Idea Generation as defined by Trade Ideas is the first in a set of specific skills that form trading mechanics, much like the coordinated skills and steps involved in a baseball or golf swing. Idea Generation or idea development is the process of describing market or stock behavior into actionable patterns and specific trade ideas. Idea generation also includes gathering information from a variety of trusted sources to produce useful conclusions. Using Trade Ideas an individual is able to model the patterns s/he observes from the market or a specific stock’s behavior. The resulting stream of real time information points to all the stocks exhibiting the same behavior; thereby providing a target-rich environment from which to make trades or further study.
One exercise traders use to help them describe actionable patterns is to review several of their recent best trades. What was the stock doing across multiple time frames before the trade? What was the trigger event or alert that prompted the trade? The answers to these questions build a trader’s ability to describe in words the patterns they wish to see again and again using a pattern recognition tool like Trade Ideas.