As a developing trader it is important to stay engaged with the market and your developement, regardless of whether you are trading or not. What do I mean?
Well based on my trading system that I am not going to be trading today as I had two down days in a row, which means today will be a non trading day. But this does not mean that I will do nothing just because I can not trade. Today is a perfect day to work on my if/then statments for different trade setups. I will also review and tweak my rule based trading system (See video below on rule bases trading system and its importance).
It is also a good opportunity to paper trade. I guess what I am really trying to say is that in order to succeed in this trading thing, you need to be dedicated. You need to get the 10,000 hours of screen time to become an expert.
So instead of taking the day off from trading because I can not actively trade the market today, I am going to get a few more hours of screen time and trader development under my belt.
Good Luck Trading!
P.S. I will be sharing my rule based system, sometime over the next month as I refine and test it. It really is a business plan. And you all know the old adage "If you fail to plan, then you plan to fail".
Wednesday, September 30, 2009
Tuesday, September 29, 2009
Traderfeed: Overcoming Stubbornness as a Trader
Dr. Steenbarger is an absolute invaluable resource for traders and tonight he posted another great article regarding trader's greatest potential weakness: ego.
Ironically Dom and I were discussing psychology and trading during the open. The more you trade and fail the more you appreciate these insights and approaches to overcome yourself.
http://traderfeed.blogspot.com/2009/09/overcoming-stubbornness-as-trader.html
Ironically Dom and I were discussing psychology and trading during the open. The more you trade and fail the more you appreciate these insights and approaches to overcome yourself.
http://traderfeed.blogspot.com/2009/09/overcoming-stubbornness-as-trader.html
Monday, September 28, 2009
Changing Strategies to improve tactics and win the war
I'm going to be committing to swing trading and options through my IB accounts which have proven successful for me. And moving my day trading completely to the demo. I've realized that I have a lot of ground still to cover (probably over a year) to even begin to feel confident with some sort of fundamental ground to trade from. Even though I didn't lose money when I started day trading luckily breaking basically flat for 3 weeks. But it's obvious that I have no real idea what I'm doing. I feel like trading the Lightspeed demo will really allow me to trade and learn without the constant anxiety of losing money which clouds my memory and ability to absorb and retain the necessary lessons from my trades. I tend to only recall the emotions and not the trades. On Friday I traded on the demo, felt comfortable, stuck to my discipline, entered and exited good setups and was up over $200 paper money at the end of the day trading RIMM and FAS. And initiated a good swing position in QQQX which is up over 4% since Friday. Researching pivot points, mysmp's day trading articles and reviewing technical analysis helped ground me on Friday.
I'm going to try to continue to track my paper trading daily and much like Gman's choptracker (see Stocktwits TV setment tonight) try to analyze my trading habits and identify where and when my strengths and weaknesses lie.
Also I'm going to spend the year testing different filters, news, charting software and widdle down my resources and hopefully have a solid successful routine come 12-18 months from now.
I'm going to try to continue to track my paper trading daily and much like Gman's choptracker (see Stocktwits TV setment tonight) try to analyze my trading habits and identify where and when my strengths and weaknesses lie.
Also I'm going to spend the year testing different filters, news, charting software and widdle down my resources and hopefully have a solid successful routine come 12-18 months from now.
Sunday, September 27, 2009
Friday, September 25, 2009
Something is just not right...
A normal person who recieve credit from a financial institution does not dictate or really have any say with regards for what that limit is going to be. It is all dependent on the bank credit risk analysis of the individual which in the recent financial crisis has obviously tightened.
But the government on the other hand actually get to vote to determin what there credit limit is...Hmmmmm. Check out the article http://online.wsj.com/article/SB125270970074004941.html#.
I actually did not know that we had a set debt limit that is voted on in congress. What a bunch of bull shit, like that number really means anything to them.
But the government on the other hand actually get to vote to determin what there credit limit is...Hmmmmm. Check out the article http://online.wsj.com/article/SB125270970074004941.html#.
I actually did not know that we had a set debt limit that is voted on in congress. What a bunch of bull shit, like that number really means anything to them.
Wednesday, September 23, 2009
Another one from mysmp.com
Day Trading Time Zones
Understanding Specific Time Zones during the Trading Day
Having a successful trading career not only depends on the trading system or style that you use but also depends on other intangibles, such as day trading time zones. Understanding the market dynamics during different times of the day will take your trading to the next level.
Think about your trading history and notice if you see a pattern in the different day trading time zones in relation to winning and losing trade percentages. What a day trader must understand is that even if a chart has a great setup, the time at which the trade is placed may be in a day trading time zone which typically starts a countertrend move. For example, many traders who are day trading breakouts will be far more successful during the first two hours of the day than any other timeframe during the day. Typically breakout attempts will fail and reverse which will only serve to frustrate the trader and cause you to doubt your approach to trading.
Let's now take a look at the different time zones and understand the general market dynamics during each time zone.
Day Trading Time Zones
The opening bell - 9:30am to 9:50am
The first 20 minutes of the day are the most volatile of the trading day. While this is the most dangerous day trading time zone, it can also provide to be the most lucrative if you understand how to trade in this time frame. It is usually recommended that novice traders stay out of this zone and wait for the imbalances created from overnight news or earnings releases to settle down. Many technical indicators do not work well in this time frame as the volatility is too strong. In most cases, volume will also be the highest of the day during this time.
The Morning Reversal- 9:50am to 10:10am
The first reversal zone of the day begins at around 9:50am and lasts for 20 minutes. This is a very important period of the day for day traders. I look for this time zone to put on continuation trades. For example, a stock may opening bell, you will be able to more clearly see what the traders in this security will want to do. Volume will drop off a little bit compared to the open but will still be very high during this day trading time zone. This time period is my favorite for trading as the price stability returns to the market but volatility is still present for profitable trading. In strongly trending markets, reversals may be small or non-existent
Low Risk Trading - 10:10am to 10:25am
During this day trading time zone, volatility shrinks again and you want to look for clues in the Dow, S&P, and Nasdaq as to the direction that the market wants to take. This is an opportune time for bigger traders to move the market the way they choose. Watch the tape of the stocks that you track for any indications of direction.
Decision Time - 10:25am to 10:30am
The market will be settled for the most part and most of the days volatility will have passed. There may have been a few reversals in the first hour but during this small zone, many traders will cash out of profitable positions and finish the day while others will position themselves for the next move in the market. I look at this period as a time for consolidation and preparation. The move following this day trading time zone can last until lunchtime.
Final Move of the Morning - 10:30am to 11:15am
This time zone will be the final major time zone as far as morning trading is concerned. It is safer in relation to the other zones in that technical indicators such as the slow stochastic or RSI will have a more pronounced effect than some of the earlier time zones. Be careful near the end of this range as it leads right into the lunch time hour which can start early or start late. A rule of thumb is that the more volatile the preceding day trading time zones are, the greater the chance that this move will extend further into the 11 o'clock hour.
Go Eat your Lunch!! - 11:15am - 2:15pm
Lunchtime trading can be brutal. False breakouts and choppy sideways moves characterize this time period. If you must trade, trade lightly until you have a good track record of putting on winning trades in this time zone. Also, please let me know how you do it! The risk to reward is very high here. Volume will fall out of the market as floor traders and other institutional traders will take their lunches. Don't let this time zone turn profitable morning trading into a loss.
Back to Business - 2:15pm - 3:00pm
Traders will work their way back into the market during this time frame. For the most part, trends have been established and trading during this timeframe will provide you with opportunities where the use of technical indicators is applicable. Remember, the CME closes at 3pm so you will see a pickup in volume due to some of the bond traders coming into the equity and futures markets.
It's GO Time - 3:00pm - 3:10pm
Bond market closes and bond traders will flood the equities markets; watch for sharp moves in either direction. Moves can be fast and large.
Use Caution & Stay with the Trend - 3:10pm - 3:25pm
During this day trading time zone, use caution as you are approaching the 3:30pm timeframe which tends to produce a reversal or a stall of the prior trend. During this zone, you want to stay with the trend that has been established from the 2:15pm and even 3:00pm timeframe but don't get attached to the positions.
Portfolio Re-balancing - 3:30pm - 4:00pm
I tend to recommend traders not trade during the last half hour of the day. There are many funds and institutions rebalancing their portfolios and it can get a bit tricky. If your day trading, you only have 30 minutes max to get out of your trade and I don't like working under that type of pressure. If your an action junkie or like putting on very short term trades, the volatility is there for you to do so.
Conclusion
Personally, I trade up until about 11:00am to 11:30am. The volatility in the morning fits my trading style. That is key; you need to understand who you are as a trader and trade accordingly.
As you can see, the chart setup or systems that you look at are not the only factor in putting a day trade on. Remember, day trading is not absolute; it is a game of odds. Your job is to put the odds in your favor and by utilizing the different day trading time zones that we have discussed, your trading will become more consistent.
Understanding Specific Time Zones during the Trading Day
Having a successful trading career not only depends on the trading system or style that you use but also depends on other intangibles, such as day trading time zones. Understanding the market dynamics during different times of the day will take your trading to the next level.
Think about your trading history and notice if you see a pattern in the different day trading time zones in relation to winning and losing trade percentages. What a day trader must understand is that even if a chart has a great setup, the time at which the trade is placed may be in a day trading time zone which typically starts a countertrend move. For example, many traders who are day trading breakouts will be far more successful during the first two hours of the day than any other timeframe during the day. Typically breakout attempts will fail and reverse which will only serve to frustrate the trader and cause you to doubt your approach to trading.
Let's now take a look at the different time zones and understand the general market dynamics during each time zone.
Day Trading Time Zones
The opening bell - 9:30am to 9:50am
The first 20 minutes of the day are the most volatile of the trading day. While this is the most dangerous day trading time zone, it can also provide to be the most lucrative if you understand how to trade in this time frame. It is usually recommended that novice traders stay out of this zone and wait for the imbalances created from overnight news or earnings releases to settle down. Many technical indicators do not work well in this time frame as the volatility is too strong. In most cases, volume will also be the highest of the day during this time.
The Morning Reversal- 9:50am to 10:10am
The first reversal zone of the day begins at around 9:50am and lasts for 20 minutes. This is a very important period of the day for day traders. I look for this time zone to put on continuation trades. For example, a stock may opening bell, you will be able to more clearly see what the traders in this security will want to do. Volume will drop off a little bit compared to the open but will still be very high during this day trading time zone. This time period is my favorite for trading as the price stability returns to the market but volatility is still present for profitable trading. In strongly trending markets, reversals may be small or non-existent
Low Risk Trading - 10:10am to 10:25am
During this day trading time zone, volatility shrinks again and you want to look for clues in the Dow, S&P, and Nasdaq as to the direction that the market wants to take. This is an opportune time for bigger traders to move the market the way they choose. Watch the tape of the stocks that you track for any indications of direction.
Decision Time - 10:25am to 10:30am
The market will be settled for the most part and most of the days volatility will have passed. There may have been a few reversals in the first hour but during this small zone, many traders will cash out of profitable positions and finish the day while others will position themselves for the next move in the market. I look at this period as a time for consolidation and preparation. The move following this day trading time zone can last until lunchtime.
Final Move of the Morning - 10:30am to 11:15am
This time zone will be the final major time zone as far as morning trading is concerned. It is safer in relation to the other zones in that technical indicators such as the slow stochastic or RSI will have a more pronounced effect than some of the earlier time zones. Be careful near the end of this range as it leads right into the lunch time hour which can start early or start late. A rule of thumb is that the more volatile the preceding day trading time zones are, the greater the chance that this move will extend further into the 11 o'clock hour.
Go Eat your Lunch!! - 11:15am - 2:15pm
Lunchtime trading can be brutal. False breakouts and choppy sideways moves characterize this time period. If you must trade, trade lightly until you have a good track record of putting on winning trades in this time zone. Also, please let me know how you do it! The risk to reward is very high here. Volume will fall out of the market as floor traders and other institutional traders will take their lunches. Don't let this time zone turn profitable morning trading into a loss.
Back to Business - 2:15pm - 3:00pm
Traders will work their way back into the market during this time frame. For the most part, trends have been established and trading during this timeframe will provide you with opportunities where the use of technical indicators is applicable. Remember, the CME closes at 3pm so you will see a pickup in volume due to some of the bond traders coming into the equity and futures markets.
It's GO Time - 3:00pm - 3:10pm
Bond market closes and bond traders will flood the equities markets; watch for sharp moves in either direction. Moves can be fast and large.
Use Caution & Stay with the Trend - 3:10pm - 3:25pm
During this day trading time zone, use caution as you are approaching the 3:30pm timeframe which tends to produce a reversal or a stall of the prior trend. During this zone, you want to stay with the trend that has been established from the 2:15pm and even 3:00pm timeframe but don't get attached to the positions.
Portfolio Re-balancing - 3:30pm - 4:00pm
I tend to recommend traders not trade during the last half hour of the day. There are many funds and institutions rebalancing their portfolios and it can get a bit tricky. If your day trading, you only have 30 minutes max to get out of your trade and I don't like working under that type of pressure. If your an action junkie or like putting on very short term trades, the volatility is there for you to do so.
Conclusion
Personally, I trade up until about 11:00am to 11:30am. The volatility in the morning fits my trading style. That is key; you need to understand who you are as a trader and trade accordingly.
As you can see, the chart setup or systems that you look at are not the only factor in putting a day trade on. Remember, day trading is not absolute; it is a game of odds. Your job is to put the odds in your favor and by utilizing the different day trading time zones that we have discussed, your trading will become more consistent.
Day trading style
More on the system from yesterday. Came accross this article on different day trading stratigies. Not sure I would commit to one but would like to have a tool kit of stategies depending on the market conditions. I think as a day trader it is important to make money in any kind of market. Take a read... Oh by the way this was pulled from mysmp.com, really a great resource site.
Day Trading Styles
Day Trading Styles
There are a number of day trading styles that make money in the market. This article provides an overview of multiple day trading strategies that professionals use to make money on a consistent basis. This article will contain the pros and cons of the following day trading styles: (1) breakouts, (2) scalp trading, (3) counters, and (4) trend following.
Day Trading Breakouts Overview
Breakouts is the most common form of day trading styles. It involves identifying the pivot points for a stock and then buying or selling short those pivots in hopes of reaping quick rewards as the stock exceeds a new price level. Breakouts is generally the starting place for newbie traders as it provides a clear entry level and it is a trend following system.
Pros of Breakout Trading
Breakout trading has the potential for quick gains. When key price levels are exceeded it will trigger stop order which gives that initial burst. The key component of a valid breakout is that volume and price accompany the move. This will increase the odds of the trade continuing in the desired direction. Breakouts are also easy to identify. Most trading platforms provide methods for tracking volatile stocks and how close they are to their daily highs or lows.
Cons of Breakout Trading
Breakout trading is by far the most challenging form of day trading. For starters, the levels where trades are placed are the most obvious to everyone regardless of their trading style. Think about it, no matter what system you use on a daily basis, every day trading system factors in the highs and lows of the day. Secondly, the vast majority of intraday breakouts fail. This doesn't mean they don't head higher a day or two later, but if your day trading and there is no instant follow through, odds are you are in a losing trade. Day trading breakouts requires the most discipline as you have very little time to make the call as to whether you are wrong or right. The inability to pull the trigger fast and consistently will mount in to huge losses.
Scalp Trading Overview
Scalp trading is a day trading style where a trader looks to make small gains throughout the trading day. This day trading style suits people who love "action" in the market.
Pros of Scalp Trading
The obvious benefit of scalp trading is the fact you are looking for very little from the market. Another plus is that stop losses are very tight. This will allow the day trader to avoid the monthly "blunder" trade that we all have put on one time or another.
Cons of Scalp Trading
Scalp trading like any other form of trading requires discipline, but due to the large number of trades one will put on during the day, it requires an enormous amount of focus. This "all day focus" can make the trading day a tense situation and can lead to high anxiety for the trader. Also, people go into the business of trading for unlimited earning potential and the idea that you do not have to slave away at a desk all day. Well if you plan on scalp trading, kep a bottle next to your desk, because bathroom breaks are considered a luxury.
Counter Trading Overview
Counter trading is when a trader looks for a pivot point, waits for that pivot point to be tested and trades in the opposite direction. This type of trader has a personality where he or she enjoys going against the grain.
Pros of Counter Trading
Counter trading has a high success rate for day trading. Ask any seasoned trader and they will tell you that intraday trading is nothing more than constant zig zags and head fakes. So, the counter trader is already up in the odds department, because they are going against what the market is telling them. Another plus for counter trading is that when the market fails it often fails hard. Day traders who are able to play morning reversals can make a great living only trading the first hour of the day.
Cons of Counter Trading
While counter trading has a high win percentage, the losers can bring destruction to an account. Even if you win on 4 counter trades, if you do not cut the loser fast, a breakout could run away from you in a hurry. Another downside to trading counter is the next pivot level is too far from your entry, so you will have to set some arbitrary stop limit. Since your stop is not based on an actual price point on the stock, it could get hit quite often. Lastly, setting your price target is also a challenge. Stocks will often appear to make a double top, only to change course just as fast and reclaim the recent highs.
Trend Following Overview
When most people think of trend following, the first thing that comes to mind is a long-term hold buy and hold strategy like the Turtle System. Believe it or not, there are day traders who utilize trend trading systems. The basic method is to look for stocks that are up big in the news and then buy the pullback on these stocks after the first reaction in the morning. Lastly, the trader will place a longer moving average (i.e. 20) and sell the stock if it breaks the line.
Pros of Trend Trading
Trend trading allows the trader to ride a stock for big gains. The day trader will have a limited number of stocks to trade per day, so the commissions are low for this kind of day trading style.
Cons of Trend Trading
If every trader was able to determine which stocks are going to trend all day, there would be a new millionaire created every 30 minutes. No one knows at 10 am, which stocks are going to trend all day long. This means that at best, a trend following day trader can hope to be right 20% of the time. While this trader could still make a killing with such a low win rate there are very few traders that can stick to their trading plan with such a low win rate.
Summary
Every trader is responsible for his or her success. Day trading can be a great money maker, but without a sound trading plan it can push you to your mental limits. The first step in becoming a successful day trader, you have to determine which style of trading best suits your personality.
Day Trading Styles
Day Trading Styles
There are a number of day trading styles that make money in the market. This article provides an overview of multiple day trading strategies that professionals use to make money on a consistent basis. This article will contain the pros and cons of the following day trading styles: (1) breakouts, (2) scalp trading, (3) counters, and (4) trend following.
Day Trading Breakouts Overview
Breakouts is the most common form of day trading styles. It involves identifying the pivot points for a stock and then buying or selling short those pivots in hopes of reaping quick rewards as the stock exceeds a new price level. Breakouts is generally the starting place for newbie traders as it provides a clear entry level and it is a trend following system.
Pros of Breakout Trading
Breakout trading has the potential for quick gains. When key price levels are exceeded it will trigger stop order which gives that initial burst. The key component of a valid breakout is that volume and price accompany the move. This will increase the odds of the trade continuing in the desired direction. Breakouts are also easy to identify. Most trading platforms provide methods for tracking volatile stocks and how close they are to their daily highs or lows.
Cons of Breakout Trading
Breakout trading is by far the most challenging form of day trading. For starters, the levels where trades are placed are the most obvious to everyone regardless of their trading style. Think about it, no matter what system you use on a daily basis, every day trading system factors in the highs and lows of the day. Secondly, the vast majority of intraday breakouts fail. This doesn't mean they don't head higher a day or two later, but if your day trading and there is no instant follow through, odds are you are in a losing trade. Day trading breakouts requires the most discipline as you have very little time to make the call as to whether you are wrong or right. The inability to pull the trigger fast and consistently will mount in to huge losses.
Scalp Trading Overview
Scalp trading is a day trading style where a trader looks to make small gains throughout the trading day. This day trading style suits people who love "action" in the market.
Pros of Scalp Trading
The obvious benefit of scalp trading is the fact you are looking for very little from the market. Another plus is that stop losses are very tight. This will allow the day trader to avoid the monthly "blunder" trade that we all have put on one time or another.
Cons of Scalp Trading
Scalp trading like any other form of trading requires discipline, but due to the large number of trades one will put on during the day, it requires an enormous amount of focus. This "all day focus" can make the trading day a tense situation and can lead to high anxiety for the trader. Also, people go into the business of trading for unlimited earning potential and the idea that you do not have to slave away at a desk all day. Well if you plan on scalp trading, kep a bottle next to your desk, because bathroom breaks are considered a luxury.
Counter Trading Overview
Counter trading is when a trader looks for a pivot point, waits for that pivot point to be tested and trades in the opposite direction. This type of trader has a personality where he or she enjoys going against the grain.
Pros of Counter Trading
Counter trading has a high success rate for day trading. Ask any seasoned trader and they will tell you that intraday trading is nothing more than constant zig zags and head fakes. So, the counter trader is already up in the odds department, because they are going against what the market is telling them. Another plus for counter trading is that when the market fails it often fails hard. Day traders who are able to play morning reversals can make a great living only trading the first hour of the day.
Cons of Counter Trading
While counter trading has a high win percentage, the losers can bring destruction to an account. Even if you win on 4 counter trades, if you do not cut the loser fast, a breakout could run away from you in a hurry. Another downside to trading counter is the next pivot level is too far from your entry, so you will have to set some arbitrary stop limit. Since your stop is not based on an actual price point on the stock, it could get hit quite often. Lastly, setting your price target is also a challenge. Stocks will often appear to make a double top, only to change course just as fast and reclaim the recent highs.
Trend Following Overview
When most people think of trend following, the first thing that comes to mind is a long-term hold buy and hold strategy like the Turtle System. Believe it or not, there are day traders who utilize trend trading systems. The basic method is to look for stocks that are up big in the news and then buy the pullback on these stocks after the first reaction in the morning. Lastly, the trader will place a longer moving average (i.e. 20) and sell the stock if it breaks the line.
Pros of Trend Trading
Trend trading allows the trader to ride a stock for big gains. The day trader will have a limited number of stocks to trade per day, so the commissions are low for this kind of day trading style.
Cons of Trend Trading
If every trader was able to determine which stocks are going to trend all day, there would be a new millionaire created every 30 minutes. No one knows at 10 am, which stocks are going to trend all day long. This means that at best, a trend following day trader can hope to be right 20% of the time. While this trader could still make a killing with such a low win rate there are very few traders that can stick to their trading plan with such a low win rate.
Summary
Every trader is responsible for his or her success. Day trading can be a great money maker, but without a sound trading plan it can push you to your mental limits. The first step in becoming a successful day trader, you have to determine which style of trading best suits your personality.
Tuesday, September 22, 2009
Hedging with futures
Just wanted to pass on some information. It doesn't apply to what you're both doing now day-trading equities, but undoubtedly at some point in your careers this will apply to you directly or somebody you know. Remember a few months ago I bought some $10 in-the-money puts on the SPY looking to hedge with leverage if the S&P went under 850. Now that I understand futures and options on futures, it's clear that my ignorance of this cost me money. Instead of buying in-the-money puts I could have bought and option to enter in to a short position of a futures contract on the S&P at 850, or any other increment I chose. With the ITM puts I bought, I stood to lose 100% of that as the SPY rallied 100 points against me, with an option on the futures I could have received the same leverage for about $1500. Again I stand to lose 100% of that, but why would you risk $5500 like I did when you can only risk $1500 and get the same protection I was seeking. So live and learn, just thought I would pass it along.
Where I'm at with my trading and short-term goals
ThanX Dom for sharing. Here is a list of the areas I'm currently focusing on right now:
- Timing: I trade the first 5 minutes and pre-markets horribly. However throughout the day once I find a well-defined orderly uptrend with pullback I'm consistently successful. I hope that Camtasia will help so I get involved earlier in recognizing the setups. Right now I'm in the right plays just can't seem to get involved at the right entry levels. I'm improving in this area and waiting for pullbacks but again I tend to get anxious abandoning my thesis and cutting my profits way short. Also for the past few days I've found myself having to fight to get back to par because I've started the day in hole. For the next few days I'm not going to make a trade for at least the first 5 minutes.
- Chasing: I have a problem with chasing breakouts only to see the bottom fall out underneath the false breakout and then having to wait until the stock comes back for another test... usually I'm lucky because I can get flat only to watch the stock race off without me. Dom's tape reading has really helped me better identify these false breakouts.
- Feel: I need to get a better feel for the momentum plays and sticking to my trading plan/thesis especially the exit target. I tend to cut my winners short because I used to have a predominant fear that the trade is going to drop out especially when it's basing and just trending sideways. Again tape reading is helping me here. Gaining experience over time is the real solution here.
ThanX for sharing.
- Timing: I trade the first 5 minutes and pre-markets horribly. However throughout the day once I find a well-defined orderly uptrend with pullback I'm consistently successful. I hope that Camtasia will help so I get involved earlier in recognizing the setups. Right now I'm in the right plays just can't seem to get involved at the right entry levels. I'm improving in this area and waiting for pullbacks but again I tend to get anxious abandoning my thesis and cutting my profits way short. Also for the past few days I've found myself having to fight to get back to par because I've started the day in hole. For the next few days I'm not going to make a trade for at least the first 5 minutes.
- Chasing: I have a problem with chasing breakouts only to see the bottom fall out underneath the false breakout and then having to wait until the stock comes back for another test... usually I'm lucky because I can get flat only to watch the stock race off without me. Dom's tape reading has really helped me better identify these false breakouts.
- Feel: I need to get a better feel for the momentum plays and sticking to my trading plan/thesis especially the exit target. I tend to cut my winners short because I used to have a predominant fear that the trade is going to drop out especially when it's basing and just trending sideways. Again tape reading is helping me here. Gaining experience over time is the real solution here.
ThanX for sharing.
Equity Outlook Reports
As part of the futures account I opened I get something from them daily they call their Equity Outlook Report. I put a few of them in the drop box in case you're interested.
The system
As you guys know I have really been working hard to solidify my "trading system", lets no confuse this with automated trading as I am a discrectionary trader. With that comes the rules that define my system, the style of trading, the method of identifying or quantifying risk/reward, the resources to prepare for trading, the review process in order to improve and eliminate that which does not work.
When someone asks me what kind of trader are you? And how do you approach the market? I want to be able to tell them...
I am a day trader. I capitalize on short term trade setups and imbalances between supply and demand. I accomplish this be basing my trades off of the tape (Looking at prints, level II, and inside market) and the charts (really are one in the same, because really with out the tape you would have no chart. The chart is a visual representation of the tape). I look for trade setups that offer a minimum risk/reward of 1:5, and I realize that this is a game of probabilities and I can not control what the market will do but I can control the trades I enter, when I enter them, and when I exit them. It is not about being right or wrong, your ego will kill you in this game. It is about developing high probability trade set ups and trading them the best that you can and hopefully you are lucky to be on the right side of the trade. If not you move on to the next trade idea, it is not personal.
Well I digress...I play in play stocks: This is any stock that has earnings, news that will act as a catalyst, a stock that belongs to a particular sector that is hot. I want stocks that are going to be volotile intraday. I am looking for stocks that trade a minimum of 1 million shares pure day and in most cases an average daily range of $1 or greater.
How do I prepare myself for trading and how do I find in play stocks. Below is a list of resources that I use:
Briefing.com: Lists all stocks reporting earnings on any given day. Also provides news stories on stocks coming across the wire as the come. Important economic numbers that are coming out for the day. How the overnight markets and foreign markets did.
Finviz.com: Just recently discovered the power of this one. I use this to scan the market for in play stocks based on customer filters.
Freestockcharts.com: Use this to take a deeper look and to identify important price levels in a stock on different time frames. Also try to identify any important technical pattern that may be forming as this can more often than not be a catalyst to move a stock.
Stocktwits: Some good content all around.
Blogs: Traderfeed.com, SMB Blog, T3live blog.
T3live: stock ideas, what other traders are trading and what setups they see.
I use Camtasia video recorder to record my trading for review later. I have also developed a excel spreadsheet that I dump all my trading into where I can make comments on trades that meet certain thresholdes. It also calcutes some key performance metrics that I have identified as important. Lastly I keep a journal of trade ideas and a place to reflect on the trading day. As I gain more experience I will refine the process.
Just thought I would share.
When someone asks me what kind of trader are you? And how do you approach the market? I want to be able to tell them...
I am a day trader. I capitalize on short term trade setups and imbalances between supply and demand. I accomplish this be basing my trades off of the tape (Looking at prints, level II, and inside market) and the charts (really are one in the same, because really with out the tape you would have no chart. The chart is a visual representation of the tape). I look for trade setups that offer a minimum risk/reward of 1:5, and I realize that this is a game of probabilities and I can not control what the market will do but I can control the trades I enter, when I enter them, and when I exit them. It is not about being right or wrong, your ego will kill you in this game. It is about developing high probability trade set ups and trading them the best that you can and hopefully you are lucky to be on the right side of the trade. If not you move on to the next trade idea, it is not personal.
Well I digress...I play in play stocks: This is any stock that has earnings, news that will act as a catalyst, a stock that belongs to a particular sector that is hot. I want stocks that are going to be volotile intraday. I am looking for stocks that trade a minimum of 1 million shares pure day and in most cases an average daily range of $1 or greater.
How do I prepare myself for trading and how do I find in play stocks. Below is a list of resources that I use:
Briefing.com: Lists all stocks reporting earnings on any given day. Also provides news stories on stocks coming across the wire as the come. Important economic numbers that are coming out for the day. How the overnight markets and foreign markets did.
Finviz.com: Just recently discovered the power of this one. I use this to scan the market for in play stocks based on customer filters.
Freestockcharts.com: Use this to take a deeper look and to identify important price levels in a stock on different time frames. Also try to identify any important technical pattern that may be forming as this can more often than not be a catalyst to move a stock.
Stocktwits: Some good content all around.
Blogs: Traderfeed.com, SMB Blog, T3live blog.
T3live: stock ideas, what other traders are trading and what setups they see.
I use Camtasia video recorder to record my trading for review later. I have also developed a excel spreadsheet that I dump all my trading into where I can make comments on trades that meet certain thresholdes. It also calcutes some key performance metrics that I have identified as important. Lastly I keep a journal of trade ideas and a place to reflect on the trading day. As I gain more experience I will refine the process.
Just thought I would share.
MS for more follow through tomorrow
First I need to say that it sucks not being able to do this thing full time. I feel like I leave so much money on the table. I have had a lot of good positions but I have to exit them before I reach my price targets. I have watched day in and day out a stock I was trading go higher. I really can not wait to be in the market for the entire day. But enough whining.
MS set up very nicely these last few days. Today the trade was a break out of a multy month resitance level at $32. This trade worked as resistance became support. The patient trader got to see a move to almost $33 by market close. But that is not the most exciting thing. At the end of the day notice how much volum came into MS at the last few minutes of the market to drive it higher. Looking at the charts this thing still has a few points left to move. See charts below:
I will look to accumulate some share around the $32.50 level in this MS and if this level failed to hold I would look to accumulate as clost to $32 as possible as this is the more important level to hold. I really like the high volume into the last upmove into the close.
Lets see how this one plays out.
Looming trouble
http://finance.yahoo.com/news/FDIC-could-seek-bailout-from-apf-3266069115.html?x=0&sec=topStories&pos=4&asset=&ccode=
This issue was known long ago. Namely that the FDIC fund didn't have enough to cover the expected losses that were going to occur over the next few years. The solution is to borrow money from the banks they are supposed to insure? Isn't this like your car insurance company borrowing money from you in case you file a claim and need cash? I'm not sure why this isn't a bigger story. Perhaps because the public has just come to expect that we'll print/borrow whatever we have to in order to stave off problems. The question remains, how much can we borrow? Where is the end? By the time you figure that question out it's too late.
Monday, September 21, 2009
LVS & WYNN Bull Flag Consolidation
These 2 look ripe for a breakout of their bull flag pattern on the daily chart... will be stalking... may take a day or 2. Don't like the increasing selling volume would like to see it waning.
Sunday, September 20, 2009
Friday, September 18, 2009
Thursday, September 17, 2009
The importance of keeping your cool...
So this morning I was really biased to the long side on DFS after reporting a spectacular quarter beating on EPS by more than a point and on Rev's. I dabbled with this in the pre-market as it pulled back. I was long from and average price of 15.42 at the open and was stuck on holding. Had a target of the highs from the pre-market of 16.30. When this stock could not get above 15.50 I should had gotten out, after trading against me a bit this thing gave me a chance to get out before stopping me out at a ridiculous price below 15. Although this stock did eventually make it to test and break the highs of the pre-market I was in at the wrong prices. Price can turn a great trade idea into a horrible trade. So anyways after taking a .43 loss per share on that one I was close to being stopped out for the day. At first I was pissed off and was about to trade on tilt...worst possible thing to do. The market was just teaching me a lesson.
So instead I sat back in my chair for a few minutes, acknowledged that my ego got in the way of exiting the trade but it was only one trade. I also decided that it was only 10 minutes into the open and there was still plenty of time to grind my way positive. So that is exactly what I did, I got in the zone and traded my way out one trade at a time out of the negative to finish positive for the day.
It just goes to show you that you need to remember that the trading day is not over until 1:00. You always have time to make good trades. The key is to remember that you do not have to make it all back in one trade. Don't swing for the fences, just hit a bunch of singles and grind your way positive.
So instead I sat back in my chair for a few minutes, acknowledged that my ego got in the way of exiting the trade but it was only one trade. I also decided that it was only 10 minutes into the open and there was still plenty of time to grind my way positive. So that is exactly what I did, I got in the zone and traded my way out one trade at a time out of the negative to finish positive for the day.
It just goes to show you that you need to remember that the trading day is not over until 1:00. You always have time to make good trades. The key is to remember that you do not have to make it all back in one trade. Don't swing for the fences, just hit a bunch of singles and grind your way positive.
The Cramer Effect
Jim Cramer featured FLEX on Tuesday in his segment "Off the Charts" and his loyal followers the Cramerites rushed the following day to buy his recommendation for no other reason than his recommendation. Will look to short again if the stock breaks below today's low $7.2...
Blog question
I heard you guys mention something about an electronic drop box on the blog, where is that? How do I deposit something there? I have a .pdf file I wanted to share with you guys. I know I can just email it but going forward if everything could be centralized on the blog it would be easier.
Wednesday, September 16, 2009
The Importance of Teamwork by Dr. Steenbarger
I want to be a lone wolf but surrounded by other highly specialized wolves in a motley pack...
http://traderfeed.blogspot.com/2009/08/more-on-gnarls-barkley-teamwork-and.html
http://traderfeed.blogspot.com/2009/08/more-on-gnarls-barkley-teamwork-and.html
Tuesday, September 15, 2009
X
A little bit of heartbreak today as I watch X roll up on $49. I closed out a call spread when it was at $28. My long call was $17.50 and my naked was $50. That's $21,000 I left on the table in the past few months. The original intent was to try and hit a home run. I was on track for it and decided to leave with my single. I had the same flaw in this trade as I heard someone talk about earlier. I had an entry point in mind but not an exit point. $50 wasn't so much my exit point as it was the strike price that brought in enough money to pay for the long call so I didn't have to use any cash to put this trade on. I think I'm a bit neurotic for long-term spreads. I did fine with month-to-month trades for five years. Maybe day trading would actually suit me good.
BBY into the close
I am glad I traded this afternoon as I was reminded of another lesson. When you get in or out of a position you need the market to tell you it is time to get in or out. What do I mean? Lets take BBY for example I made a trade highlighted in the chart above it was having trouble get above 38.50 so I went low offer and got short 200 shares at 38.49 with a .02 stop. On the chart the 37.95-38 looked like it could be support. So their could be potentially .50 of profit in this trade and maybe even an opportunity to flip the position. I covered at 38.42! Why? I am asking myself the same question. There was nothing that had changed in the stock, the S&P was pulling back pretty stongly after making new highs, this thing just failed for the third time at Resistance at 38.50 and the stock was already weak off the back of its earnings today. These were all checks in my favor. And all reasons why I should had been holding the position. You may say that it was profitalbe and it was, but the easy money was only a few ticks away. With all these "checks" in my favor I really should had held this position until the market gave me a reason to sell and support at 38 would had been such a reason among others.
Now back to why this happened. It is because I did not formulate a complete detailed plan. I new that the stock was weak and that there was resistance at 38.50 and that I wanted to get short, and I had an exit/risk identified of .02. The piece I was missing is where I would get out if this thing traded in my favor. Above I mentioned the 38 level, but to to be honest that was not part of my trade analysis when I entered the trade. So this just reiterates the importance of having a detailed trading plan for every trade. And more importantly you need to have a exit for both when it trades against you and in your favor. It could be the difference of making .07/share or .50/share.
Also wanted to mention the strength I saw into the close off of the 38 level in BBY. I will look at this stock first thing in the morning to see if this is going to remain an important level. For now this will be one of my trade ideas into tomorrows open. Also going to keep SVA on my radar, Daily still looks great.
SVA today
SVA worked out to be a great trade today if you played it right. I preface it this way as I made some mistakes today trading this and only ended up about $5 on this stock. But let me explain. As you can recall from my post last night I wanted to buy SVA in the 9.75-9.90 area with a first target of $11. This morning SVA was gapping up in the pre-market at traded as high of 10.27. At this point I knew I had to adjust my plan just a bit. The first trade I put on was at 10.11 and took a sale at 10.16 when the .30's could not lift on the third try. In Reality the third time that SVA could not hold above .30's I should had taken a sale at .32, .31, or .30 depending on how fast I was. Third time is not a charm. This thing was not ready to go and it was going to give you and opportunity to get in at better prices. Then I tried the trade a few more times when I saw it trying to move higher and supporting at prices near 10.10. I took a few small losses. It broke 10 and traded down to 9.90 but never lower. At this point I am thinking, lets get into a really good price and hold this baby unless it trades below its 20 period moving average. So I entered in at 10.02 fearful of SVA not trading below 10 again as I saw this as a way of the big guys shaking out the weak hand longs. I trailed my stop a penny under the 20 period moving average. Up to this point I am very happy with my agressiveness on my execution. At the start of this trade I had a risk of about .14 and was seeking a move of at least .50-1 point to the upside. At one point before I closed my position pre-maturely I had a risk of about .04 because of my trailing stop with the same reward in sight. After I closed out this position it takes off almost .70 and I only catch about .20. But I guess the moral of the story or the big lessoned I learned today is to stick with the trading thesis and if the stock does not hit your stop loss do not hit out early. My stop was never hit. I woul had been long 100 shares and when .20 broke this is where I could had thought to buy a second lot.
However I am not upset with the missed trade, becuase I know for every missed trade there is another trade waiting. I am happy with my trading this morning because I learned something and will be better prepared for a setup like this in the future. I will look to see if this thing has follow through tomorrow.
Thanks for listenting to my thought process.
Good Luck Trading!
However I am not upset with the missed trade, becuase I know for every missed trade there is another trade waiting. I am happy with my trading this morning because I learned something and will be better prepared for a setup like this in the future. I will look to see if this thing has follow through tomorrow.
Thanks for listenting to my thought process.
Good Luck Trading!
A little Chicago news
Hey guys, I was put in touch with someone from Susquehanna after I left Chicago. He gave me some ideas on things I should put in my cover letter to attract their attention. He said he turned my resume in and said I would hear something in the next few weeks if they were interested. Truth be told, I think he just electronically entered the application just as I could over their website. It doesn't sound like he talked with anybody in person or that I have any inside shot. Submitting over websites doesn't work, that's why I wanted to go there and meet people. I think that if I'm interested I've probably just got to pick up and go for 6 months and see what happens. There is one place I found that does 6-month leases but as you would expect, they are more expensive than 12-month. However, I could use this logic. If I found a job it was worth it and you can afford to sign a cheaper 12-month or even buy a condo. If I didn't find a job I saved a lot of money by not signing a 12-month and I'm free to head on to my next destination.
Monday, September 14, 2009
ZOOM ZOOM ZOOM
After Dom left for work I couldn't handle the silence so I signed up for another free T3 trial and heard this one over the chatter. Watched this one double then triple, waited for the pullback found a strong level of support from the tape BUT couldn't put my order in quickly enough around $11 only to watch it blow through $14... Incredible.
Where will this one go tomorrow?
Where will this one go tomorrow?
Stocks on my Radar
All these Bio stocks have been in play the last few weeks. (SVA, NVAX, JAZZ, VVUS, OPXA, BCRX, OREX, MELA, AUXL, SLXP, DNDN). The market was again able to make new highs. Although the market may seem overextended or you may feel that it is overextended, it is important to remain open minded and not to let bias get in the way of good trading. Easier said then done. Try not to fight the tape.
1) Of all the bio's this SVA is my favorite on the charts. If it can get through 10 with some volume, it can easily get to >=$12. I will be looking to establish a position in this at a great price and set a wider stop. I really like the wedge pattern it is forming. The longer this thing consolidates, the more explosive it is going to be. I am going to look for an entry between 9.75-9.90 with a stop at 9.6, first target 11 then 12.50. Looking to put on 200 shares, offload half at 11 and let the other half ride.
I was very gun shy this morning with this AUXL. But it still looks like it may have some more room to run before its announcement on Wednesday. I would look to initiate a long on a pull back to in the range of 36-36.25 or a break out of 37. There is a $40 price target on this thing and this news on Wednesday is just the right catalyst to get us to that number.
Another high flier from today's trading day is SLXP. This thing gapped up like 7 points and really did not do much after this. But I do like how it based the whole day. I would look to be long in the 20-20.15 area for at least 2 points to the upside and would stop 19.70 and maybe even go from long to flat to short. I kind of have the feel of long above 19.70 and short below this level.
DRYS is finally starting to come alive. Thank god, I have my investment group at work in this one. We have plenty of time but I am tired of them giving me shit every day. Anyways they are finally green on this position, we still have 18 months. But anyways, this thing is finally breaking out. It failed last time at these levels, so lets see what it does. If it can get above 7.50 and hold I don't see anything on the charts until $8.5 then $10.
The chart for DNDN also looks good. Here are some notes from Mike B. at SMB Capital from their blog: Into the Close I recognized that one of the stocks I was long was stronger than all the others. That was DNDN, which will now be the first stock I consider to trade as I prepare before the Open tomorrow. Let’s discuss.
Into the Close I was long LVS, DRYS, AIG, and DNDN. SPY broke from its tight range and started an upmove into the last 45 minutes of the trading day. LVS did not trade higher, though it had cleared important technical levels. DRYS did not trade higher though above 7 was significant. AIG in a nice intraday uptrend was stopped in its tracks at 41.30. Not a strong upmove into the Close. But then there was DNDN.
DNDN closed strongly into the Close. It printed near its intraday high for the day. This is old school strong. DNDN found support at 26.70 and then cleared its intraday resistance at 27.27. Rosey called this out and got us in the trade to 50c. Now this move was not explosive above intraday resistance but it was better than all of the other stocks.
After the Close I made a note in my trading journal that DNDN finished the strongest into the Close. This will be the first stock I check when arrive early tomorrow AM. DNDN above 27.50 is my first trading idea. I will look at AIG next as it was the second strongest stock into the Close. LVS above 18.30 will get my attention. I have created a hierarchy for the next trading session.
All of this is subject to change overnight. But now I have started to think about my next trading session and the stocks that are the most interesting for how I trade. I start generating trading ideas for tomorrow right after the Close today.
Good Luck Trading!
1) Of all the bio's this SVA is my favorite on the charts. If it can get through 10 with some volume, it can easily get to >=$12. I will be looking to establish a position in this at a great price and set a wider stop. I really like the wedge pattern it is forming. The longer this thing consolidates, the more explosive it is going to be. I am going to look for an entry between 9.75-9.90 with a stop at 9.6, first target 11 then 12.50. Looking to put on 200 shares, offload half at 11 and let the other half ride.
I was very gun shy this morning with this AUXL. But it still looks like it may have some more room to run before its announcement on Wednesday. I would look to initiate a long on a pull back to in the range of 36-36.25 or a break out of 37. There is a $40 price target on this thing and this news on Wednesday is just the right catalyst to get us to that number.
Another high flier from today's trading day is SLXP. This thing gapped up like 7 points and really did not do much after this. But I do like how it based the whole day. I would look to be long in the 20-20.15 area for at least 2 points to the upside and would stop 19.70 and maybe even go from long to flat to short. I kind of have the feel of long above 19.70 and short below this level.
DRYS is finally starting to come alive. Thank god, I have my investment group at work in this one. We have plenty of time but I am tired of them giving me shit every day. Anyways they are finally green on this position, we still have 18 months. But anyways, this thing is finally breaking out. It failed last time at these levels, so lets see what it does. If it can get above 7.50 and hold I don't see anything on the charts until $8.5 then $10.
The chart for DNDN also looks good. Here are some notes from Mike B. at SMB Capital from their blog: Into the Close I recognized that one of the stocks I was long was stronger than all the others. That was DNDN, which will now be the first stock I consider to trade as I prepare before the Open tomorrow. Let’s discuss.
Into the Close I was long LVS, DRYS, AIG, and DNDN. SPY broke from its tight range and started an upmove into the last 45 minutes of the trading day. LVS did not trade higher, though it had cleared important technical levels. DRYS did not trade higher though above 7 was significant. AIG in a nice intraday uptrend was stopped in its tracks at 41.30. Not a strong upmove into the Close. But then there was DNDN.
DNDN closed strongly into the Close. It printed near its intraday high for the day. This is old school strong. DNDN found support at 26.70 and then cleared its intraday resistance at 27.27. Rosey called this out and got us in the trade to 50c. Now this move was not explosive above intraday resistance but it was better than all of the other stocks.
After the Close I made a note in my trading journal that DNDN finished the strongest into the Close. This will be the first stock I check when arrive early tomorrow AM. DNDN above 27.50 is my first trading idea. I will look at AIG next as it was the second strongest stock into the Close. LVS above 18.30 will get my attention. I have created a hierarchy for the next trading session.
All of this is subject to change overnight. But now I have started to think about my next trading session and the stocks that are the most interesting for how I trade. I start generating trading ideas for tomorrow right after the Close today.
Good Luck Trading!
Lightspeed
Hey Dom,
Do you happen to have a lightspeed keyboard cheatsheet? Or some exercise doc that SMB gave you?
If so can you please put it the shared Dropbox. Let me see about the "Outliers" mp3.
ThanX
Do you happen to have a lightspeed keyboard cheatsheet? Or some exercise doc that SMB gave you?
If so can you please put it the shared Dropbox. Let me see about the "Outliers" mp3.
ThanX
A little action
I sold some naked puts today just trying to generate some revenue.
(5) Sep GG $40 @ .61 = $305
(10) Oct VLO $19 @ .85 = $850
(5) Oct UA $25 @ .75 = $375
Best case scenario is $1530 or a 2.97% one-month return on total risk of $51,500.
Sunday, September 13, 2009
Update
I'm not doing much right now with trading. I spend an hour a day seeing what happened and looking at a few option related opportunities, but that's about it. I've got 3 bull call spreads on the books and just kind of letting them go and see what happens. Between my last semester of school, job searching, and networking, I don't have a whole lot of free time. If I do I plan on starting the Level II CFA studies. My rough plan is still on track to finish in December and then be available to trade full time if I chose to. I don't see me having a job lined up by then as I don't even know what I want to do exactly just yet. I'm hoping that by the time January rolls around I'll have a lot more information from you two on your experiences that will help me decide what my next move will be.
Great "trading" related reading this morning
Most traders struggle when they first begin. The great news is the worst you will ever be as a trader will be when you first start. And you have to hang in there and focus on improving. GMan, one of the better intraday traders trading today, walked into my office to quit. He went from "I quit" to head trader. I was negative $36k, eight months in and am writing this book. My partner did not make money for his first six months. One of the best intraday traders on the street was absolutely one of the worst at my original firm. This trader was in the bottom ten percent of our firm and today he is in the top one percent of all day traders. Our most improved trader this year floundered for his first seven months and now is headed to becoming a star. It takes time to be good.
And I see this time and time again. Those that can give trading more time when they start have a better chance to succeed. 8 months is better than 6, and 12 is better than both. You need reps. Like Michael Jordan who did not make his varsity basketball team when he was a Sophomore in high school you must be patient. But your time will come.
At the start you should trade with small size and with one stock. You should not increase your tier size until you are positive 7/10 trading days. You should have a small max loss when you begin. You should be limited to the amount you can trade. For example when a new trader begins they should not write more than 10k shares in a day.
When you start you will need reps. You will not get better until you gain experience. Stay patient.
Let's visit a recent column "Genius: The Modern View" by David Brooks of the New York Times to offer clarity on a trader's need to be patient when they begin. Mr. Brooks wrote insightfully about the modern genius model in our society. He noted that it takes concerted practice to become great. Brooks wrote, “The key factor separating geniuses from the merely accomplished is not a divine spark. It’s not I.Q., a generally bad predictor of success, even in realms like chess. Instead, it’s deliberate practice. Top performers spend more hours (many more hours) rigorously practicing their craft." We are not born great at anything. You were not born a great trader.
Not convinced yet that you are not going to be a great trader on Day One? Let's check out Malcolm Gladwell's latest page turner "Outliers". Mr. Gladwell explores the commonalities amongst the uber-successful. Those that Mr. Gladwell studied all worked at their craft for at least 10,000 hours before they were great. Bill Gates, Tiger Woods, The Beatles, Bill Joy all had extraordinary opportunities to practice their craft, which was responsible for their greatness. Gladwell explains, "Working hard is what really successful people do."
Geoff Colvin in "Talent is Overrated: What Really Separates World-Class Performers from Everybody Else," wrote that deliberate practice, often with a continuous feedback is necessary to become great. Concentrated practice is the key.
Let's explore the world of tennis for further evidence that you must remain patient to become a solid trader. Russian women accounted for half of the top 10 ranked players in the world in 2007. Wow! Three of those players were produced by Spartak, a dumpy club where they felt lucky if the heat worked. Their secret? Deliberate practice on technique, constant critical feedback, and improving weaknesses. At Spartak passionate instructors focus on the brickwork of developing the skills of their students. Players start at 5, so they have practiced for at least 10 years before we ever meet them at Wimbledon or better yet the US Open in
Ok so you don't like sports, let's use an example from trading. After all this is a trading book. In "Reminiscences of a Stock Operator" we read, "Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass." So I guess you got to practice as a trader also. Sorry.
a) Be patientb) Start slowly
c) You need reps
d) It is hardest at the beginning
Friday, September 11, 2009
A few insightful posts from Dr. Steenbarger
Take some time to read the posts below. I will be answering the questions in the second post this weekend. My live account is now set up with OceanView Capital and I will begin trading live on Monday morning. I will prepare this weeked and button up the rest of my trading system. I feel the most prepared now more than ever. I feel like I have purpose when I go into the markets. that is not to say that I will not make any mistakes but if someone were to ask me what I trade, how, and why? I can come up with a more conclusive answer than a few months ago. I have a defined system that gets me in and out of stocks. Lets see what the markets will give me.
Continuous Quality Improvement in Trading: The Value of Elaborating Your Trading Process
If you look at successful manufacturing companies, such as Toyota and Honda, you'll find that they understand their production processes very well. They keep a close eye on quality and intervene quickly should they deviate from their own quality standards. That enables them to produce products, year after year, that are surprisingly free of defects.
Trading is far more fuzzy than manufacturing, but I think it still helps to view ourselves as profit factories. We take certain inputs--the data we collect on ourselves, the research we produce, the preparation for market days--and transform those into outputs measured in profits and losses. To the extent that we are consistent in our "best practices", we can maximize profitability and minimize our own defects.
I see it in my own trading as well as that of traders I work with: the process is too loose, too open to random, subjective inputs. We will be swayed by something we hear or read; we will become so locked in an idea that we miss important market data. Worst of all, we will produce defect after defect and continue the assembly line of trading.
You cannot double down on your processes and tighten them up if you don't know what they are. Only by reflecting on your best trading and dissecting your best decisions can you figure out how you do what you do when you are at your best.
In coming posts, I will be elaborating my own trading process, as much for my own development as to aid others. My goal in this is not to provide a template for how to trade; each trader must arrive at their own. Rather, the goal is to illustrate and stimulate how continuous quality improvement can apply to something as fuzzy and discretionary as trading.
Reflections on Trading Processes
What is your trading process?
* How do you generate your best trade ideas?
* How do you manage risk most effectively?
* How do you manage positions most effectively to get the most out of trade ideas?
* How do you most effectively manage yourself and your emotions during trading?
* How do you prepare for market days most effectively?
* How do you best review markets and trading performance for optimal learning?
What I find is that the traders who have been successful over the long haul know the answers to these questions and also have very distinctive answers.
Like Toyota or UPS, they have developed their own, unique processes that are both efficient and effective. Success is a function of refining processes over time and becoming ever more consistent in following those processes.
If you *know* your processes, you can more readily develop confidence in them. Many times that is the difference between making the good trade and not; avoiding the bad trade and not.
Half of the challenge of trading is finding your best practices; the other half is implementing them with fidelity and consistency.
Continuous Quality Improvement in Trading: The Value of Elaborating Your Trading Process
If you look at successful manufacturing companies, such as Toyota and Honda, you'll find that they understand their production processes very well. They keep a close eye on quality and intervene quickly should they deviate from their own quality standards. That enables them to produce products, year after year, that are surprisingly free of defects.
Trading is far more fuzzy than manufacturing, but I think it still helps to view ourselves as profit factories. We take certain inputs--the data we collect on ourselves, the research we produce, the preparation for market days--and transform those into outputs measured in profits and losses. To the extent that we are consistent in our "best practices", we can maximize profitability and minimize our own defects.
I see it in my own trading as well as that of traders I work with: the process is too loose, too open to random, subjective inputs. We will be swayed by something we hear or read; we will become so locked in an idea that we miss important market data. Worst of all, we will produce defect after defect and continue the assembly line of trading.
You cannot double down on your processes and tighten them up if you don't know what they are. Only by reflecting on your best trading and dissecting your best decisions can you figure out how you do what you do when you are at your best.
In coming posts, I will be elaborating my own trading process, as much for my own development as to aid others. My goal in this is not to provide a template for how to trade; each trader must arrive at their own. Rather, the goal is to illustrate and stimulate how continuous quality improvement can apply to something as fuzzy and discretionary as trading.
Reflections on Trading Processes
What is your trading process?
* How do you generate your best trade ideas?
* How do you manage risk most effectively?
* How do you manage positions most effectively to get the most out of trade ideas?
* How do you most effectively manage yourself and your emotions during trading?
* How do you prepare for market days most effectively?
* How do you best review markets and trading performance for optimal learning?
What I find is that the traders who have been successful over the long haul know the answers to these questions and also have very distinctive answers.
Like Toyota or UPS, they have developed their own, unique processes that are both efficient and effective. Success is a function of refining processes over time and becoming ever more consistent in following those processes.
If you *know* your processes, you can more readily develop confidence in them. Many times that is the difference between making the good trade and not; avoiding the bad trade and not.
Half of the challenge of trading is finding your best practices; the other half is implementing them with fidelity and consistency.
Thursday, September 10, 2009
Whitney on Rebuilding Credit Markets - CNBC.com
She's starting to sound like Dr. Doom, Roubini and Peter Schiff. Her thesis sounds solid from a fundamental standpoint:
Whitney on Rebuilding Credit Markets - CNBC.com
Shared via AddThis
Whitney on Rebuilding Credit Markets - CNBC.com
Shared via AddThis
Monday, September 7, 2009
Range Play
So above is a edited video of what SMB refers to as the OGT or One Good Trade. They treat trading as a sport and you are required to record the open and close and periodically submit to them edited video with commentary on what you define as a good trade. A good trade does not have to be a profitable trade, as long as the risk/reward was there and you were following the fundamentals that they lay out in the program. I plan to continue to record my trading so that I can review my strengths and weaknesses. I will periodically post video to share with you guys.
Just a caveat, this video is from the beginning of my training. Video's in the future should have more discussion about what I am seeing related to my tape reading skills.
Thanks
Friday, September 4, 2009
Thursday, September 3, 2009
Skype Morning Call....
So this morning we had our first live morning call, where we shared ideas of what we were looking at and trading. I think we all benefited from listening in and contributing.
I think this is the kind of sharing that you wanted to get to Mark. Let me know what you thought and if you think this is something you would want to do on a regular basis. I know that Steve is game for it.
I think also in addition to those files that I am sharing with you in the drop box, you may be able to pick up on the tape reading just from listening to me call things out and watching the same stocks that I am trading. One thing that you may want to consider is getting either a lightspeed demo account or a live account so that you know that you are looking at exactly what I am looking at.
In the near future I will start to add video of my screen that I will edit and add audio too so that you can all see what I see when I am in the trade and what the tape looks like. I think that AUY would had been a perfect example today, but I did not have my screen recorder on.
Let me know what you guys think.
I think this is the kind of sharing that you wanted to get to Mark. Let me know what you thought and if you think this is something you would want to do on a regular basis. I know that Steve is game for it.
I think also in addition to those files that I am sharing with you in the drop box, you may be able to pick up on the tape reading just from listening to me call things out and watching the same stocks that I am trading. One thing that you may want to consider is getting either a lightspeed demo account or a live account so that you know that you are looking at exactly what I am looking at.
In the near future I will start to add video of my screen that I will edit and add audio too so that you can all see what I see when I am in the trade and what the tape looks like. I think that AUY would had been a perfect example today, but I did not have my screen recorder on.
Let me know what you guys think.
Wednesday, September 2, 2009
AMZN: Buy right here right now?
If support is confirmed and holds will look to initiate a small position with a tight stop right below support. Natural first line of resistance is $80.
See chart for details.
See chart for details.
AIG: Where do we go from here?
Well it looks like AIG is still in an overall downtrend. If you look at the chart below you will see the clearly defined downward trajectory of the last few days... however this could also be a bull flag in the making watch out for a confirmed breakout or a reversal of the current trend around $40... Some key areas of support are $38, $40, $42 $44, $48, $50, & $52.... no surprise that they're whole numbers in 2 point increments. If you see it falling or racing look to these levels as support and resistance.
Right now I'm about flat with all the covered calls and buys and sells with this stock... but I have a plan to continue bringing in cash flow while managing my 200 share position.
Right now I'm about flat with all the covered calls and buys and sells with this stock... but I have a plan to continue bringing in cash flow while managing my 200 share position.
Twitter Feeds?
Hey Dom,
I am bummed that we still don't have any means of sharing stock picks and watchlists... I'm been more consistent and active with my tweets about picks and I would love to see what you're watching or shorting or making money on. More specific what SMB is feeding you.
Do you have a twitter account? If so lemme know. Maybe you could incorporate that into the blog? I added a twitter "gadget" to my blog.
Otherwise we're not really helping each other's trades just reflections.
Let me know what you think...
I am bummed that we still don't have any means of sharing stock picks and watchlists... I'm been more consistent and active with my tweets about picks and I would love to see what you're watching or shorting or making money on. More specific what SMB is feeding you.
Do you have a twitter account? If so lemme know. Maybe you could incorporate that into the blog? I added a twitter "gadget" to my blog.
Otherwise we're not really helping each other's trades just reflections.
Let me know what you think...
Tuesday, September 1, 2009
Going Live...SMB vs Ocean View Capital
So this morning I was talking to Mark about going Live. I am scheduled to go live with SMB next week. But I have really been doing a lot of thinking of whether I want to go live with SMB or with my buddies firm over at Ocean View Capital in La Jolla.
Remember with SMB, I paid $5k for the training program, which was not only worth it but is also tax deductable. But in order to trade with firm capital you have to contribute antoher $5k which is not a capital contribution to your account, but rather a payment for the 6 month mentoring process and to help absorb some of your early on losses. They only require their remote traders to do this. After reveiwing the payout structure it was not as good as I thought. Your % payout is determined on your Ticket average or your average profit per 1000 shares traded. The max payout is 80%, but it is not available until year 3. In the 1st year or until you make $150k your max payout is 75% and as low as 20% during your fisrt 6 months. After this the rest of the 1st year your max payout is 55% with as little as 0%. And so on and so forth.
So in a nutshell If I paid them the additional $5k and decide to leave tomorrow I am now out $5k as it is not a capital contribution.
OceanView on the other hand has a minimum $10k contribution with a flat 90% payout. Most competitive I can find. They also have the same commissions as SMB Capital. My friend Mike is the owner and I know that he is more than fare. And the thing with the contribution is if you decide to leave you take your money with you, assuming losses have not eaten in to it. This is your skin in the game.
So to make a long story short I called Mike today and let him know what I was contemplating. And he was very happy that I took the training course in Tape reading as this is how he started out when he was trading on the floor. He said that he would let me come in with just the $5k.
So this is really a no brainer for me. Go somewhere to get a higher payout and contribute the same amount of money, while at the same time if I decide to leave I get my contribution back.
Don't get me wrong, I do not regret taking the course at SMB, as if I did not take this course I would not be contemplating this decision. I just think this is the best desicion for me in order to reach my goal of trading live in a timely manner.
Mark - You said you wanted to set up an appointment to go the the La Jolla office to meet with Mike. I think I am going to schedule to go in and fill out the paperwork on Tuesday next week if you want to meet up there. Let me know.
Jason - If you are back in town you are more than welcome to come as well.
I will send you guys a copy of the Payout tables for SMB.
Dom
Remember with SMB, I paid $5k for the training program, which was not only worth it but is also tax deductable. But in order to trade with firm capital you have to contribute antoher $5k which is not a capital contribution to your account, but rather a payment for the 6 month mentoring process and to help absorb some of your early on losses. They only require their remote traders to do this. After reveiwing the payout structure it was not as good as I thought. Your % payout is determined on your Ticket average or your average profit per 1000 shares traded. The max payout is 80%, but it is not available until year 3. In the 1st year or until you make $150k your max payout is 75% and as low as 20% during your fisrt 6 months. After this the rest of the 1st year your max payout is 55% with as little as 0%. And so on and so forth.
So in a nutshell If I paid them the additional $5k and decide to leave tomorrow I am now out $5k as it is not a capital contribution.
OceanView on the other hand has a minimum $10k contribution with a flat 90% payout. Most competitive I can find. They also have the same commissions as SMB Capital. My friend Mike is the owner and I know that he is more than fare. And the thing with the contribution is if you decide to leave you take your money with you, assuming losses have not eaten in to it. This is your skin in the game.
So to make a long story short I called Mike today and let him know what I was contemplating. And he was very happy that I took the training course in Tape reading as this is how he started out when he was trading on the floor. He said that he would let me come in with just the $5k.
So this is really a no brainer for me. Go somewhere to get a higher payout and contribute the same amount of money, while at the same time if I decide to leave I get my contribution back.
Don't get me wrong, I do not regret taking the course at SMB, as if I did not take this course I would not be contemplating this decision. I just think this is the best desicion for me in order to reach my goal of trading live in a timely manner.
Mark - You said you wanted to set up an appointment to go the the La Jolla office to meet with Mike. I think I am going to schedule to go in and fill out the paperwork on Tuesday next week if you want to meet up there. Let me know.
Jason - If you are back in town you are more than welcome to come as well.
I will send you guys a copy of the Payout tables for SMB.
Dom
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