I'm talking market and not outside....
I saw a trader, and his Thursday performance.
"Wed we were down 200, the news was awe full, why we rallied 200... I didn't get.", he said.
guy has been trading for 7 years, thinks we trade on news. Which we kind of do... But... Not like "Today's" news. Only news we trade "Today" is if something blows up.
But 73 trades, 12 issues. In the session. 90% losers.
WHOLY SHIT. My record one day, is roughly 20. I don't get to 20 trades, unless I'm 90% winners.
My record loss streak is 5... Then I suck my thumb for a few hours... saying stuff like "I think I'm Wrong.... What am I wrong about...
Maybe my trading advantage is I have no confidence, so..... it's an advantage.
I always wondered about "Real Day traders." and how they trade.... and trying to catch every tick... seems like a heart attack waiting to happen...
I GUESS, Whatever Works for people..... Right... that is the truth... if it works why mess with it.
My life is starring at charts... Till I puke....
Say I'm trading a bank stock..... to trade it. I have to watch... It's index(XLF, The Leading index(IWM,QQQQ,SMH, OIL), The Laggard Index, (SPX, XLE, etc). Usually Oil if I'm not watching it, Usually the dollar, Maybe Gold..... Then in the bank sector, I have to watch a leader GS, BA, WFC). A laggard (FNM, WM).
Then I'm usually watching a couple more indexes, Retail, Energy....
Once I'm trading something, so Like Friday I'm trading retail and banks... Suddenly I have to open a leader in retail, a laggard, maybe a high end, and the index
So... If I'm lucky I can trade 3 sectors, maybe 2 stocks in each of those sectors... so Max 6 stocks... Now.. it's possible that I can trade the indexes too. so that gives me 10 possible trades I can make at a time.......
And there is a limit to how much I can watch.... Plus my obsessive blogging. I have 3 computers, and 5 screens... and I want to get some projections so I can throw some charts on my walls.... but I'm kind of afraid of some kind of Chart Epileptic seizure
But I'm usually looking for long term holds... 20 days, 5 days, 3 days.... Maybe I'm willing to trade out of them when I can see a midday correction coming. Or trading a move in materials.
I just... there is no way I would trade 12 stocks in a day.... 74 times.
and If I'm not trading 75% I stop trading.
Saturday, August 16, 2008
Why on a nice day...
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6 comments:
Interesting to hear how others trade. You have three computers going and five screens?!! The Chart Epilepsy may be a valid fear!
I agree that making 74 trades in a session is ridiculous. Physically, how can that be done?
As for me, I may make two or three trades in a day, my record is 12. I usually keep positions for several days and have several large holdings that I have had for months to years.
Charts charts and more charts. That's the key to getting a feel for the market. I can't resist looking at the big indices every single day and then going over Brian Shannon and TK videos at night to see if their conclusions are the same as mine.
Five screens is very impressive.
Daytraders, Pro's,tend to trade more than swing traders, I think.
When I say, I want to puke, after a day... I'm not lying... and that after a day, the idea of looking at another chart. I do like the idea of getting a projection and using some white wall space.
you also have to trade larger size.
It's also an indicator of "overtrading"
I don't think I could go 12 losers, and not just go back to bed.
For a long time I used to avoid other opinions, sometimes it skews your opinion, and I realized if I could avoid everyone else's opinion, I could either form a better one, or a more neutral one.
hey I'm curious... have I convinced you to switch from trading horizontal resistance to trading Trend line resistance?
Not really. I like TK's idea of looking at horizontal resistance and support, especially for individual stocks. This may sound schizoid, but I tend to use trend line supports and resistance for indices and then go to horizontal support lines for individual stocks. Does that make sense? Probably not, but TK really emphasizes that support (or, as he says "suppahwt") is the horizontal.
I'm a newbie at serious day and swing trading (only a couple years) and I admittedly keep my trading size low-- I am hitting for average and not trying to hit it out of the park (yet). I have been increasingly successful at this for over a year, having a nice run last summer, and then riding the bear down with FXP, SDS and shorts in banks. I honestly think that I can make a living at this one day and I do not want to shake my confidence now. I'm still working full-time at a *job* and have to convince myself and my wife that this can be done with some modicom of safety and reliable income. I'm almost there.
I love other opinions and have read a few books and blogs that have helped and many others that have not. I like your free association style of blogging because it helps me to see how your right brain processes the charts that percolate through it during the day. A lot of it is lost on me because my left brain often prevents me from seeing the patterns clearly. My habit is to analyze my trades and keep tweaking the process to see where I made good decisions and where I made bad ones-- I'm plagued with an overdeveloped left cerebral cortex.
Another interesting thing is that when I started "investing" 14 years ago, I joined an Investment Club, ala Beardstown Ladies, made up of local professionals-- doctors, lawyers, architects, scientists-- and I saw how useless fundamental analysis of companies can be. I stayed in the Club for 10 years mainly for the comraderie: drinking beer with smart interesting people. We often invited local "experts" in to talk about portfolio management, fundamental analysis, macroeconomics, etc-- but never technical analysis (!) We all decided to disband because while the Club was stimulating from a social standpoint, it was deleterious to any stock analysis or trading help. Now we just get together every once in a while for dinner and a show.
Now I'm almost exclusively a technician and I came to this after really really trying to make money with fundamental analysis and failing miserably. TA works and its doable. I've read John Murphy for a lot of the lingo, have subscribed to Gary Smith's site "The Chartist" or something like that a few years ago and that helped. The one book I really like is Alexander Elder's Come Into My Trading Room, probably because it's written by a fellow physician who is living my dream of trading for a living. Also, he sets up his "system" and explains step-by-step how he evaluates a stock, and then executes the trade. It's a great overview.
Wow, this became a long nauseating diatribe! Sorry about that. Anyway, keep up the blogging and I'll look at more trend line trading-- it seems that is what Brian Shannon promotes, too. I also like the Invivo list and I may look into subscribing to her site for some edumacation. Thanks again.
That is great, it was a good read.
Trend line trading is just horizontal trading... Only with Time/momentum added in.
I haven't watched Brian trade but from what I've seen mostly horizontal ones. and he talks 70% horizontal.
I like TK, because he isn't a hedger. Any idiot Technician, can say "Today we went down, I think we are going down. and be "mostly right"
When stocks build a base, they will do it horizontally, As they do when building a top. But his "Break out, Pull back, Go." is very trend-line. And you can see that he talks a lot of trend-lines, and triangles.
You missed Friday, when I first noticed the descending triangle in the XLF, then realized it was part of a Pennant. I actually changed the post after 3 minutes... because I was confused.
From a risk reward kind of way.. the Real secret.. IMHO is to realize when a stock is about to "Make a decision" one way or the other. Wait for it to make up it's mind, then you follow that trend.
I don't know how other peoples brains work. Overall, the market is very rational. But, the weird thing are the "Sell the news" moves. But it makes sense...
It's like the move in the Dollar. If you hate the dollar, you went short way before Fanny Freddy. Once the news was out or it was resolved..... There were no more sellers... No More people to sell it. Just like Gold, Everyone scared of Armageddon, just went "All in"..... It's a market and without new sellers or the alternate.... You get a reversal.
AAPL when the new phone came out. there just wasn't any new money flow into the stock, and it sells off.
It seems irrational, but it's not. That is why TK doesn't want to hear the news, It's just noise..
Funny though, I forget how Right brained a lot of it is.
I come out a little more right brained.. but fairly balanced. But, as I reflect, what I do... as I try and put the whole market together, and create larger models of what has happened, and what may happen.. that is very Right brained.
But the reason I do it... is because I can't stand the Chaos, and want to make it orderly.... Hopefully without imposing my Rorschach on it.... Or maybe Imposing it, and trying to filter it.
Teresa has some ridiculous Technical skills, But something I learned from her... is also something I know about Engineering... Keep it simple.
Simple systems can be the best. And when you start making things more complicated, One tends to impose that Rorschach on them.
In talking with her, seems like she has a great Balance, where. Everyone wants a Simple Technical Do no wrong Quant system.... but it doesn't work that way...
Like they say about technical trading... There is an art to it... a point where you do have to play a little Finesse...
Also as manic as I am right now about my trading... It has my spidey sense going... Makes me think I'm about to hit a massive "cold Streak"...
Of course Like Jesus, unicorns, god, and Karma... I don't believe in cold streaks.
Trend trading. Sure, I thought you meant moving averages. I used to pay more attention to cross-overs of 10 and 50 day MA's and be reluctant to buy stocks below their 200-day MA, etc. For example, HCBK is the only bank that has not dropped below its 200-day MA... now that tells me it's strong. I thought that was what you meant. But, yes, I do trade on trends, both up and down, and I try to keep it as simple as possible. I don't try to catch falling knives (like I did back in the days of fundie analysis.)
Brian pays close attention to the 5-day MA for example and is reluctant to go long in a market with a declining 5-day MA. I thought that was what you were getting at by referring to trend trading.
TK, on the other hand, never mentions MA's as far as I can tell. He's all about the simple formations, triangles, "suppawht" and resistance-- which are horizontal and have nothing to do with MA's. "Break out, pull back, go" is trend line-- so what is horizontal resistance trading?
I guess I got mixed on what you meant by trend vs horizontal. Don't we use both to some degree?
Right brain. This TA is ALL about right brain development: pattern recognition, it's really an artform and I appreciate this from a purely intellectual standpoint. Watching TK is like watching Michelangelo at the Sistine Chapel (well, maybe that's a bit of hyperbole.)
Sentiment. Barry Ritholtz has given me an appreciation of macroeconomics and how it can move markets-- you just don't have a time frame on it. But even more important is the sentiment. This is really Gestalt type stuff-- do you know of any quantitative measures that are reliable? I look at the % of stocks above their 50 and 200 day MA's and also the Williams %R to see if the entire market is overbought or oversold.
For the small amounts of money I trade, simplicity works very well. Teresa's and TK's analysis are both simple. Give me 5 stocks going up to buy and 5 stocks going down to short-- I may get burned on 3 or even 4, but the net gain will be there. I don't need to be levered or trading options and spreads, etc, to appreciate the beauty of trading, and for me it's all about the intellectual stimulation-- I know that sounds weird. I'd like to think I'm not gambling, and I do like Theresa's commentary and her stock lists. She seems very well-rounded about life in general, too, and seems to truly enjoy her place in the universe.
The MoMo stuff has never appealed to me mainly because it's just not pretty, it's just mania and seems sick. In the late 1990's, one colleague would come into the office everyday to tell me how much (on paper) he made in JDSU. I had some Sun Micro at the time which was doing very well, but not as well as his JDSU-- he would remind me, gloat, and implore me to buy JDSU or some other hot stock. Finally, I sold all my Sun Micro in Dec 99 because the gains just stopped making sense to me (remember I was an inveterate fundie at the time) and I got much derision from this colleague. I sold a lot of everything else to sit in cash for the meltdown of 2000. In the end, of course, he felt huge pain, lost a lot of money, fired his money manager, canceled out his profit-sharing for his employees, got divorced, blew out his knee playing tennis... (OK, the last two things probably had nothing to do with JDSU, but you get my drift.)
Horizontal vs Trend? I suppose I use both to varying degrees.
My favorite line in the market is when someone is asked, why their analysis went wrong. And truthfully they say "Ya, there were just more sellers than buyers."
Eternal market truth.
I'm going to do a post about Mean reversion and fundamental analysis.
The big flaw in Horizontal is that.. I heard some technician say " I'm a buyer above 11700. "
If the market is going from here to 11700, don't you want those ticks.
What does Brian say?, it's the direction of the Moving averages. And sure the IWM is above the 200 day, But I'd be happier to buy it when it moves below... because the air is getting thin up here.
The worst part for you is that, The 10 minute trends, feed the daily trends, feed the Weekly, Feed the yearly(seasonal), Feed the Cyclical(10 year), feed the Secular(30-40).
They are all tied together.
I'm going to do a post, about fundimentals and Mean reversion
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