Coaching Yourself for Profitable Trading Performance in 2008
In my recent post, I mentioned that there is a considerable overlap between coaching and the short-term approaches to behavior change known as brief therapy. Many traders try to make accelerated changes in their cognitive, behavioral, and emotional patterns without understanding how such changes can be made and sustained. Indeed, few of the professional trading coaches that I’ve met seem to be aware of the brief therapy literature and the extensive research on change and how it occurs.
So how can you use this growing area of research and practice to aid your progress in 2008? Here are a few findings from the brief therapy world and their implications for coaching yourself to successful trading performance:
1) Keep It Focused - The research is unequivocal: focused efforts at change are more likely to occur–and more likely to occur in a relatively brief time frame–than efforts to change many things at one time. Establishing and maintaining a change focus is perhaps the single most important thing one can do to ensure that efforts at improvement will pay off. The focus should be grounded in a thorough assessment of the problems to be addressed and the strengths to be built upon. Many times traders assume that their problem is one thing or another, when in fact they haven’t really drilled down into their trade data to identify what, specifically, they’re doing right or wrong. Working on something broad and vague, such as “discipline”, is not a focus. Focused changes should identify specific things to do differently and concrete steps to make a difference.
2) Keep It Consistent - Research into short-term change finds that involvement in the change process–consistent efforts over time–is associated with success. Traders who work on their trading in a structured, daily fashion are much more likely to benefit from coaching than those who limit their change efforts to weekly or monthly reviews. The goal of all short-term change is to create new, positive habit patterns. It is impossible to create those patterns without regularity: doing new things so consistently that they become part of the self.
3) Keep It Doable - Success breeds optimism, motivation, and further efforts at success. Effective change efforts create a virtuous cycle of continuous improvement. If goals for change are too difficult, they will create only frustration and discouragement. It is better to start small and ensure success than to try to make the most complex changes all at once. If you’re working on entering or exiting trades differently, just try it for a single day and see how it goes. Then modify the goal for the next day. By focusing on the next day’s trade, you keep goals concrete and doable.
In general, I would say that traders tend to overweight the importance of psychology in their results and underweight trading mechanics: how they execute trade ideas (getting good entry prices, not chasing moves; ensuring that each trade has a favorable reward-to-risk profile) and how they set and follow criteria for exiting trades (price targets as well as stop losses). To be sure, psychological factors can interfere with the implementation of those mechanics, but many traders simply lack sound rules for entering and exiting positions and instead make decisions impulsively, on the fly.
A review of one’s own best trades can be very effective in identifying one’s own “best practices” regarding trading mechanics. Those best practices can then be translated into focused, doable goals that are pursued with consistency.
Best of luck in your development in 2008. The posts below may be of additional help in your self-coaching efforts.
http://traderfeed.blogspot.com/
Monday, December 31, 2007
Friday, December 28, 2007
Tuesday, December 25, 2007
OPTION DRAGON'S MANTRA
OPTION DRAGON'S MANTRA
1) We/I believe it is actually possible to make money trading the markets.
2) We/I believe it is possible for us/me to make money trading the markets.
3) We/I believe that we/I deserve to make money trading the markets.
“We/I are/am the Greatest traders Ever.
We always work successfully together.
We/I are/am making millions of dollars trading the markets every year.
We/I are/am happy and content, appreciative of our trading profits.
We/I are/am always calm, collected, focused.
We/I are/am always in the zone.
We/I come from positivity and abundance.
We/I cultivate and sustain a sense of ease remaining in the zone,(the Yoda state).
Have focus, patience, and pick plays with high probability of success.
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment.
Just Make Good Trades.”
NOTES:
1) We/I believe it is actually possible to make money trading the markets.
2) We/I believe it is possible for us/me to make money trading the markets.
3) We/I believe that we/I deserve to make money trading the markets.”
Each one is different. To believe you must give thought and feeling to it. Give it the feeling of satisfaction/joy to the thought. Saying it means nothing. Believing in it means everything. Think about why each is different and its different meanings.
“The Secret ” is true.
Got these quotes from an article written by a trading coach.
“We/I are/am the Greatest traders Ever.
We always work successfully together.
We/I are/am making millions of dollars trading the markets every year.
We/I are/am happy and content, appreciative of our trading profits.
We/I are/am always calm, collected, focused.
We/I are/am always in the zone.
We/I come from positivity and abundance.
We/I cultivate and sustain a sense of ease remaining in the zone, the Yoda state.
Have focus, patience, and pick plays with high probability of success.
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment-(quote from Buddha)”
(Lion in the Safari)
Just Make Good Trades.
I also ask myself after reading all research data from the morning “What are the possible themes today and what events are there” and think like a lion in the safari, cannot chase everything otherwise you get tired, pick a high probability target.
It is important to talk about things as present tense-Now. No “will”s but “Am”s.
So what if some are not true(can’t tell that to me now that I’ve said it about a million times), your subconscious and brain can’t tell! They believe and follow the heart. Give feeling to it while saying or thinking it. Feeling of joy/happiness.
Each sentence to me meant something different and this list has been changing until recently (i’m sure it will change some more but not much). I trade with my brother and including you guys/gals so the 2nd sentence is key as well. Being appreciative of your trading profits boosts your trading profits especially before it happens!
Staying calm is important but if you wear your emotions on your sleeve then it is important not to suppress your emotion but to express it and then recognize it and move on quickly, as you do it over and over again it becomes easier to do. Always stay positive and Happy!
Coming from positivity and abundance is important because it is opposite of desperation and negativity which leads to bad trades. Cultivating and sustaining is very important as you harvest and plant new seeds of trading profits in continuum. The Buddha quote is great to focus your mind on the NOW of the moment further sharpening the scope.
This next poem is a favorite of mine and was in the movie Akeelah and the Bee (2006).
Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light, not our darkness that most frightens us.
We ask ourselves, who am I to be brilliant, gorgeous, talented and fabulous.
Actually, who are you not to be?
You are a child of God.
Your playing small does not serve the world.
There’s nothing enlightened about shrinking so that other people won’t feel insecure around you.
We were born to make manifest the glory of God that is within us.
It is not just in some of us - it is in everyone.
And as we let our own light shine,
we unconsciously give other people permission to do the same.
As we are liberated from our own fear, our presence automatically liberates others.
-Marianne Williamson
BE GLORIOUSLY BRIGHT!
1) We/I believe it is actually possible to make money trading the markets.
2) We/I believe it is possible for us/me to make money trading the markets.
3) We/I believe that we/I deserve to make money trading the markets.
“We/I are/am the Greatest traders Ever.
We always work successfully together.
We/I are/am making millions of dollars trading the markets every year.
We/I are/am happy and content, appreciative of our trading profits.
We/I are/am always calm, collected, focused.
We/I are/am always in the zone.
We/I come from positivity and abundance.
We/I cultivate and sustain a sense of ease remaining in the zone,(the Yoda state).
Have focus, patience, and pick plays with high probability of success.
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment.
Just Make Good Trades.”
NOTES:
1) We/I believe it is actually possible to make money trading the markets.
2) We/I believe it is possible for us/me to make money trading the markets.
3) We/I believe that we/I deserve to make money trading the markets.”
Each one is different. To believe you must give thought and feeling to it. Give it the feeling of satisfaction/joy to the thought. Saying it means nothing. Believing in it means everything. Think about why each is different and its different meanings.
“The Secret ” is true.
Got these quotes from an article written by a trading coach.
“We/I are/am the Greatest traders Ever.
We always work successfully together.
We/I are/am making millions of dollars trading the markets every year.
We/I are/am happy and content, appreciative of our trading profits.
We/I are/am always calm, collected, focused.
We/I are/am always in the zone.
We/I come from positivity and abundance.
We/I cultivate and sustain a sense of ease remaining in the zone, the Yoda state.
Have focus, patience, and pick plays with high probability of success.
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment-(quote from Buddha)”
(Lion in the Safari)
Just Make Good Trades.
I also ask myself after reading all research data from the morning “What are the possible themes today and what events are there” and think like a lion in the safari, cannot chase everything otherwise you get tired, pick a high probability target.
It is important to talk about things as present tense-Now. No “will”s but “Am”s.
So what if some are not true(can’t tell that to me now that I’ve said it about a million times), your subconscious and brain can’t tell! They believe and follow the heart. Give feeling to it while saying or thinking it. Feeling of joy/happiness.
Each sentence to me meant something different and this list has been changing until recently (i’m sure it will change some more but not much). I trade with my brother and including you guys/gals so the 2nd sentence is key as well. Being appreciative of your trading profits boosts your trading profits especially before it happens!
Staying calm is important but if you wear your emotions on your sleeve then it is important not to suppress your emotion but to express it and then recognize it and move on quickly, as you do it over and over again it becomes easier to do. Always stay positive and Happy!
Coming from positivity and abundance is important because it is opposite of desperation and negativity which leads to bad trades. Cultivating and sustaining is very important as you harvest and plant new seeds of trading profits in continuum. The Buddha quote is great to focus your mind on the NOW of the moment further sharpening the scope.
This next poem is a favorite of mine and was in the movie Akeelah and the Bee (2006).
Our deepest fear is not that we are inadequate.
Our deepest fear is that we are powerful beyond measure.
It is our light, not our darkness that most frightens us.
We ask ourselves, who am I to be brilliant, gorgeous, talented and fabulous.
Actually, who are you not to be?
You are a child of God.
Your playing small does not serve the world.
There’s nothing enlightened about shrinking so that other people won’t feel insecure around you.
We were born to make manifest the glory of God that is within us.
It is not just in some of us - it is in everyone.
And as we let our own light shine,
we unconsciously give other people permission to do the same.
As we are liberated from our own fear, our presence automatically liberates others.
-Marianne Williamson
BE GLORIOUSLY BRIGHT!
Sunday, December 23, 2007
Option Dragon's Thoughts
Market Forecast
BTW I love using the TRIN and TICK indicator for the NYSE and Nasdaq and see it as a game changer in order to gauge short term liquidity flows and underlying price actions, as in short term demand and supply. I have found it very useful and another important piece to my repertoire. As you can see by the chart, the market was raising bids for the past 2 days as it never broke .70. Use the TRIN, TICK value table below to feel the zones in which the market is in, sentiment zones as I like to think of it. As you can see the market was in a Mega-Bullish mode for the past two days and it will be interesting to see if the market stays in the lower zone on the TRIN’s through the end of the year. Keep an eye on it and try to make correlated high probability plays with TICK and TRIN as another variable within your trading formula. (Here‘s a place that you can read up more about TICK and TRIN.)
http://traderfeed.blogspot.com/2007/04/trading-techniques-collection-of.html
It is now holiday trading and historically we should trail up into the New Year. The technicals on Happy’s market index charts all show a higher low on the longer term charts and I believe that we COULD be almost done working off the correction phase the market has been in.
After all the writedowns, chicken little crying about how the sky is falling from the media and bloggers, here we are still above November lows and still attracting large numbers of buyers. Why aren’t we lower and doesn’t the market know we are in a recession? Maybe it already knew and now is pricing in a different scenario in 6 months. I mean is this really any new news? What the market loves is certainty, transparency and clarity and as corporations become more transparent and truthful about the losses suffered by the subprime fiasco the market gets more clarity on the financial situation. So I say give the market what it wants give it clarity, give it transparency, dump all your bad news now so we can focus on better things such as earnings!
The earnings season is approaching and like my 500% (5 bagger, it went from $110 to almost $150) on DECK earnings last time, I still think DECK and Uggs is the consumer play to be in. So I went shopping last night and JWN (Nordstrom’s) was sold out of the $50 kid’s Ugg’s for xmas! I had to order a pair of Uggs from another JWN location bcuz the $150 pair of Uggs I bought for my wife was sold out and the sales rep told me, she can’t believe it and whatever they get they sell. Everywhere I go I see young and old wearing them, it reminds me of the iPod craze.
Hmmm, it pays to be in trend and be cool! J It would not surprise me to see DECK at or near $200 after earnings. I believe AAPL and GRMN both had the best sales ever and should be watched as well.
Jon Najarian of Fast Money as well as King Goldman Sachs believes that the option prices and actions are expecting one of the most volatile Januarys on record. Please be prepared in fastening your seatbelts. And that financials could be moving significantly higher (gotta hawk GS and MA).
Jon also notes that China could be primed to rally big in the next couple months. When you look at the FXI or large Chinese corporations CHL, PTR, LFC they have been consolidating for a long time (2 months)since their highs in late October as the correctly prophesized correction occurred in sync with their Chinese market seasonal trends.
A lot of value fund managers are talking about investing in the US since the correction when comparing valuations on a P/E basis with other global markets. But as always most of that money is earmarked for China. Which is fine by me because as Ken Fisher has indicated, the larger global markets always pull the smaller ones and lets face it the US market now only makes up a little over 30% of the global economy.
Another point I’d like to make is the cyclicality of wealth in America between housing and the stock market. Now that the housing market has deflated, the stock market will rise substantially comparatively. This mechanism allows for substitution of wealth creation and helps support American consumption which is the primary catalyst for our economy. The stock market WILL be the new prosperous game to be played speculatively by the same money that was chasing the housing boom. The appetite for risk must be appeased because without risk there is no gain. Cramer as I, believe that the secular bull market in Agriculture will continue as well as the solar plays.
My favorite agriculture plays are POT, MOS, AGU, MON, CF, MOO, TRA, BG, DE. The recent Energy Bill passed by the US Govt is really a Food Bill. It will put more constraints on fertilizer supplies and grain supplies as the bill calls for millions of gallons of more ethanol. Right now a Russian fertilizer company is negotiating with the Chinese for delivery of fertilizers next year and as fertilizer prices jump $50-$100 extra a ton, we could see the highest prices ever for ferts with this new Russian-Chinese deal once it is finalized. It is rumored to be completed in the next couple weeks. Now until fertilizer prices drop substantially from the highs, this bull market should continue for the foreseeable future. Analysts are going to have to play catch up with 2008-2009 estimates at this rate. They are WAY behind the curve! Ferts and Ags as the new boom craze, who ever said food was boring!!!
Solars could be part of the big solution to save our planet!!! And it is the biggest threat to the oil establishment! I remember Eric Bolling on Fast Money when he said solar was hype. Of course he said that, he and his cohorts have been helping push up oil prices for the past 3 years, if solar becomes the big thing, oil demand will drop substantially and one day oil will be used only for taking that squeak out of your kid’s bicycle chain not filling your car! (Its solar powered). Oil will never go away but it will soon be the bridesmaid instead of the only bride. My favorite solar plays are FSLR, JASO, STP, SPWR, PBW, and WFR.
I believe the market will go higher from here and we will not test November lows. The focus will be on earnings soon so writeoffs could take a back seat for the time being and remember the FED is cutting. The Fed is cutting and the markets are climbing the wall of worry. Yeah only 25 basis point cut and we growl but the fed is still in cutting mode and will cut 25 every time they meet until we are out of the woods. The market is a leading indicator and looks out 6 months ahead, we have the Bernake put and Congress put in place to provide help if the market encounters problems and as Soros believes the market not only gauges the temperature and well being of the economy but can also be the cause of illness to the economy so it is in the best interests of EVERYONE involved to make sure the market doesn’t crater. Housing has deflated consumer consumption and if the market tanks and takes everyone’s IRA, 401Ks, trading accounts and mutual funds down they will spend even less.
It is a fluid situation and news will be priced in as it comes but as more bad news comes out and we still rally, I feel good about the prospects for 2008 and it could become one of the best years for the market ever.
Happy Holidays and enjoy spending time with your cherished loved ones. We trade but that’s not who we are, we are all loving sentient beings who happen to trade for a living. We are all very important to someone. Remember what‘s important, and remember that we need to be content to feel happiness.
Besides that you better rest up for what could be the biggest ride of our lives in the markets! Stay in the Yoda state (calm, concentrated focus needed to access implicit knowledge, unemotional) and the Yoda Santa might just bring late gifts in January!
Hope you enjoy!!
BTW I love using the TRIN and TICK indicator for the NYSE and Nasdaq and see it as a game changer in order to gauge short term liquidity flows and underlying price actions, as in short term demand and supply. I have found it very useful and another important piece to my repertoire. As you can see by the chart, the market was raising bids for the past 2 days as it never broke .70. Use the TRIN, TICK value table below to feel the zones in which the market is in, sentiment zones as I like to think of it. As you can see the market was in a Mega-Bullish mode for the past two days and it will be interesting to see if the market stays in the lower zone on the TRIN’s through the end of the year. Keep an eye on it and try to make correlated high probability plays with TICK and TRIN as another variable within your trading formula. (Here‘s a place that you can read up more about TICK and TRIN.)
http://traderfeed.blogspot.com/2007/04/trading-techniques-collection-of.html
It is now holiday trading and historically we should trail up into the New Year. The technicals on Happy’s market index charts all show a higher low on the longer term charts and I believe that we COULD be almost done working off the correction phase the market has been in.
After all the writedowns, chicken little crying about how the sky is falling from the media and bloggers, here we are still above November lows and still attracting large numbers of buyers. Why aren’t we lower and doesn’t the market know we are in a recession? Maybe it already knew and now is pricing in a different scenario in 6 months. I mean is this really any new news? What the market loves is certainty, transparency and clarity and as corporations become more transparent and truthful about the losses suffered by the subprime fiasco the market gets more clarity on the financial situation. So I say give the market what it wants give it clarity, give it transparency, dump all your bad news now so we can focus on better things such as earnings!
The earnings season is approaching and like my 500% (5 bagger, it went from $110 to almost $150) on DECK earnings last time, I still think DECK and Uggs is the consumer play to be in. So I went shopping last night and JWN (Nordstrom’s) was sold out of the $50 kid’s Ugg’s for xmas! I had to order a pair of Uggs from another JWN location bcuz the $150 pair of Uggs I bought for my wife was sold out and the sales rep told me, she can’t believe it and whatever they get they sell. Everywhere I go I see young and old wearing them, it reminds me of the iPod craze.
Hmmm, it pays to be in trend and be cool! J It would not surprise me to see DECK at or near $200 after earnings. I believe AAPL and GRMN both had the best sales ever and should be watched as well.
Jon Najarian of Fast Money as well as King Goldman Sachs believes that the option prices and actions are expecting one of the most volatile Januarys on record. Please be prepared in fastening your seatbelts. And that financials could be moving significantly higher (gotta hawk GS and MA).
Jon also notes that China could be primed to rally big in the next couple months. When you look at the FXI or large Chinese corporations CHL, PTR, LFC they have been consolidating for a long time (2 months)since their highs in late October as the correctly prophesized correction occurred in sync with their Chinese market seasonal trends.
A lot of value fund managers are talking about investing in the US since the correction when comparing valuations on a P/E basis with other global markets. But as always most of that money is earmarked for China. Which is fine by me because as Ken Fisher has indicated, the larger global markets always pull the smaller ones and lets face it the US market now only makes up a little over 30% of the global economy.
Another point I’d like to make is the cyclicality of wealth in America between housing and the stock market. Now that the housing market has deflated, the stock market will rise substantially comparatively. This mechanism allows for substitution of wealth creation and helps support American consumption which is the primary catalyst for our economy. The stock market WILL be the new prosperous game to be played speculatively by the same money that was chasing the housing boom. The appetite for risk must be appeased because without risk there is no gain. Cramer as I, believe that the secular bull market in Agriculture will continue as well as the solar plays.
My favorite agriculture plays are POT, MOS, AGU, MON, CF, MOO, TRA, BG, DE. The recent Energy Bill passed by the US Govt is really a Food Bill. It will put more constraints on fertilizer supplies and grain supplies as the bill calls for millions of gallons of more ethanol. Right now a Russian fertilizer company is negotiating with the Chinese for delivery of fertilizers next year and as fertilizer prices jump $50-$100 extra a ton, we could see the highest prices ever for ferts with this new Russian-Chinese deal once it is finalized. It is rumored to be completed in the next couple weeks. Now until fertilizer prices drop substantially from the highs, this bull market should continue for the foreseeable future. Analysts are going to have to play catch up with 2008-2009 estimates at this rate. They are WAY behind the curve! Ferts and Ags as the new boom craze, who ever said food was boring!!!
Solars could be part of the big solution to save our planet!!! And it is the biggest threat to the oil establishment! I remember Eric Bolling on Fast Money when he said solar was hype. Of course he said that, he and his cohorts have been helping push up oil prices for the past 3 years, if solar becomes the big thing, oil demand will drop substantially and one day oil will be used only for taking that squeak out of your kid’s bicycle chain not filling your car! (Its solar powered). Oil will never go away but it will soon be the bridesmaid instead of the only bride. My favorite solar plays are FSLR, JASO, STP, SPWR, PBW, and WFR.
I believe the market will go higher from here and we will not test November lows. The focus will be on earnings soon so writeoffs could take a back seat for the time being and remember the FED is cutting. The Fed is cutting and the markets are climbing the wall of worry. Yeah only 25 basis point cut and we growl but the fed is still in cutting mode and will cut 25 every time they meet until we are out of the woods. The market is a leading indicator and looks out 6 months ahead, we have the Bernake put and Congress put in place to provide help if the market encounters problems and as Soros believes the market not only gauges the temperature and well being of the economy but can also be the cause of illness to the economy so it is in the best interests of EVERYONE involved to make sure the market doesn’t crater. Housing has deflated consumer consumption and if the market tanks and takes everyone’s IRA, 401Ks, trading accounts and mutual funds down they will spend even less.
It is a fluid situation and news will be priced in as it comes but as more bad news comes out and we still rally, I feel good about the prospects for 2008 and it could become one of the best years for the market ever.
Happy Holidays and enjoy spending time with your cherished loved ones. We trade but that’s not who we are, we are all loving sentient beings who happen to trade for a living. We are all very important to someone. Remember what‘s important, and remember that we need to be content to feel happiness.
Besides that you better rest up for what could be the biggest ride of our lives in the markets! Stay in the Yoda state (calm, concentrated focus needed to access implicit knowledge, unemotional) and the Yoda Santa might just bring late gifts in January!
Hope you enjoy!!
Friday, December 21, 2007
RIMM
FW called the low of the day right here. Notice the middle window. There was an upside down ice cream cone preceded the low of the day. Nice call.
Thursday, December 20, 2007
DA 2RTH
1. Failure to make new highs is ALWAYS the start of wave 2.
2. Failure to make new lows in a downtrend is ALWAYS the start of wave 3.
These waves can be defined by snap back ups and/or downs.
2. Failure to make new lows in a downtrend is ALWAYS the start of wave 3.
These waves can be defined by snap back ups and/or downs.
Thursday, December 13, 2007
MARKET BUDDAH
We/I believe it is actually possible to make money trading the markets.
We/I believe it is possible for us/me to make money trading the markets.
We/I believe that we/I deserve to make money trading the markets.”
We/I are/am the Greatest traders Ever.
We always work successfully together.
We/I are/am making millions of dollars trading the markets every year.
We/I are/am happy and content, appreciative of our trading profits.
We/I are/am always calm, collected, focused.
We/I are/am always in the zone.
We/I come from positivity and abundance.
We/I cultivate and sustain a sense of ease remaining in the zone.
Have focus, patience, and pick plays with high probability of success.
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment-(quote from Buddha)”
I also ask myself after reading all research data from the morning “What are the possible themes today and what events are there” and think like a lion in the safari, cannot chase everything otherwise you get tired, pick a high probability target.
It is important to talk about things as present tense-Now. No “will”s but “Am”s.
So what if some are not true(can’t tell that to me now that I’ve said it about a million times), your subconscious and brain can’t tell! They believe and follow the heart. Give feeling to it while saying or thinking it. Feeling of joy/happiness.
We/I believe it is possible for us/me to make money trading the markets.
We/I believe that we/I deserve to make money trading the markets.”
We/I are/am the Greatest traders Ever.
We always work successfully together.
We/I are/am making millions of dollars trading the markets every year.
We/I are/am happy and content, appreciative of our trading profits.
We/I are/am always calm, collected, focused.
We/I are/am always in the zone.
We/I come from positivity and abundance.
We/I cultivate and sustain a sense of ease remaining in the zone.
Have focus, patience, and pick plays with high probability of success.
Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment-(quote from Buddha)”
I also ask myself after reading all research data from the morning “What are the possible themes today and what events are there” and think like a lion in the safari, cannot chase everything otherwise you get tired, pick a high probability target.
It is important to talk about things as present tense-Now. No “will”s but “Am”s.
So what if some are not true(can’t tell that to me now that I’ve said it about a million times), your subconscious and brain can’t tell! They believe and follow the heart. Give feeling to it while saying or thinking it. Feeling of joy/happiness.
Saturday, December 8, 2007
GRMN
The effects of news by Tom Tom really killed me. But, once again a falling knife should never be attempted to catch. Also, I got whipsawed out on the last trade. Never place any stops during the first hour of trading. 90% of all gaps get filled.
Friday, December 7, 2007
AAPL
This series of trades really shows my inexperience. Here is the list of lessons learned:
1. Never establish a position when stock is falling
On 11/12, notice i entered 3 times: entry...sell...entry.
2. Sell on gap ups or show of strength
On 11/15, stock gapped up...and then filled back down.
3. The trend is your friend.
I tried to play puts after seeing the gap up being filled. This play is way to complex for my level.
4. Proper entry would of been 11/28
this is the start of wave 3. i would of avoided too many entrys and exits and worrys.
I don't mind the mistakes. I'll call these lessons. Hopefully, I will always remember these lessons in future trades.
Friday, November 30, 2007
HEY COACH
The Devon Principle states that we are what we eat and that, psychologically, we are always digesting our experience. Internalizing our experience makes us who we are.
If we have negative experiences, we internalize that and develop a loss of confidence and motivation. If we have positive experiences, these become part of our outlook on ourselves and our world.
To mentor yourself, your most important step is to create positive learning experiences that will sustain your motivation, interest, and sense of efficacy.
Every trading session should involve working on a specific, doable goal and making progress toward that goal.
We can't control how markets move, so we can't control whether any single trade we make will be profitable or not. But we can control how we make trades: how we enter, how we size positions, how we exit, and how we contain losses. Having rules about all of those helps us set specific goals about the process of trading, rather than about the outcome.
The goal of your learning is to trade well, just as the goal of a pitcher is to make a good pitch. If you do that often enough, you'll win your share of outings.
But the equally important reason for setting attainable, concrete goals is that--as your own coach--you are creating the experiences that you'll be digesting. By setting yourself up for success, you build a positive identity as a trader, day by day.
Without goals, there can be no sense of attainment. Without the sense of attainment, there can't be an internalization of competence and confidence. You generate your own sense of control by--trading session by trading session--controlling your own pursuit of trading goals.
If we have negative experiences, we internalize that and develop a loss of confidence and motivation. If we have positive experiences, these become part of our outlook on ourselves and our world.
To mentor yourself, your most important step is to create positive learning experiences that will sustain your motivation, interest, and sense of efficacy.
Every trading session should involve working on a specific, doable goal and making progress toward that goal.
We can't control how markets move, so we can't control whether any single trade we make will be profitable or not. But we can control how we make trades: how we enter, how we size positions, how we exit, and how we contain losses. Having rules about all of those helps us set specific goals about the process of trading, rather than about the outcome.
The goal of your learning is to trade well, just as the goal of a pitcher is to make a good pitch. If you do that often enough, you'll win your share of outings.
But the equally important reason for setting attainable, concrete goals is that--as your own coach--you are creating the experiences that you'll be digesting. By setting yourself up for success, you build a positive identity as a trader, day by day.
Without goals, there can be no sense of attainment. Without the sense of attainment, there can't be an internalization of competence and confidence. You generate your own sense of control by--trading session by trading session--controlling your own pursuit of trading goals.
Saturday, November 24, 2007
THE MARKET
From these charts, it looks like wednesday's low needs to be retested along with long term trendlines and resistance. It looks more down is in order than up. Although we are oversold, the bounce to come would probably be limited to previous trendline and/or resistance. At that point, will come the retest.
The timing of retest will coincide with the scheduled FOMC on December 11. I expect a "sell on the news" play to unfold in the next 2 weeks. Cash is king here.
TACTICS
I see the market trending until the fed announcement on Dec 11. I'm 90% cash. GOOG and AAPL are the only positions I'm in. Here are my moves:
Entry @ 630. Stocked rallied up to resistance/support area defined by stalled rally last month at the same spot. Volume is minimal to get to here. I sold 1/2 position towards end of trading day. Bought DEC 640 puts to hedge remaining position. Place a stop @ 640 but will remove it since I bought the puts.
Entry @ 153. Sold all Dec 175 calls today and bought Dec 155 puts at end of trading. Notice how stock behaved last year at this time. It usually doesn't make its big move here. Also, it is at resistance here. It may just be stuck in a consoladation range here.
Entry @ 630. Stocked rallied up to resistance/support area defined by stalled rally last month at the same spot. Volume is minimal to get to here. I sold 1/2 position towards end of trading day. Bought DEC 640 puts to hedge remaining position. Place a stop @ 640 but will remove it since I bought the puts.
Entry @ 153. Sold all Dec 175 calls today and bought Dec 155 puts at end of trading. Notice how stock behaved last year at this time. It usually doesn't make its big move here. Also, it is at resistance here. It may just be stuck in a consoladation range here.
Wednesday, November 21, 2007
THANKSGIVING
GOOG, AAPL and RIMM are ready to launch despite the down-trending market. Each of them have been making higher lows while the market has been making lower lows. I've bought on any gap down...and sold on any gap up. Using 15 minute charts has been working for the past week...playing both long and short using puts and calls. The past four trading days has definitely been a roller coasting ride. Thank God Thanksgiving is here. A day of rest...family...eats...and many reasons to give thanks. Life is great!!!
Thursday, November 15, 2007
The Bears Are Here
I was able to get some Dec calls on AAPL, RIMM, MA and BIDU towards the bottom on Monday. Each gapped up big on Wednesday. That was the time I should of sold my calls and go short by buying puts. Instead I held. Thursday, the decline continued to test the lows on Monday. This was the UDU play I was talking about...but...it occuled in 3 days instead of one week. This market is very, very volatile. Going into the last day of options expiration, I just missed on buying BIDU Nov 330 calls for 5.0. Instead, I bought OEX 185 calls. My tactics are definitely on point it just needs tweaking in reacting faster than anticipated. A great week...a great month...heck...a great year!!!
Monday, November 12, 2007
Positive Trading Behaviors
Six Positive Trading Behaviors
There is much more to good trading than merely eliminating bad habits. Here are six trading behaviors I find among many of the best traders I’ve had the pleasure to work with:
1) Fresh Ideas - I’ve yet to see a very successful trader utilize the common chart patterns and indicator functions on software (oscillators, trendline tools, etc.) as primary sources for trade ideas. Rather, they look at markets in fresh ways, interpreting shifts in supply and demand from the order book or from transacted volume; finding unique relationships among sectors and markets; uncovering historical trading patterns; etc. Looking at markets in creative ways helps provide them with a competitive edge.
2) Solid Execution - If they’re buying, they’re generally waiting for a pullback and taking advantage of weakness; if they’re selling, they patiently wait for a bounce to get a good price. On average, they don’t chase markets up or down, and they pick their price levels for entries and exits. They won’t lift a market offer if they feel there’s a reasonable opportunity to get filled on a bid.
3) Thoughtful Position Sizing - The successful traders aren’t trying to hit home runs, and they don’t double up after a losing period to try to make their money back. They trade smaller when they’re not seeing things well, and they become more aggressive when they see odds in their favor. They take reasonable levels of risk in each position to guard against scenarios in which one large loss can wipe out days worth of profits.
4) Maximizing Profits - The good traders don’t just come up with promising trade ideas; they have the conviction and fortitude to stick with those ideas. Many times, it’s leaving good trades early–not accumulating bad trades–that leads to mediocre trading results. Because successful traders understand their market edge and have demonstrated it through real trading, they have the confidence to let trades ride to their objectives.
5) Controlling Risk - The really fine traders are quick to acknowledge when they’re wrong, so that they can rapidly exit marginal trades and keep their powder dry for future opportunities. They have set amounts of money that they’re willing to risk and lose per day, week, or month and they stick with those limits. This slows them down during periods of poor performance so that they don’t accumulate losses unnecessarily and have time to review markets and figure things out afresh.
6) Self-Improvement - I’m continually impressed at how good traders sustain efforts to work on themselves–even when they’re making money. They realize that they can always get better, and they readily set goals for themselves to guide their development. In a very real sense, each trading day becomes an opportunity for honing skills and developing oneself.
These six criteria, I believe, can form the basis for effective report cards. Traders can grade themselves in these six areas and, over time, establish where they’re strongest and weakest. I find such self-appraisals very helpful for coaching; ultimately they provide goals for self-development and criteria for measuring progress over time. In no small measure, good trading boils down to three factors:
1) Having a demonstrated edge;
2) Having the skills needed to exploit that edge; and
3) Having the resilience to bounce back when the edge is no longer present.
It’s the traders who have all three qualities that are most likely to make a long-term career out of the markets.
There is much more to good trading than merely eliminating bad habits. Here are six trading behaviors I find among many of the best traders I’ve had the pleasure to work with:
1) Fresh Ideas - I’ve yet to see a very successful trader utilize the common chart patterns and indicator functions on software (oscillators, trendline tools, etc.) as primary sources for trade ideas. Rather, they look at markets in fresh ways, interpreting shifts in supply and demand from the order book or from transacted volume; finding unique relationships among sectors and markets; uncovering historical trading patterns; etc. Looking at markets in creative ways helps provide them with a competitive edge.
2) Solid Execution - If they’re buying, they’re generally waiting for a pullback and taking advantage of weakness; if they’re selling, they patiently wait for a bounce to get a good price. On average, they don’t chase markets up or down, and they pick their price levels for entries and exits. They won’t lift a market offer if they feel there’s a reasonable opportunity to get filled on a bid.
3) Thoughtful Position Sizing - The successful traders aren’t trying to hit home runs, and they don’t double up after a losing period to try to make their money back. They trade smaller when they’re not seeing things well, and they become more aggressive when they see odds in their favor. They take reasonable levels of risk in each position to guard against scenarios in which one large loss can wipe out days worth of profits.
4) Maximizing Profits - The good traders don’t just come up with promising trade ideas; they have the conviction and fortitude to stick with those ideas. Many times, it’s leaving good trades early–not accumulating bad trades–that leads to mediocre trading results. Because successful traders understand their market edge and have demonstrated it through real trading, they have the confidence to let trades ride to their objectives.
5) Controlling Risk - The really fine traders are quick to acknowledge when they’re wrong, so that they can rapidly exit marginal trades and keep their powder dry for future opportunities. They have set amounts of money that they’re willing to risk and lose per day, week, or month and they stick with those limits. This slows them down during periods of poor performance so that they don’t accumulate losses unnecessarily and have time to review markets and figure things out afresh.
6) Self-Improvement - I’m continually impressed at how good traders sustain efforts to work on themselves–even when they’re making money. They realize that they can always get better, and they readily set goals for themselves to guide their development. In a very real sense, each trading day becomes an opportunity for honing skills and developing oneself.
These six criteria, I believe, can form the basis for effective report cards. Traders can grade themselves in these six areas and, over time, establish where they’re strongest and weakest. I find such self-appraisals very helpful for coaching; ultimately they provide goals for self-development and criteria for measuring progress over time. In no small measure, good trading boils down to three factors:
1) Having a demonstrated edge;
2) Having the skills needed to exploit that edge; and
3) Having the resilience to bounce back when the edge is no longer present.
It’s the traders who have all three qualities that are most likely to make a long-term career out of the markets.
Sunday, November 11, 2007
ON WATCH: UDU
These stocks are seeking support at 50MA. Once they get to the 50MA, I expect a bounce back up to 50%Fib...then it will retrace back down to test the 50MA again...then back up with a breakout to next bull target...i.e. up/down/up (UDU) The bullish trigger are set just above the 50ma with stops just below the 50ma.
Pattern: Up...down...up (UDU)
------------------
RIMM - Bullish trigger @ 106.50. Stop @ 103.50. Target=119.
Pattern: UDU = 39 points
ISRG - Bullish trigger @ 258.70. Stop @ 255.70. Target=283.
Pattern: UDU = 120 points
-----------------------
CME, BIDU, AAPL and FCX are all in this pattern. If this works out, what a play to end an already great year!!!
Pattern: Up...down...up (UDU)
------------------
RIMM - Bullish trigger @ 106.50. Stop @ 103.50. Target=119.
Pattern: UDU = 39 points
ISRG - Bullish trigger @ 258.70. Stop @ 255.70. Target=283.
Pattern: UDU = 120 points
-----------------------
CME, BIDU, AAPL and FCX are all in this pattern. If this works out, what a play to end an already great year!!!
IN PLAY
GRMN - Bullish since 11/8 @ $84. Stop @ 82.50 (just over the 200ma)
Target: 50ma around $101.50
Add to position @ 92.50
AAPL - Bullish since 11/8 @ 175. Did not have a stop. A bag holder for now. I'm setting a bullish trigger @ 162. It looks like it is seeking the 50ma @ $161.40. If in, stop will be @ 160.40. Target: 175 the gap at 10/22.
BIDU - Bullish since 11/8 @ 365. Did not have a stop. A bag holder again. Setting a bullish trigger @ 307.50. It seems to be seeking the 50ma @ 306.82. If in, place stop @ 304.50. Target= 355...20ma
----------------------------------
I did not expect the huge downside move on 11/8. Instead of setting bullish traps, bearish traps were indicated. Another mistake, was not setting stops for all three. I'm holding the bag on two of the three positions. Luckily, they are Dec calls.
Problems:
**bad entry points
**buy puts instead of calls
**no stops
Solutions:
* entries will be off 50ma or 200ma (my usual bread and butter)
* set stops just over the 50/200 ma
Will concentrate on making the right moves. If the right moves are made, success will always follow.
I'm now armed and ready to trade. Happy Veterans Day. :-)
Target: 50ma around $101.50
Add to position @ 92.50
AAPL - Bullish since 11/8 @ 175. Did not have a stop. A bag holder for now. I'm setting a bullish trigger @ 162. It looks like it is seeking the 50ma @ $161.40. If in, stop will be @ 160.40. Target: 175 the gap at 10/22.
BIDU - Bullish since 11/8 @ 365. Did not have a stop. A bag holder again. Setting a bullish trigger @ 307.50. It seems to be seeking the 50ma @ 306.82. If in, place stop @ 304.50. Target= 355...20ma
----------------------------------
I did not expect the huge downside move on 11/8. Instead of setting bullish traps, bearish traps were indicated. Another mistake, was not setting stops for all three. I'm holding the bag on two of the three positions. Luckily, they are Dec calls.
Problems:
**bad entry points
**buy puts instead of calls
**no stops
Solutions:
* entries will be off 50ma or 200ma (my usual bread and butter)
* set stops just over the 50/200 ma
Will concentrate on making the right moves. If the right moves are made, success will always follow.
I'm now armed and ready to trade. Happy Veterans Day. :-)
CONSISTENCY
How to Regain Your Trading Consistency
Brett N. Steenbarger, Ph.D.
www.brettsteenbarger.com
A reader recently wrote to me the following:
I was a successful consistent trader who always hit singles and doubles ($1000-$3000 a day) for 48 months in a row without having a losing month (1999-2003).Then one day I struck out. I lost $38,000 in one stock and had my first losing month as a trader ever. Since then I have not had two consecutive winning months and in fact have only had a handful of profitable months since then. I am still looking for the road back to consistency. No matter how close I get I always find a way to screw it up even if it is on the last day of the month. Or I give back the month with just some silly unimportant trade that turns into a disaster. It is like I subconsciously look for these situations just so I can mess up.
This is not such an unusual scenario. One large loss can trigger a cascade of attempts to make back the money, further mistakes, and expanding losses. The key is breaking this cycle of losing money, attempting to make the money back with aggressive trades, and continuing to lose.
The first thing I'd have our trader look at is where he is placing stops and targets for his trades. Note that his successful period was 1999-2003. That was a period of much higher price volatility than we've seen since then. What constitutes "singles and doubles" in a high volatility environment is a home run trade in a slow, low-volatility market. It is entirely conceivable that our trader is placing targets too far from his entries, allowing small gains to reverse on him. Similarly, he may be letting trades get too far away from him simply because he is calibrated to a higher level of volatility.
A good way to test these hypotheses would be to study trades over the last several months. If losing trades are larger than winners on average, and if many losers start out as winners, that would suggest that our trader needs to adjust to the post 2003 environment.
To break the cycle mentioned above, the first step is to drastically reduce trading size. I would cut size to 1/4 the average at the most. The goal is to keep a little skin in the game, but take P/L (and the push to make back money) off the table temporarily. The initial objective is not to make money, but to regain a trading rhythm by getting back to singles and doubles.
The next step is to identify those singles and doubles. That means deconstructing the account statement and identifying which trades are making money and which aren't. I would break the data down into time of day, stock/index being traded, long/short, and size. I would also look to see if there are large outlier trades to the downside that are pulling down P/L, and if there are some trades that are making money consistently.
Once our trader has identified what's working, the idea is to keep position size fixed and *only* trade those setups that have been working. This is the foundation to build upon. These setups can be written down and mentally rehearsed ahead of the trading day to build consistency. The idea is to not increase size *and* not trade other patterns until consistency is achieved with smaller size and the most successful setups.
There is only one cure for trauma, and that is repeated experiences of control and safety. We want trading to be routine, not highly emotionally charged.
Finally, I would encourage our trader to take a look at how he is viewing his situation. Note above that he talks of the $38,000 loss and the silly trade that "turns into a disaster" as if these are things happening to him, not things that he is actively doing. A simple strategy would be to have the trader write down the four things he is responsible for prior to each trade:
* The Entry
* The Target(s)
* The Stop
* The Position Size
We can't control whether any individual trade will be a winner, but we can control how much we are willing to bet on each trade. Outsized losses don't happen to a trader; they are actively caused. It is harder to allow those things to occur if you're talking aloud those four trade parameters and have them written in front of you.
So there it is in a nutshell. My advice is to get small, get selective, and take responsibility for what can be controlled.
Brett N. Steenbarger, Ph.D.
www.brettsteenbarger.com
A reader recently wrote to me the following:
I was a successful consistent trader who always hit singles and doubles ($1000-$3000 a day) for 48 months in a row without having a losing month (1999-2003).Then one day I struck out. I lost $38,000 in one stock and had my first losing month as a trader ever. Since then I have not had two consecutive winning months and in fact have only had a handful of profitable months since then. I am still looking for the road back to consistency. No matter how close I get I always find a way to screw it up even if it is on the last day of the month. Or I give back the month with just some silly unimportant trade that turns into a disaster. It is like I subconsciously look for these situations just so I can mess up.
This is not such an unusual scenario. One large loss can trigger a cascade of attempts to make back the money, further mistakes, and expanding losses. The key is breaking this cycle of losing money, attempting to make the money back with aggressive trades, and continuing to lose.
The first thing I'd have our trader look at is where he is placing stops and targets for his trades. Note that his successful period was 1999-2003. That was a period of much higher price volatility than we've seen since then. What constitutes "singles and doubles" in a high volatility environment is a home run trade in a slow, low-volatility market. It is entirely conceivable that our trader is placing targets too far from his entries, allowing small gains to reverse on him. Similarly, he may be letting trades get too far away from him simply because he is calibrated to a higher level of volatility.
A good way to test these hypotheses would be to study trades over the last several months. If losing trades are larger than winners on average, and if many losers start out as winners, that would suggest that our trader needs to adjust to the post 2003 environment.
To break the cycle mentioned above, the first step is to drastically reduce trading size. I would cut size to 1/4 the average at the most. The goal is to keep a little skin in the game, but take P/L (and the push to make back money) off the table temporarily. The initial objective is not to make money, but to regain a trading rhythm by getting back to singles and doubles.
The next step is to identify those singles and doubles. That means deconstructing the account statement and identifying which trades are making money and which aren't. I would break the data down into time of day, stock/index being traded, long/short, and size. I would also look to see if there are large outlier trades to the downside that are pulling down P/L, and if there are some trades that are making money consistently.
Once our trader has identified what's working, the idea is to keep position size fixed and *only* trade those setups that have been working. This is the foundation to build upon. These setups can be written down and mentally rehearsed ahead of the trading day to build consistency. The idea is to not increase size *and* not trade other patterns until consistency is achieved with smaller size and the most successful setups.
There is only one cure for trauma, and that is repeated experiences of control and safety. We want trading to be routine, not highly emotionally charged.
Finally, I would encourage our trader to take a look at how he is viewing his situation. Note above that he talks of the $38,000 loss and the silly trade that "turns into a disaster" as if these are things happening to him, not things that he is actively doing. A simple strategy would be to have the trader write down the four things he is responsible for prior to each trade:
* The Entry
* The Target(s)
* The Stop
* The Position Size
We can't control whether any individual trade will be a winner, but we can control how much we are willing to bet on each trade. Outsized losses don't happen to a trader; they are actively caused. It is harder to allow those things to occur if you're talking aloud those four trade parameters and have them written in front of you.
So there it is in a nutshell. My advice is to get small, get selective, and take responsibility for what can be controlled.
Friday, November 9, 2007
WORDS FOR TRADERS
So what's an investor to do?
The first thing to do is an attitude check from the neck up.
One of the most important tools you posses as a trader is your mind. Attitude can either make or break you as a trader.
To become a successful trader it begins with believing in yourself and having a winning attitude.
Everyone wants to be a winner; at least, they think so. Unfortunately, most are not willing to perform the tasks necessary to become a consistent winner.
Winners generally achieve success by being focused on a goal. Being focused allows winners to remain committed to the tasks at hand. Most winners perform a lot of hard work; including a willingness to deal with sometimes mundane duties. Most of all, winners perform with an "I am responsible for both my failures and successes" attitude.
So, where does the would-be trader start to become a success? By focusing on the tasks at hand. Most of all, treat trading as a business. And, as in any business, money management is critical.
Money management, next to trend, is probably the aspect of trading most overlooked by smaller investors. Man, by nature, is an optimistic creature and the amateur trader often acts instinctively. Unfortunately, this instinct or optimism is often the undoing of the smaller trader.
When a person enters a trade, he does so with the hope it will be a winner. When the position goes against him, he keeps thinking (or hoping) "it will come back." He knows he should have a stop in place, but hope keeps telling him to stay just a little longer since everybody knows "you always get stopped out the day the market turns." Eventually, hope turns into frustration, desperation and, finally, panic, prompting the trader to issue a GMO (get me out) order.
If the trader hasn't learned his lesson by this point, he develops the "I have to get it back" syndrome. He generally rushes into another poorly planned trade, throwing good money after bad.
Winners show several different characteristics. They enter the market knowing they can be wrong and, in fact, are wrong as often as they are right. They have learned markets don't run on hope. They understand markets tell them when they are right or wrong. When a trade is losing money and getting worse, the market is telling them to get out.
Bad Trades
A bad trade is like a dead fish: The longer you keep it, the worse it smells.
Good Trades
When a trade is making money, the market is telling them they are right and to let the position ride.
Don't ever do this …
Winners don't add to, or "average", losing positions. They dump the trade and go looking for a new opportunity. Successful investors may add to the winning trades. When ahead, they press their advantage while remembering that at any time the market can turn on them and prove them wrong.
It trading keep your mind clear and do not get emotional about a trade. Remember you are not married to a stock rather you are in the dating game.
Next week… it's a surprise.
Have a great weekend and a super trading week.
The first thing to do is an attitude check from the neck up.
One of the most important tools you posses as a trader is your mind. Attitude can either make or break you as a trader.
To become a successful trader it begins with believing in yourself and having a winning attitude.
Everyone wants to be a winner; at least, they think so. Unfortunately, most are not willing to perform the tasks necessary to become a consistent winner.
Winners generally achieve success by being focused on a goal. Being focused allows winners to remain committed to the tasks at hand. Most winners perform a lot of hard work; including a willingness to deal with sometimes mundane duties. Most of all, winners perform with an "I am responsible for both my failures and successes" attitude.
So, where does the would-be trader start to become a success? By focusing on the tasks at hand. Most of all, treat trading as a business. And, as in any business, money management is critical.
Money management, next to trend, is probably the aspect of trading most overlooked by smaller investors. Man, by nature, is an optimistic creature and the amateur trader often acts instinctively. Unfortunately, this instinct or optimism is often the undoing of the smaller trader.
When a person enters a trade, he does so with the hope it will be a winner. When the position goes against him, he keeps thinking (or hoping) "it will come back." He knows he should have a stop in place, but hope keeps telling him to stay just a little longer since everybody knows "you always get stopped out the day the market turns." Eventually, hope turns into frustration, desperation and, finally, panic, prompting the trader to issue a GMO (get me out) order.
If the trader hasn't learned his lesson by this point, he develops the "I have to get it back" syndrome. He generally rushes into another poorly planned trade, throwing good money after bad.
Winners show several different characteristics. They enter the market knowing they can be wrong and, in fact, are wrong as often as they are right. They have learned markets don't run on hope. They understand markets tell them when they are right or wrong. When a trade is losing money and getting worse, the market is telling them to get out.
Bad Trades
A bad trade is like a dead fish: The longer you keep it, the worse it smells.
Good Trades
When a trade is making money, the market is telling them they are right and to let the position ride.
Don't ever do this …
Winners don't add to, or "average", losing positions. They dump the trade and go looking for a new opportunity. Successful investors may add to the winning trades. When ahead, they press their advantage while remembering that at any time the market can turn on them and prove them wrong.
It trading keep your mind clear and do not get emotional about a trade. Remember you are not married to a stock rather you are in the dating game.
Next week… it's a surprise.
Have a great weekend and a super trading week.
Thursday, November 8, 2007
SETTING TRAPS
Since I don't really feel comfortable playing the "DON'T PASS" line, I will set some traps if the following positions get pushed down to fill some gaps.
MA If price goes down to $174.50, the buy 10 contracts of MALLT Dec 200.
GRMN If price goes down to $84, buy 10 contracts of GQRLA Dec 90
AAPL If price goes down to $176, buy 10 contracts of APVLQ Dec 185
MA If price goes down to $174.50, the buy 10 contracts of MALLT Dec 200.
GRMN If price goes down to $84, buy 10 contracts of GQRLA Dec 90
AAPL If price goes down to $176, buy 10 contracts of APVLQ Dec 185
Wednesday, November 7, 2007
GRMN
I played this to bounce off support. It made a 5 point move. Now, news of Tom Tom's higher bid has the sent the stock tumbling. I'll take my loss. Realize can't win the all. Still have lots of ammo to play with.
Friday, November 2, 2007
The Passline
Ever play craps at a casino? Players have two choices to place their bets. They can play with the shooter by putting their chips on the "passline". or...they can bet against the shooter...and in most cases, bet against the majority of players at the table...which ain't cool. Needless to say, those who play "don't pass" are subconciously hated by the majority who are with the shooter. This craps mentality can be seen in the market ala longs vs shorts. With that said, I felt the market would take a dive on a sell on the news Fed rate cut. I wanted to place bearish positions...but...for some reason, I didn't. I guess I'm a natural "passline" player. I got out of BIDU way too early...but...still had a significant profit. Instead of buying puts, I'm holding 2 small call positions: MA and GRMN. My GRMN position is taking a huge hit...however, I'm holding because there is evidence of this stock being manipulated. The evidence is...the low of the week came today at $97.14. When checking out this weekly graph, guess what the 20MA...the spot to the penny where GRMN stopped this decline. You got it...$97.14.
Friday, October 26, 2007
T2118 + Microsoft earnings =
In area for a turn around in market ala end of 6/07 and beginning of 7/07. With MSFT report last night, should be enough to scare shorts and attract buyers. This up move may be an opportunity to set bearish conditions like the downside in the middle of 7/07... Let's see!!! :-)
Thursday, October 25, 2007
Tuesday, October 23, 2007
Thursday, October 18, 2007
GAP TRADING METHOD
GAP Trading Method
1. Dip, Pop and Pop
If the first move is a “dip,” I look for the first support level and go long. Remember, if a gainer is going to hold its strength, we won’t see much profit-taking at the open, and plenty of buyers will be lined up to carry the stock to higher highs. So the pullback should remain shallow, meaning I am looking for support to form at the very first level down.
Gainers are usually opening far above any pivots, so for support levels, I will be watching things such as the premarket low, any nearby whole numbers, moving averages and sometimes the previous day’s intraday high. If the gap is large, first support should come in well above the previous day’s closing price.
Once I see buyers coming in around first support and I enter a long position, I want to see a move up and over the open price — and a break above the premarket high — to confirm that the uptrend is continuing.
2. Pop and Pop
If the first move is a “pop” from open, I will wait for a pullback before going long, and I might even short the pop, depending on the size of the gap. The reason is a large gap, plus any early buying, creates a lot of incentive for profit-taking, so the first climb in that case will usually be more of a short-lived pop before a deeper pullback comes in.
or first resistance levels, I will be watching things such as the premarket high, any nearby whole numbers and any previous resistance levels on the daily chart that might be nearby. If I short that first resistance, though, I want to keep my target very conservative. Remember, if a gainer is going to hold its strength, we won’t see many people taking profits. So any short will be a small scalp against the trend, and I want to turn around and go long at the first bottom. The safest trades with the most potential will be with the trend.
From off that first top, the pullback should remain shallow if the uptrend is continuing, and it often bottoms at a higher low, near the open. The premarket low might also act as a support barrier. That bottom is your best long opportunity. The next climb should then hit higher highs. We need that higher high to confirm a continuation of the uptrend; otherwise, we could have a double top, which would be another short opportunity.
Now let me give you a couple of examples of these patterns in action, from news stocks this past week.
In April 25, we had plays on Amazon.com (AMZN - commentary - Cramer’s Take - Rating) and Biodelivery Sciences (BDSI - commentary - Cramer’s Take - Rating), among others.
If you look at Amazon, you see it opened with strong momentum at 53.12, up from 44.75, Tuesday’s closing price. Buyers stepped in almost immediately after the open, just below 53, and it “popped” to 54. From there it pulled back and, fitting with a “Pop and Pop” pattern, found support again just below 53, close to the opening price, before continuing the uptrend and breaking to higher highs. That successful retest of the 53 area was a great long opportunity.
With BDSI, too, buyers stepped in almost immediately. It opened at 7.44, up from Tuesday’s 4.63 close. After squirming a bit — I don’t usually consider that early “squirming” to be a real pullback if it’s a matter of pennies — it “popped” a dollar, from 7.21 to 8.25.
In this instance, we decided to short the pop. The large gap, plus a dollar early climb, creates enough profit-taking incentive to give us a predictable pullback. Normally, with a strong stock, we would then look for support back around the open or early low. In this case, however, the pullback broke below 7.21 and continued to lower lows. So we lucked out there with the short.
very news stock is different, but they do follow similar patterns. Knowing those patterns prepares us with an instant game plan when we recognize them occurring. And even when they break from a pattern, we can use those red flags to create new opportunities.
Look for Double Top or double bottom
*A breakdown of either formation is bearish and should be shorted
The bigger the pullback the weaker the trend
Watching the pullbacks-shallow bullish;deep bearish
Watch Open price reactions-open price very important
* Create pivot lines for pre-market low, nearby whole or strike numbers, moving avg, previous day’s intraday high
*Draw trendlines
watch for Flatlining- hold profits longer through cost avg out. Watch for the sharp sell off breaking technicals
Read this before the open
1. Dip, Pop and Pop
If the first move is a “dip,” I look for the first support level and go long. Remember, if a gainer is going to hold its strength, we won’t see much profit-taking at the open, and plenty of buyers will be lined up to carry the stock to higher highs. So the pullback should remain shallow, meaning I am looking for support to form at the very first level down.
Gainers are usually opening far above any pivots, so for support levels, I will be watching things such as the premarket low, any nearby whole numbers, moving averages and sometimes the previous day’s intraday high. If the gap is large, first support should come in well above the previous day’s closing price.
Once I see buyers coming in around first support and I enter a long position, I want to see a move up and over the open price — and a break above the premarket high — to confirm that the uptrend is continuing.
2. Pop and Pop
If the first move is a “pop” from open, I will wait for a pullback before going long, and I might even short the pop, depending on the size of the gap. The reason is a large gap, plus any early buying, creates a lot of incentive for profit-taking, so the first climb in that case will usually be more of a short-lived pop before a deeper pullback comes in.
or first resistance levels, I will be watching things such as the premarket high, any nearby whole numbers and any previous resistance levels on the daily chart that might be nearby. If I short that first resistance, though, I want to keep my target very conservative. Remember, if a gainer is going to hold its strength, we won’t see many people taking profits. So any short will be a small scalp against the trend, and I want to turn around and go long at the first bottom. The safest trades with the most potential will be with the trend.
From off that first top, the pullback should remain shallow if the uptrend is continuing, and it often bottoms at a higher low, near the open. The premarket low might also act as a support barrier. That bottom is your best long opportunity. The next climb should then hit higher highs. We need that higher high to confirm a continuation of the uptrend; otherwise, we could have a double top, which would be another short opportunity.
Now let me give you a couple of examples of these patterns in action, from news stocks this past week.
In April 25, we had plays on Amazon.com (AMZN - commentary - Cramer’s Take - Rating) and Biodelivery Sciences (BDSI - commentary - Cramer’s Take - Rating), among others.
If you look at Amazon, you see it opened with strong momentum at 53.12, up from 44.75, Tuesday’s closing price. Buyers stepped in almost immediately after the open, just below 53, and it “popped” to 54. From there it pulled back and, fitting with a “Pop and Pop” pattern, found support again just below 53, close to the opening price, before continuing the uptrend and breaking to higher highs. That successful retest of the 53 area was a great long opportunity.
With BDSI, too, buyers stepped in almost immediately. It opened at 7.44, up from Tuesday’s 4.63 close. After squirming a bit — I don’t usually consider that early “squirming” to be a real pullback if it’s a matter of pennies — it “popped” a dollar, from 7.21 to 8.25.
In this instance, we decided to short the pop. The large gap, plus a dollar early climb, creates enough profit-taking incentive to give us a predictable pullback. Normally, with a strong stock, we would then look for support back around the open or early low. In this case, however, the pullback broke below 7.21 and continued to lower lows. So we lucked out there with the short.
very news stock is different, but they do follow similar patterns. Knowing those patterns prepares us with an instant game plan when we recognize them occurring. And even when they break from a pattern, we can use those red flags to create new opportunities.
Look for Double Top or double bottom
*A breakdown of either formation is bearish and should be shorted
The bigger the pullback the weaker the trend
Watching the pullbacks-shallow bullish;deep bearish
Watch Open price reactions-open price very important
* Create pivot lines for pre-market low, nearby whole or strike numbers, moving avg, previous day’s intraday high
*Draw trendlines
watch for Flatlining- hold profits longer through cost avg out. Watch for the sharp sell off breaking technicals
Read this before the open
Tuesday, October 16, 2007
SELL THE NEWS
Options expiration week is getting crazy and volatile. The counter trend I anticipated last Thursday was followed through on Monday...and is continuing as I type today. The subprime news from C has contributed to the sell off that's going on. This in addition to earnings reports coming out has led to the "sell on the news" phenomena, i.e. stock price is driven up...company reports good earnings...and then sells off. Needless to say, this week will be great buying opportunities in a short time to come.
Here's the stocks on my watchlist:
GS, MA, RIMM, GOOG, AAPL, BIDU.
I'll be waiting for these stock prices come to me for a snap back up rally...or Christmas rally... to last to the end of the year. Just wait for the stock charts to confirm my suspicions. Be Patient!!! :-)
Here's the stocks on my watchlist:
GS, MA, RIMM, GOOG, AAPL, BIDU.
I'll be waiting for these stock prices come to me for a snap back up rally...or Christmas rally... to last to the end of the year. Just wait for the stock charts to confirm my suspicions. Be Patient!!! :-)
Thursday, October 11, 2007
BIDU
The sell-off today is based on this implied downgrade. In addition to options expiration week, the sell-off is amplified. However, this becomes a great buying opportunity to go long. The downgrade play is very similar to FTI. Monday or Tuesday will be a good time for possible entry on the long side. But... for now, let's wait and see what the charts say.
--------------------
China's Baidu.com (BIDU - Cramer's Take - Stockpickr) sneezed Thursday, and the entire Nasdaq seemed to catch a cold.
Shares of the Chinese Internet company dropped as much as 12% in afternoon trading after investment bank JP Morgan issued a report saying that the company's third quarter should be merely in line with consensus estimates -- and somewhat below its prior forecasts.
Based on recent checks, JP Morgan now expects Baidu's revenue to be about $67.5 million, below the $67.9 million it previously forecast.
While seemingly a minor development, the adjustment was enough to knock the wind out of a highflying stock like Baidu, which has roughly tripled since the beginning of the year -- and still trades at more than 80 times forward earnings.
As Baidu began to plunge on word of the JP Morgan note, the rest of the tech-heavy Nasdaq follwed. The index has similarly been on an astounding climb, jumping more than 15% in under two months.
What's more, as Baidu recently worked back from its lows of the session, so did the broader tech index, which ended the day at 2772, down 1.4%.
Baidu shares closed down 10% to $308.78. Its volume of nearly 20 million shares was more than three times its average daily volume.
JP Morgan's revision may have been especially received as rough by investors, because the investment bank had just initiated coverage on the stock at the beginning of October with a $400 price target -- the highest on Wall Street.
Still, JP Morgan analyst Dick Wei wrote that the long-term prospects for the company are still bright. "Any share price pullbacks on the back of these short-term issues offer an excellent buying opportunity for the leading Chinese search engine," Wei wrote.
JP Morgan makes a market in Baidu shares.
----------------------------------
Luckily, I'm stopped out of SID. Am now 100% cash. Better to be lucky than good. :-)
--------------------
China's Baidu.com (BIDU - Cramer's Take - Stockpickr) sneezed Thursday, and the entire Nasdaq seemed to catch a cold.
Shares of the Chinese Internet company dropped as much as 12% in afternoon trading after investment bank JP Morgan issued a report saying that the company's third quarter should be merely in line with consensus estimates -- and somewhat below its prior forecasts.
Based on recent checks, JP Morgan now expects Baidu's revenue to be about $67.5 million, below the $67.9 million it previously forecast.
While seemingly a minor development, the adjustment was enough to knock the wind out of a highflying stock like Baidu, which has roughly tripled since the beginning of the year -- and still trades at more than 80 times forward earnings.
As Baidu began to plunge on word of the JP Morgan note, the rest of the tech-heavy Nasdaq follwed. The index has similarly been on an astounding climb, jumping more than 15% in under two months.
What's more, as Baidu recently worked back from its lows of the session, so did the broader tech index, which ended the day at 2772, down 1.4%.
Baidu shares closed down 10% to $308.78. Its volume of nearly 20 million shares was more than three times its average daily volume.
JP Morgan's revision may have been especially received as rough by investors, because the investment bank had just initiated coverage on the stock at the beginning of October with a $400 price target -- the highest on Wall Street.
Still, JP Morgan analyst Dick Wei wrote that the long-term prospects for the company are still bright. "Any share price pullbacks on the back of these short-term issues offer an excellent buying opportunity for the leading Chinese search engine," Wei wrote.
JP Morgan makes a market in Baidu shares.
----------------------------------
Luckily, I'm stopped out of SID. Am now 100% cash. Better to be lucky than good. :-)
FTI
Out FTIJ @ $5.60. Nice profit.
Market opened with a pop and drop. Today may be the move I've been waiting for prior to options expiration. The way stocks have been moving over the past two weeks on relatively modest volume is a watchful concern. Am now in 10% cash with only one position...SID @ $75.60. It's now at $79.07. :-) Setting a tight stop at $78.
Time for a little cruise starting Saturday.
Market opened with a pop and drop. Today may be the move I've been waiting for prior to options expiration. The way stocks have been moving over the past two weeks on relatively modest volume is a watchful concern. Am now in 10% cash with only one position...SID @ $75.60. It's now at $79.07. :-) Setting a tight stop at $78.
Time for a little cruise starting Saturday.
Monday, October 8, 2007
THE WEEK BEFORE OPTIONS EXPIRATION
Usually there will be a counter-trend starting Wednesday or Thursday. Since we have been trending up the past few weeks, I would expect a pullback starting this week. Mondays and Tuesdays are usually when I take profits. In this case, I took profits last Friday. With this said, I'll be looking for SBU set-ups and initiate calls for next month.
SBU + DOJI + BULLISH KICKER
Here's another powerful pattern.
1. All-time high on 10/01 - $75.60
2. Notice 3 day pullback shows up as a fully loaded SBU (snap back up) in middle window. Doji like candle on 3rd day.
3. Bullish kicker on 10/5.
Set a buy at $75.60.
My play for the day. :-)
Sunday, October 7, 2007
BREAKING 2 LR30
Powerful uptrending stocks start out by breaking the 2nd standard deviation of LR30 shown on top. This makes my watchlist. I will not chase it here but would wait for the development of the SBU from middle window. The high here is $29.10 which will be my entry once the SBU gets started. I will initiate the buy once a candle looks doji. Hopefully it will be followed by a bullish kicker as in SID.
GRMN and BX are on my current watchlist.
Saturday, October 6, 2007
PROFIT TAKING
Am now 30% in cash after a tremendous two weeks. Here's my results:
SNDA - +4.0
RIG - -1.50
CMI - +7.2
ADSK - +2.1
MA - +14.20
GOOG - +68 (made two monthly quotas here!!!)
I didn't pull the trigger on GS...AAPL...or RIMM. All three did not me my criteria for entering a position. They will be on the top of my radar screen for a snap-back up entry.
Life is great!!!
SNDA - +4.0
RIG - -1.50
CMI - +7.2
ADSK - +2.1
MA - +14.20
GOOG - +68 (made two monthly quotas here!!!)
I didn't pull the trigger on GS...AAPL...or RIMM. All three did not me my criteria for entering a position. They will be on the top of my radar screen for a snap-back up entry.
Life is great!!!
Friday, October 5, 2007
GRMN
Made the watchlist as it is now over the 50MA. On today's move, notice it leaves a bullish kicker and leaps over the 50MA. However, it is in snap back DOWN position. This suggests a retest of the swing low. I am setting a bearish entry point at $100 with a target of $85. Need to overcome the swing high to confirm uptrend is still intact before I go bullish. In the meantime, I am neutral...but...playing very close attention.
Wednesday, October 3, 2007
SNAP BACK UP
Here's my criteria for entry:
* Play off the 50MA
* Doji followed by bullish kicker
* In middle window, red and green above 50...while orange and red in snap back position.
GOOG
Here it qualifies for my watchlist by breaking above the 50MA.
Note the very powerful move above the LR30-30 too.
After the snapback move on 9/10, I set my entry @ $529.83...the swing high...on the doji day 9/17. The next day was a bullish kicker and I got in with 1/2 position here:
On this doji day with the snap back up fully loaded, I set my entry @ $571.75. The next day I got filled with my other 1/2 position.
* Play off the 50MA
* Doji followed by bullish kicker
* In middle window, red and green above 50...while orange and red in snap back position.
GOOG
Here it qualifies for my watchlist by breaking above the 50MA.
Note the very powerful move above the LR30-30 too.
After the snapback move on 9/10, I set my entry @ $529.83...the swing high...on the doji day 9/17. The next day was a bullish kicker and I got in with 1/2 position here:
On this doji day with the snap back up fully loaded, I set my entry @ $571.75. The next day I got filled with my other 1/2 position.
Monday, October 1, 2007
GETTING OVERBOUGHT
Although the market uptrend is still intact from the 8/07 lows, may consider taking a little off the table this week or next. The anticipated pullback will be a great place to start new long positions for the wave 3 up.
Thursday, September 27, 2007
Monday, September 24, 2007
WINDOW DRESSING
This week I suspect a snap-back rally from the large move triggered by the Fed's 50/50 rate cut on 9/18. Included during this rally is a little monthly ending window dressing. If this comes true, I plan to estalish bearish positions on Thursday and/or Friday. The stocks I've chosen is shown on Saturday. Let's have a great week!!!
Saturday, September 22, 2007
RIG
LR30 buy signal on 9/19. Ascending nicely with hockey sticks showing a pullback. Will consider adding more when snap back up signal ready.
CMI
all-time high on 9/19. Pullback nicely and perfectly set up for snap-back up to take out all-time high.
ADSK
Hit all-time high on 9/19. Pullback nicely to LR-30. Perfect setup for Snap-back up. Should take out all-time high next week.
MA
Snap back up on 9/18. Stopped and consolidated around 50ma. In position for another snapback up next week.
WATCH LIST
RIG, GOOG, PCU, CLB, BXP, MC, MA, GS, AMZN,XOM, ADSK, CMI, RIMM, FTI, EBAY PSA, NVDA, SNDA
Friday, September 21, 2007
PROFIT TAKING
Took a little off FTI after a nice profit. Letting BZP ride after adding on a few more yesterday @ $7.50. Quadrulple witch day. Market setting up for a pullback next week but T2118 still shows uptrend. Will have the weekend to contemplate. A very good week.
Wednesday, September 19, 2007
FTI - IN PLAY
20 CONTRACTS @ $1.60. FTI JY
Lookin for a snapback up over $58.62 within next day or 2.
RIG
Nice move today. Target to be $120. Expect a consolidation or even a pullback for entry tomorrow or next week.
MA
Hit the 50MA on strong volume. Beginning of 8/1/07 gap @ $152.45.
If MALJK's bid loses 1.9 points or MALJK's bid decreases to 1.3 then buy to open 20 contracts of MALJK at 1.3 on SmartEx and beep. This conditional order will remain active for up to 60 days and may trigger as a result of a stock split or other corporate actions.
----------------------------------------------
MA closed higher. It did not drop intraday like I expected. I changed my buy order to trigger at the 50MA. Also, strike price will change to $150. I will not chase this. Let the game come to me.
----------------
If MA's bid decreases to 145.60 then buy to open 20 contracts of MALJJ at market on SmartEx and beep. This conditional order will remain active for up to 60 days and may trigger as a result of a stock split or other corporate actions.
If MALJK's bid loses 1.9 points or MALJK's bid decreases to 1.3 then buy to open 20 contracts of MALJK at 1.3 on SmartEx and beep. This conditional order will remain active for up to 60 days and may trigger as a result of a stock split or other corporate actions.
----------------------------------------------
MA closed higher. It did not drop intraday like I expected. I changed my buy order to trigger at the 50MA. Also, strike price will change to $150. I will not chase this. Let the game come to me.
----------------
If MA's bid decreases to 145.60 then buy to open 20 contracts of MALJJ at market on SmartEx and beep. This conditional order will remain active for up to 60 days and may trigger as a result of a stock split or other corporate actions.
Tuesday, September 18, 2007
**Feds cut rate by 50 points. The market was expecting 25. When it got 50, big move on DJ-30 +300 points. Huge short covering here. Even though everything went up, there's a feeling the economy must really be bad for the Feds to cut rate that much. I will remain on the fence and wait for the market to tell me what to do.
**FTO went up $3.00 to $47.18. No pullback. Will not chase it here.
**BZP is really going good. Up to $7.75. Note the hammer finish. Will add to any pullback.
**T2118.... +116.95...resuming uptrend
**MTH...See bounce at 50MA to pullback. Consider entry after
**NVDA...bullish 3 day candlestick reversal. Excellent volume. See pullback on hourly @ $36. If close above $36 on hourly, will consider going long.
**BOBJ...Very choppy on daily. On longer term chart, looking very bullish. Possible long @ $47.20 with stop @ $45.50.
**BXP...Broke 50MA daily...Nice volume. Upper BB and 200MA are overhead resistance @ $105. If it can get through $105 will take a long position.
**ADSK..Took out both June and July swing high. Excellent volume. Is in All-time high territory here. Will monitor here.
**SCHN...Took out July swing high. Excellent volume. Will check price action ala 7/10 after that gap up. That was good for a 4 point move.
** CLB...maybe too late. Can't chase. But, notice the scout action on the candles the last 2 days prior to today's breakout.
**PSA... Nice bullish action of the 50MA daily. Bumps into the upper BB and 100MA. Nice volume. Needs to clear $80.34 before consider long position.
**FMC...Excellent move after split on 9/14. Might be too late.
**SNDA...Can't chase. Let the game come to me. :-)
**FTO went up $3.00 to $47.18. No pullback. Will not chase it here.
**BZP is really going good. Up to $7.75. Note the hammer finish. Will add to any pullback.
**T2118.... +116.95...resuming uptrend
**MTH...See bounce at 50MA to pullback. Consider entry after
**NVDA...bullish 3 day candlestick reversal. Excellent volume. See pullback on hourly @ $36. If close above $36 on hourly, will consider going long.
**BOBJ...Very choppy on daily. On longer term chart, looking very bullish. Possible long @ $47.20 with stop @ $45.50.
**BXP...Broke 50MA daily...Nice volume. Upper BB and 200MA are overhead resistance @ $105. If it can get through $105 will take a long position.
**ADSK..Took out both June and July swing high. Excellent volume. Is in All-time high territory here. Will monitor here.
**SCHN...Took out July swing high. Excellent volume. Will check price action ala 7/10 after that gap up. That was good for a 4 point move.
** CLB...maybe too late. Can't chase. But, notice the scout action on the candles the last 2 days prior to today's breakout.
**PSA... Nice bullish action of the 50MA daily. Bumps into the upper BB and 100MA. Nice volume. Needs to clear $80.34 before consider long position.
**FMC...Excellent move after split on 9/14. Might be too late.
**SNDA...Can't chase. Let the game come to me. :-)
FTI - THE ANALYST PLAY
Stock split 2for1 on 9/4. Price action very bullish since. What makes this stock interesting is the difference of analysts comments. One day there was an upgrade. That lead to that hangman candle on 9/17.
Today was a downgrade. Notice the huge down volume on daily. However, when seen at the 5 minutes, notice huge up volume into the close. Even closed above the 50. I will go @ $55.50 with a stop at $53.70 (todays low).
LONG $55.50 with stop at $53.70
Monday, September 17, 2007
FTO
This week is options expiration week. Tomorrow, the Fed's meet. The market is anticipating a rate cut. However, based on these two events, no new positions will be taken. FTO is probably an exception. I am hoping it will pullback to the 20MA which is around $42.50. At that point, I would like to see more volume to confirm a resumption of its upward trend. If this happens, I will take a 1/2 position. If it closes above $45, i will initiate the other 1/2 position.
Targets: $46...$49.
T2118
This is my bread and butter indicator. Notice how it nailed the March and August lows. At this point, it is darn near neutral. This is another reason for not initiating any new positions.
T2118 SHOWING 1987 CRASH
There is a significant amount of traders who are comparing this market with the market of 1987...specifically the Crash of 1987. Here is what T2118 looked like before, during and after the crash. Notice the possible similarities with 2007.
MONEY MANAGEMENT
One of the biggest factors in becoming a successful trader is money management. For now, here are a two strict guide lines I stick to:
1. I've learned in order to open a new position, one must earn the right to open additional positions. You must prove to be profitable after one trade to earn the right to have two open positions. In other words, why have three open positions if you have not been profitable with two. For that matter, why have two open positions, if you haven't proven to be succesful with one.
This principle keeps me very humble. One can see if this is followed, one would have more open positions if he is on a roll. If you are on a losing streak, you will have lesser and lesser open positions. When I first started, I was losing so bad that at one point I was paper trading for a few months!!! :-) But, that is how I learned to define and redefine my trading process.
2. At most, only 20% of one’s current bankroll is allotted for one position. For example, if your bankroll is $1000, only $200 max is allotted for one position. If this trade becomes positive by $100, the bankroll would be $1100. Since the bankroll increased, the max for the next position is increased to $220. Since one has earned the right for another position, the maximum allotted for a 2nd position would then be $176 (20% of 1100-220).
I learned this technique from my horse racing days. This system has kept me alive in more ways one would ever know.
From my experience, stick to these two rules keeps one’s bankroll very healthy.
1. I've learned in order to open a new position, one must earn the right to open additional positions. You must prove to be profitable after one trade to earn the right to have two open positions. In other words, why have three open positions if you have not been profitable with two. For that matter, why have two open positions, if you haven't proven to be succesful with one.
This principle keeps me very humble. One can see if this is followed, one would have more open positions if he is on a roll. If you are on a losing streak, you will have lesser and lesser open positions. When I first started, I was losing so bad that at one point I was paper trading for a few months!!! :-) But, that is how I learned to define and redefine my trading process.
2. At most, only 20% of one’s current bankroll is allotted for one position. For example, if your bankroll is $1000, only $200 max is allotted for one position. If this trade becomes positive by $100, the bankroll would be $1100. Since the bankroll increased, the max for the next position is increased to $220. Since one has earned the right for another position, the maximum allotted for a 2nd position would then be $176 (20% of 1100-220).
I learned this technique from my horse racing days. This system has kept me alive in more ways one would ever know.
From my experience, stick to these two rules keeps one’s bankroll very healthy.
Subscribe to:
Posts (Atom)
