Why "Strong Stocks" Can Be Dangerous Traps

And how you can avoid them...

January 20, 2025

Have you ever watched a stock like NVIDIA hit all-time highs and felt that irresistible urge to jump in?

That voice in your head screams "This is it! Don't miss the move!"

I get it. 

Trust me, I do. 

There's nothing more seductive in trading than a strong stock making new highs.

But here's what most traders miss...

When a stock is making headlines for hitting new highs, that's exactly when you need to be most careful. 

It's when everyone and their grandmother is talking about buying that you should start thinking about risk.

The market has a cruel way of teaching this lesson. 

Just when everything looks perfect - when all the financial media is bullish, when every technical indicator is screaming "buy" - that's often the exact moment smart money starts taking profits.

Think about it logically...

Who's left to buy when a stock is making all-time highs and everyone is already bullish?

That's not just a rhetorical question - it's the key to understanding market psychology.

Personally I've learned to look deeper. 

Instead of just seeing the price action, I look at the whole picture. 

What's the market breadth telling us?

Are other major stocks confirming the move? 

Is there divergence between price and momentum?

These are the questions that keep you out of trouble. 

They're the difference between being a trader who chases headlines and one who consistently builds wealth over time.

Your trading companion,
Team Theta Warrior

PS: It’s not easy to see the whole picture when trying to scale your returns…

So we’ve put together a 60-second free quiz to help you see the whole picture and give you the next actionable step to increasing your profitability…