Ready to build your next trade like a scientist?
| | | What's Your Trading Thesis? | | | How much do you know about the scientific method? As it turns out, basic scientific principles can be applied to swing trading ... But don't worry, even if you snoozed your way through science class in high school, it's not overly complicated. A thesis is an outline of what you believe to be true, and what you expect to happen next. It's used as the basis of science experiments. A trading thesis is the same idea, but in the stock market. Every trade you execute should be based on a solid trading thesis. Ready to build your next trade like a scientist? Let's take a look at what a trading thesis is, how it works, and how to build a trading plan around that thesis. |
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| | | Tim Sykes is known for his ability to spot stocks that are about to skyrocket… Before most people even notice them. Recently, he's alerted: - SNOA (a nice $5 /share winner)! - CREX - a 50% winner in just 3 hours… - CAPR went from his alert at $5.10 to over $11 a share! Just to name a few. As you could guess…many members of his Supernova Alerts are VERY HAPPY. Could a trade alert like that change things for you? |
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Even if you've never heard the term 'trading thesis' before, it's possible that you've actually traded based on one without realizing it. Your thesis the reasoning behind entering a trade. Whether or not you're right is another topic, but let's stick with the basics for now. For example, say you think that Apple Inc. (Nasdaq: AAPL) is undervalued. You think it could climb to $200 by the end of the year. That's your thesis. But just because you think it doesn't make it true. The price could crash and go to $50. Your thesis is your best guess. So how can you make sure that this 'best guess' is aligned with reality? | There are thousands of different reasons why a trader might buy a stock. Here are some of the most typical ones: Momentum. A stock in motion tends to stay in motion. Growing sales. As businesses sell more, it could attract buyers, causing the stock price to rise. Growing profits. Sales are one thing, but how much is the company actually taking home? Higher profits can make a stock more attractive to more investors.
No big surprises there. With these common reasons in mind, let's consider a slightly more advanced trading thesis. Maybe you think AAPL is going to report higher profits than predicted in 2020 — and this could drive the stock price to $200 or more. In this case, your thesis carries a little bit more weight, because you've got some reasoning behind it. But how can you tell if you're right? | |
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| | On that day… Paul Scolardi decided to take on trading stocks full time. All from his home in Scottsdale, AZ... Since then he's been dominating the market. This year alone he's made $3 million dollars in verified trades… And he wants to show YOU how he does it. So… If you want to work with Paul... |
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Testing your thesis isn't overly complicated — but it can be costly, especially if you're not prepared. So how could you test your AAPL thesis as outlined above? Remember, your thesis has two key parts:
So in order to test this thesis, you've got to pay attention to the earnings report and watch how the stock price reacts. If either part doesn't happen, the thesis is no longer valid. First, you'll watch for the earnings report. If the profits are smaller than predicted, your thesis is no longer valid. If the profits are higher than predicted, then you're on the right track. But that doesn't automatically mean that the stock is going to exceed $200. So how do you actually trade the thesis? |
Let's bring this hypothetical AAPL thesis full circle. Say that on the most recent earnings report, earnings exceeded expectations. Now, it's time to develop a trading plan based on your thesis. Your plan should have three parts: Entry. Say the current price is $117. That might be your entry. Stop. If you're wrong, you should have a point at which you're ready to exit the trade. Say the most recent dip was to $110. That might be your stop. Profit target. In your thesis, $200 was the goal — so that's the profit target.
Remember, this is just a hypothetical example. I'm not using this as an actual plan, and I don't suggest you do, either. It's just easier to understand with an actual stock in the example. To close it out, let's talk about how to react in various scenarios. |
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| | | I haven't had a real job… EVER. I got started as a work-from-home trader back in the 1990's (before it was cool). Because I found one simple pattern that showed up on my computer screen every week. One I still trade TODAY. It's made me millions of dollars. And it's one that anyone with the internet can access from a home computer. Want to see it? | | |
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Putting Your Plan in Action Not every trading thesis works out. Being wrong is part of trading. You can't predict the future. Your thesis is based on the best information you have. However, you've gotta be prepared to react quickly when your thesis is put to the test. With the example outlined above, the entire trade would have been a no-go if profits were lower than anticipated. If the profits were higher than anticipated and you entered the trade but the price didn't go up, you'd cut losses at $110. If the price went up to $200, you'd take profits. Both of these outcomes are perfectly acceptable. Since you can't predict the future, you've gotta have a plan and be prepared for various outcomes. That's why you've gotta make and stick to your plan. | It's Not Rocket Science... A thesis helps you create a trading plan. The more detailed your thesis, the stronger your trading plan will be. It doesn't have to be a hugely complicated process — simply make notes about what you expect to happen, and make a plan including how you'll react if the thesis is proven right or wrong. There are no sure things in the stock market. However, a trading thesis can help you make more educated decisions. Smart, prepared traders are far more likely to find consistency in the market. Trade like a scientist, Paul Scolardi Editor, Swing Trade Millionaires | P.S. Tim Sykes is a millionaire trader that everyone in the trading community knows. But something you may not know is… He made his first million off of ONE simple pattern. Called the Supernova. And he spots these life-changing stock patterns all the time. And… If you can get these alerts sent straight to your inbox... Click here to see how | | *Results not typical. Paul Scolardi teaches skills others have used to make money. Most who receive free or paid content will make little or no money. Most traders lose money. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services. Past performance in the market is not indicative of future results. | This is for information purposes only as Millionaire Media, LLC is not registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. We are not a licensed investment professional, and we do not give investment advice. Always consult a licensed investment professional when seeking investment advice. Millionaire Media, LLC cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media, LLC in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media, LLC accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns. | | |
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