This column was originally published on RealMoney on Nov. 13 at 10:52 a.m. EST. It's being republished as a bonus for TheStreet.com readers.
I believe that a positive mindset is an essential component of success in trading as well as in life.
I'm not suggesting that we all walk through the day in a state of clueless bliss. I'm talking about having the desire and ability to sort through the positive and negative aspects of every situation and come out a better person for having done the work.
Every trade will consist of things you did right and things you did wrong. In that way, trading is like golf: one long series of mistakes.
In hindsight, you could always have bought the stock at a lower price or sold it at a higher price. You could have avoided buying the stock that wound up going against you or, better yet, you could have shorted it.
Don't let your mistakes overshadow what you do right so that you become a self-fulfilling prophecy of failure. Look for the positives.
Did you trade with the trend, even though the trade didn't work out? Did you avoid letting the results of a previous trade -- profitable or otherwise -- cloud your judgment on the current trade? Of course, you need to learn from your mistakes, but don't forget to notice the things you did right.
After every trade, you have a choice. You can dwell on the negatives and internalize them, using mistakes as ammunition to shoot yourself in the foot on your journey toward success. Alternatively, you can focus on the things you did right (even if all you did was avoid taking a bigger loss than last time). Internalize the positive aspects of the trade and resolve to work to strengthen them further.
You become what you think about. Approach your trading development from a winning perspective, not as a loser. Winners are better able to see their errors for what they are: actions that need modification. Losers don't even notice the things they did right; they just see errors as a series of steps toward being the biggest loser.
Let's look at some charts.
continues to stair-step higher. After breaking out of a trading range in August, this stock became range-bound again between $35 and $37. However, that ended early last month. Now it's consolidating between $38 and $40. Are you seeing a pattern here?
I'd look for Hewlett-Packard to begin the next leg higher on a breakout above $40. Until then, I'd consider $38 to $40 the current trading range.
After getting crushed back in late July,
gradually filled the gap between $22.50 and $35. But look at how much stock traded back in late August at $35 to $37.50. This large amount of volume is reflected in the long
While there's no denying Rackable's uptrend, it's important to understand how far the stock has come. Since the August bottom, it has advanced 75%. I'd look for the stock to churn for a while at this level, and I would protect profits with a stop below the breakout level.
traded within a $1 range during September and October. But that ended with a bang when the company reported a third-quarter loss. The stock likely exploded because the company announced that it would be continuing negotiations with the United Steelworkers union. Wall Street is anticipating an end to the strike.
If you're long, there's no reason to sell now, but I'd sure protect profits with a trailing stop. It's tough to find a disciplined entry for Goodyear right now. However, if the stock pulls back in a typical sell-the-news move after the company settles its labor dispute, that just might be the next buying opportunity.
began trading last May, and the stock opened at around $36. It took the market almost five months to soak up all the supply and push the stock back above the opening day's high. But with all that supply finally distributed and a new batch of bulls holding the stock, I'd look for this stock to move higher.
As most "Mad Money" fans know, Jim Cramer has
liked this stock from much lower levels. If you're long, there's no reason to change your stance.
But look at how much stock traded between $40 and $43. That's a lot of financial commitment invested at that level. So any pullback should find support from all those people who are now unhappy that they sold. If the stock falls back below $37.50, I'd be a seller.
I hear that the shoes are extremely comfortable, but as I wear a size 14, I can't even try the darned things on! That said, you can't argue with the uptrend. This is a bear-killer.
showed up on one of my scans as a potential breakout stock. Like Rackable, Digitas has filled the gap that occurred in July and is now chewing through additional resistance.
Notice how narrow the channel that defined support and resistance is now. The stock has really been trading within a $1 range for more than a month. So I'd look for a bout of high volatility to begin as soon as the stock clears $11 on fairly heavy volume -- i.e., greater than about 1.3 million shares. If you're long now, then try putting your stop just below the support line drawn above.
Be careful out there.
At the time of publication, Fitzpatrick had no positions in any stocks mentioned in this column, though positions may change at any time.
Dan Fitzpatrick is a freelance writer and trading consultant who trades for his own account in Encinitas, Calif., and contributes to
. He is a former co-manager of a hedge fund and teaches seminars on technical analysis, options trading and asset-protection strategies for traders and business owners. Fitzpatrick graduated from the McGeorge School of Law and was a fellow at the Pacific Legal Foundation, a nonprofit public interest firm specializing in constitutional law. He also practiced law in the private sector before pursuing trading as a full-time career. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Fitzpatrick cannot provide investment advice or recommendations, he appreciates your feedback;
to send him an email.