Get to Know Tom Bowley

It's important to put things in perspective. My background as a CPA really shapes who I am in the stock market. While in public accounting, I handled the Accounting and Auditing area of a large regional CPA firm in the Washington DC Metropolitan area. I was responsible for several large audit clients in the manufacturing, service and banking areas. I understand the fundamentals of companies and how they drive valuations. Auditing banks was particularly useful in my current position as Chief Market Strategist because it enabled me to understand certain intermarket relationships like the tight positive correlation between the performance of banks and the performance of the S&P 500.

I often tell folks that "I never met a spreadsheet that I didn't like," and it's really quite true. I'm a numbers geek. I take nothing for granted when it comes to the stock market. If something doesn't make sense to me, I ignore it.

I take that same basic approach to teaching. I don't expect anyone to "take my word for it". I explain everything in detail. You can then make an educated decision on whether to use that information or ignore it. I think the best example of this is with regard to the Bowley Trend. I've studied historical trends in the S&P 500 over the past six decades and have discovered what I believe are extremely valuable and reliable trends that can help us make money in the future. History does, in my opinion, repeat itself in the stock market. But whether you decide to use this information is your call.

I'm mostly a self-taught technician. I've done it the old-fashioned way - by losing money and LEARNING from my mistakes! One of my goals is to teach fellow traders and investors many of the things I've learned over the years, helping them avoid those same mistakes and helping them save money. I've been very fortunate to have the privilege to write for StockCharts.com since 2006, helping to educate readers from around the globe. One of the featured contributors in the biweekly StockCharts ChartWatchers newsletter is world-renowned author John Murphy. Much of John's writings, especially as they relate to intermarket analysis, has really helped to mold me and how I view the stock market. I view writing alongside John and the other technically-savvy contributors at StockCharts.com to be an honor.

Trading the Invested Central Way

There are a few critical components to successfully trading the stock market. They are as follows:

Harness Your Emotions

First and foremost, you MUST have the proper mindset. Trading is an imperfect science. You will be wrong on many occasions so being able to admit mistakes quickly ("don't be wrong for long") is one of the traits of a seasoned trading veteran. You must approach every single trade with a plan. Know why you're taking a position. Know what your target is. Know what your line in the sand is if the trade works against you and GET OUT if your stop is violated.

Manage Your Risk

This involves a couple things. First, decide how much of your portfolio you are willing to lose on a trade. Then, based on your entry point and your stop level, you can figure out your position size. But risk also involves evaluating the overall market to determine its sustainability, either up or down. I believe it's important to trade WITH the trend, increasing your opportunities for success. Using intermarket indications, trends can be evaluated for their likelihood of continuance or "sustainability".

Patience and Discipline

This one cannot be overstated. There are thousands of stocks on our major indices. By evaluating the overall market and using structured scanning techniques, it's very easy to find trading candidates that fit your risk profile. Allow stocks to come to you. Avoid chasing stocks. By exercising patience, you will not only avoid unnecessary and expensive losses, you will also develop a very important habit of buying stocks at levels where you can minimize risk. I cannot overstate how important it is to minimize losses on losing trades. Sometimes, the best decision to sell results in a loss -- a small loss.

Understand the role of the Market Maker

It amazes me how many folks risk thousands of dollars of capital and have no idea what a market maker does. These are the "middle men" that match buyers and sellers and capture the spread as profit. Many years ago, these spreads were quite large and accounted for much of a market makers profit. However, on most stocks today, the spread is one penny. Higher volumes help to offset the narrower spreads, but market makers now rely on TRADING profits more than ever. They compete against you and me with one very distinct advantage. They see order flow.

Goldman Sachs (who owns a market making unit) CEO Lloyd Blankfein said in early 2010 that their market making unit made over $100 million dollars on 35 of 63 trading days in its most recent quarter. He went on to say that they made at least $25 million on EVERY trading day that quarter. Let me simplify our goal at Invested Central by stating the obvious -- WE WANT TO TRADE ALONGSIDE MARKET MAKERS BECAUSE THEY MAKE MONEY IN ALL MARKETS.

I can teach you how money can be made trading stocks. I can teach you how to find high reward to risk trades. I can show you how to improve your current trading results. But the rest is up to you. You have to show the willingness to learn, to exercise discipline and to keep your emotions in check.

Our Diamond service is designed to educate first and foremost. It will help you develop the skills necessary to succeed. You'll experience that education the very first time you come into our noon chat -- I guarantee it!

One of my favorite features of our service is the quarterly Diamond stock picks that I select. CLICK HERE to read more on this exclusive feature at Invested Central.

I want to offer you a FREE 15-Day Trial to our Diamond service to help you with all of the above. I believe you'll become a smarter trader. Join the thousands of other traders from around the globe that have become better stock market traders.

I look forward to seeing you!

Tom Bowley
Chief Market Strategist
Invested Central

Read a sample of Tom's latest daily market analysis

Check out the performance of Tom's Diamond Picks