neither trade suggestion triggered.
Today’s Best S&P Futures Turning Points: Short 6091.75 stop 6095.25. Buy 6017.25 stop 6012.25 (filtered out during CPI release volatility).
The World Index: (+100/-100) remains at -7 with sentiment mixed on very low volatility.
Catalysts: CPI @ 8:30. Crude Oil Inventories @ 10:30. 10-year Bond Auction @ 13:00. Federal Budget Balance @ 14:00.
Quick Tip: Off The Chart
All markets are influenced by the forces of supply and demand. More demand than supply will push the markets higher. This natural law works on every tradable asset.
But is all demand visible on a price chart? For indexes, currencies, and commodities, I would argue yes. They are mostly institutional markets, and the footprints large traders leave can be found. Our team trades a chart-based Supply/Demand strategy that has a real edge.
For individual stocks I would argue yes, but not always. While institutions play a major role in individual stock movement t...
Outperformance by Trade Aptitude
Yesterday’s results: Neither trade idea triggered.
Today’s Best S&P Futures Turning Points: Buy 6100.00 stop 6096.25 if price retraces down from above. Short 6079.50 stop 6083.75 if price retraces up from below.
The World Index: (+100/-100) remains at +7 with sentiment mixed on low volatility.
Catalysts: Trade Balance & Jobless Claims @ 8:30. Fed’s Barkin @ 11:30 and 12:15.
Quick Tip: Outperformance
If you search for the “best mutual fund manager in history” you’ll find an article listing the top 5. On this list is Peter Lynch, famous for making Fidelity a household name by growing the Magellan fund to $13 Billion in assets while simultaneously doubling the S&P return.
Clearly Lynch was a talented stock picker. Part of his research involved Insider trades. He commissioned a research firm to collect and analyze all the filings with the SEC. This was before the internet, so you can imagine how time-consuming the task was.
To this day Insider buys of a certain type remain a ke...
Big Picture by Trade Aptitude
Yesterday’s results: Shorting 6035.50 stopped out. Buying 5988.00 offered 8.25 points before reversing.
Today’s Best S&P Futures Turning Points: No great levels today.
The World Index: (+100/-100) falls from +21 to -29 with most major world markets mildly Bearish on low volatility. S&P futures slightly higher.
Catalysts: S&P Home Price Index @ 9:00. Consumer Confidence, New Home Sales & Richmond MFG Index @ 10:00. FOMC Minutes @ 14:00.
Quick Tip: Big Picture
Regardless of your trading timeframe, daily, swing, or position, using a “big picture” analysis to your entry decision adds edge. It’s the higher timeframe.
Traditional technical analysis suggests that a multiple of 3 to 6 is appropriate. For example, if you’re a day trader using a 5-minute chart for your entry, aligning with the trend of the 15- or 30-minute chart will help. A swing trader using a daily chart would align with the weekly chart.
Consider this: if you’re using your entry timeframe trend change to exit ...
Simplify by Trade Aptitude
Yesterday’s results: Buying 5909.50 picked the bottom of the session and ran 66 points to the suggested short at 5975.50, which only offered a 6.25-point scalp. 
Today’s Best S&P Futures Turning Points: Short 6002.25 stop 6007.75. Buy 6007.00 stop 6001.50 if price retraces down from above.
The World Index: (+100/-100) drops from +29 to zero with sentiment mixed and volatility low.
Catalysts: S&P MFG & Services PMI Flash @ 9:45. UofM Consumer Sentiment & Inflation Expectations @ 10:00.
Quick Tip: Simplify
One of our trading teams, the stock/options swing traders, uses a long-only strategy that has extreme asymmetrical results. The risks are very low. The rewards are sometimes parabolic.
While there are dozens of options strategies you could use, why complicate your plan? Simple call option buys work fantastically with these trades because the real edge comes from inside information, not a chart pattern or indicator. We scan for big Smart Money bets that seem unlikely to succe...