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-- So you want to be a Stock Trader? (http://www.elitetrader.com/vb/showthread.php?threadid=80319)
So you want to be a Stock Trader?
I'm reposting some of my previous ET quotes here. That way when I get questions from Noobs, I can direct them to one forum for my previous answers. I'll add some excerpts from a few PM too.
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WizeTrade http://www.elitetrader.com/vb/showt...1378#post901378
Quote from 2manywhiners:
Hello DoxazoAdonai. Please send me $3,995. In return I will give you a software program that helps you make a decision on whether or not to buy a stock, just follow the signs. Red light to sell or avoid buying a stock, Green light to buy a stock or hold.
How does it know whether to buy or sell?
Glad you asked, it uses moving averages and current/previous prices, as well as open & closing prices, all weighted over volume.
Uh huh... Well isn't all that information free on at least a dozen different websites, or even on free software?
Yes, yes it is. So send us $3,995 right now and don't forget the monthly data feed charges as well. Those are only about $500 - yes, five hundred dollars a year. Do you want to search for stocks that fit your trading criteria? Well sorry, you'll have to buy another software program from us to do just that - WIZEFINDER. Oh yeah!
Doesn't Yahoo! offer a free stock screener [that actually has more search options than your program] to help find securities that meet your criteria?
Yes, yes it does. So if you act now you'll receive your copy of WizeTrade and a years worth of fees for only FOUR THOUSAND DOLLARS [USD].
BUT WAIT, there's more! Act within the next thirty seconds and we'll discount our software to $1,495. That's a savings of over TWO THOUSAND DOLLARS! [USD]. And you'll also receive a FREE! collection of kitchen knives hand made by hardworking oompaloompas - oops, I mean elves - at the north pole, just in time for Christmas [free items not guaranteed to arrive before Christmas 2007] And when you do finally get your kitchen knives, you'll want to use them to cut your wrist open to the point your hand is nearly detached from your arm. BECAUSE YOU JUST WASTED OVER TWO THOUSAND DOLLARS [USD] ON AN INFOMERCIAL PIECE OF CRAP SOFTWARE THAT DOESN'T WORK AT ALL!!!
Please people, do a little research before you throw your life savings away. I know all of that hard-earned money is burning a hole in your bank account, so buy a new car or put a down payment on a vacation home, just don't give it to me. But, if you insist I'll gladly take it. Unfortunately for you, so will everyone else on Wall Street.
If it seems too good to be true (or too easy, in the case of WizeTrade) then it is. Run like hell while you still have shoes on your feet, and a shirt on your back!
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Poker and the Beginning Trader http://www.elitetrader.com/vb/showt...7533#post907533
Quote from 2manywhiners:
bigger fish - game/theory forum doesn't sound like a bad idea. This post probably should have been broken into at least a couple dozen different posts.
Now, I've been playing poker for quite a while (sometime mid 90's, I started with a weekly 7stud game 'til I saw Rounders, now it's strictly Texas or Omaha, if I can find an Omaha game) There are a lot of different views here about what poker is and isn't and how it relates to trading, so here's my 2 cents.
Poker IS gambling, there is a tremendous amount of luck involved. However, Poker IS also a game of skill. Meaning that skilled players WILL win over the long run. I have won more (many more) times than I have lost, however losing still happens. Mostly for me it comes in the form of a bad beat and rarely a bad read (I don't play online, finding fear in an opponent's face when you can't see his face renders a lot of my skill useless) So, most of the time I lose, it's because someone got lucky. When I win, it's because I have superior skills to those I play against. Now, in my opinion poker and trading do have a lot in common, but so does fly fishing and baseball (I can think of at least a dozen things they have in common) A good trader could play very good technical poker, but end up losing more often than winning. That's because traders think in numbers. Good poker players read the emotions of a technical player, especially if he has calculated pre-determined entry & exits for specific types of hands, 20 hands or less and he's just become a Level 2 screen
(example: I once beat a technical player heads up and played nothing but losing hands. I threw away pocket pairs, Anna Kournikova, QJ suited, etc. I only played crappy starting hands, and I NEVER won a hand after 5th street, he left the table after 20 minutes of heads up play. I read him like the book that he was. I folded when he had anything bigger than a pair, and put him all in when he didn't. Granted I had a chip stack 3 or 4 times the size of his, and I just pushed him around, but that's because I had been doing it the entire evening. The point is his technical game was at a disadvantage because poker isn't about what you have, the only hand that matters is what your opponent has, and how you play your hand based on his/hers.)
Technical poker players are probably better suited (pardon the pun) for 7 card stud, it allows you to see the statistical probability of everyone's hand, thereby allowing you to analyze your own probability of winning. I personally don't play 7stud very much at all. First, because not too many others do either, but second, its not much fun and it feels kind of like work. The one thing from this forum I do agree with though, is people who equate poker to gambling or trading to gambling are most likely losing both.
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http://www.elitetrader.com/vb/showt...6156#post956156
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Favorite movie qoutes that apply to trading http://www.elitetrader.com/vb/showt...5438#post995438
Quote from 2manywhiners:
"Every battle is won before it is ever fought. Sun-tzu, The Art of War." Wall Street
"If something's worth doing, it's worth doing for money." Wall Street
"Me, I want what's coming to me."
"What's coming to you Tony?"
"The World chico... and everything in it..." Scarface
"There is no spoon..." The Matrix (know what's real)
"Temet Nosce" "Know Thyself" The Matrix
"Try Not. Do or Do Not. There is no Try." Star Wars Episode V: The Empire Strikes Back
"You remember lesson about balance, Daniel-san? Lesson not just Karate, lesson for Whole Life." The Karate Kid
"Revenge is a dish best served cold." Man on Fire
Jules quote from Pulp Fiction isn't actually Ezekiel 25:17. It was combined with Psalm 23 and heavily edited by Tarantino.
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Paper Trading Vs The Real Deal http://www.elitetrader.com/vb/showt...043#post1037043
Quote from 2manywhiners:
I'd liken it to reading a military field manual before leaving for war, then arriving in the actual war zone.
Mentally preparing for war by reading a field manual, while sitting in your favorite recliner drinker a beer and grilling brawts, is still probably closer to reality than paper trading is (in order to learn, not testing new strategies or learning new platforms)
Paper trading usually creates a false sense of insight into the market and, shortly after going live, many new traders don't understand why they're losing money. Many also fail to realize that they're trading on emotions that they didn't use on paper.
My solution? Trade very small lots, or less than 10% of your trading capital, for at least your first few weeks or months. Sure, broker fees may eat you up (try per share instead of per trade; and if you plan on starting out with more than 10-20 trades per day, you're probably already in trouble), but at least you can more accurately estimate what your expectations should be, and how viable your strategy is. If your trading 1/10 of what your strategy would have you trade, then multiply all of your losses and gains x10, then calculate the adjustment of your broker fees. Real Money, Real Trading, Real Expectations, Less Risk, Same (or at least similar) Emotions.
You can learn more in two weeks, using this method, than you would in two months of paper trading. Good luck.
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Paper Trading Vs The Real Deal http://www.elitetrader.com/vb/showt...196#post1038196
Quote from 2manywhiners:
one more take:
Ever played online poker? (I'm not relating trading to poker, that's a whole other forum) Well, I have played three types of online poker; free simulated money no-limit & limit, very small limit, and high stakes no-limit. I'm sure a lot of people on ET have played all three types as well, and already know what I'm getting at.
Those who don't, well, it's like this; the simulated money poker games are absolutely ridiculous. I played these for a while before opening a cash account, and what I had learned about online poker was that no one played very well, everyone just kept raising and re-raising, no one left the hands when they were supposed to (except for me) and eventually I started doing similar things because: a) I often mucked the better hand after someone raised repeatedly, and b) I tried to slow play good hands by simply calling and not raising. Well, after playing by the "rules" and losing regularly, I decided to just play real aggressive, and in return I won (simulated money) more often.
When the time came to open a cash account I started off with small limit games (like $0.50 & $1.00) and I was absolutely amazed at how conservative MOST of the players were. Was $5 really a lot of money? Well, the first week I stuck with the tried and true simulated money method of "raise first and re-raise later, then go all-in" but to no avail. I lost $25. Whoa. Big money right? Well, that's what I thought, but apparently any amount of money in online poker causes people to play differently. I have since played in online high stakes no-limit cash games and tournaments, and I found that most players still play with the same strategies as the $0.05 limit players (granted, they have superior skills to the lesser players, but they follow the same poker fundamentals)
Lying in bed last night, it dawned on me. Simulated Trading isn't any different from Simulated (money) Poker, they both operate the same way as their "real" money counterparts, but the logistics and the emotional effect on their trading (or playing) style varies to an incalculable degree.
I'm not saying beginners should open an account and start trading $20,000 the first day. They shouldn't (neither should you... learn the platform intimately first) but they should start trading a portion of their capital relatively quickly, if for no other reason than to avoid the false confidence that is inherent with paper trading.
A guy I know very well once told me that he had a better day than I did, because he made over $500 on paper, and I was up only $10 at the end of the day (after fees) with real money. Now, I understand his rationalization, had he been in the market, with live money, he would have been up at least $450 right? I made 4 figures that week (this was on a Friday, I think) but even if my week had been $50, his rationalization would have still been wrong. (side note) I eventually mentored him after he finally did go live, but only because he literally begged me. He had six REALLY rough months after going live and he just kept saying over and over, "I never had a down week on paper... this is wrong, something is wrong with the market..." he eventually did "get it" but not until after he had lost some money. Had he started LIVE with a small portion of money, he wouldn't have had the rough period he did, because he never would have made the $10,000 per month on paper. Would he have been better off in the long run? I dunno. But I do think so, mostly because the effect of paper trading successfully had really skewed his psyche. Take from this what you will, I'm sure he's not the only person with a story like his...
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Need help daytrading QQQQ http://www.elitetrader.com/vb/showt...805#post1096805
Quote from 2manywhiners:
Exactly. Well said jho.
A lot of people try overcomplicate things because to a beginner the Markets tend to seem extremely complicated. In reality it all becomes much easier when we incorporate common sense into our trading strategies. A wise man told me that, no matter what you trade, the secret to success in the market is simply good risk management. Cut losses short, wait out the winners.
Is 0.20 an ideal stop loss? No, not if your target movement, or the probable movement, is 0.10. If the target were say 0.5, then 0.2 could be acceptable, however it depends on many different variables when it comes to where a stop should be placed. A stop at 0.4 would easily allow for a higher winning trade percentage than a stop at 0.1. Keep in mind though that a single loss at 0.4 would equal the same $$$ amount of four losses at 0.1. However, extra commissions and fees must also be accounted for with the use of tighter stops, as there will likely be a greater number of executed trades in a shorter or similar time frame. Also keep in mind that larger targets and wider stops often equate to significantly longer trade times.
Risk management is more than just a necessary consideration in trading, it should be incorporated into the very basis of any good trading strategy.
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http://www.elitetrader.com/vb/showt...111#post1097111
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Need help daytrading QQQQ
Quote from 2manywhiners:
I played paintbrush with a chart (for the first time in a while) to help you (unet1604 and any other beginner/inexperienced traders) understand chart pattern entries. Note: most of my exits (from long or short) are gut feeling or trailing stop based, so I won't really try to explain them here.
I don't trade the first portion of the open, which means the first 5-15 minutes, and these candles are 10min charts. So being an experienced trader, I'm looking at different screens than these, but I recommend newbies look at longer candles for longer periods of time. Be sure you know where the move is going before you try to follow. Don't try to short the very tips of tops, or buy the very bottoms. Be patient. Be humble. Take your time. Don't overtrade.
1. Note the Gap open here. Gaps up then falls. First clue this may be a shorting day. I'm in fairly early on this action, but in keeping with my advice of using longer bars and longer time-frame day trades for beginners, I'll be using these specific charts as I would have you do so. First 3 candles = lower lows, lower highs. Prepare for short setups. The entry basis for circle 1 is in the latter half of the circle. The second time of the day you've seen lower lows and highs. Commence shorting somewhere near the bottom right corner of circle 1. Bank. (Note: check out the volume bar at the bottom, see anything significant that occurred in volume's relation to price?)
2. Here is where overtrading will most likely come for beginners. You got in fairly early on a decent move. $$$. If you're looking to give some of it back, trading around this time after a move like you were just in is definitely one way to do it. In circle 2 you'll find chart patterns supporting a theory that an uptrend or reversal is in motion, but you'll also find patterns that say a new downtrend is starting. You may never hit a stop in this area, then again you're not hitting any targets either. Even though it is gradually an upward movement, it's not going anywhere fast, let's look somewhere else, or simply go do whatever else it is you do. Second guessing, some extra un-needed trades, throw in a bit of boredom, and there goes 1/4 of your morning profits. You should have been up somewhere around 0.9% after that mid-morning move. Don't throw it away because of boredom.
3. Fresh new trading day. A quick gap down is followed by a nice solid upward trend. If you're experienced with the open (if you're still reading this, you're probably not) you got in around the third candle. Decent move. If you're not, you waited till candle 4 or 5. You found a solid trend, higher highs (excluding gap and open) and higher lows, give it a go. Damn, got stopped out? Yes, but don't fret, myself and many others bought too. This is what stops are for. No one wins all the time.
4. Don't get bent after the last trade went against you, stick it out, but don't trade for revenge. Experience is already shorting this before it is hitting lower lows, you should wait for it to get close, and you should be in by at least the last bar in circle 4. Side Note: if you're using trailing stops, there are several points on the chart where you're hitting them. Don't fret or worry. Wait for one candle (two 5 or a 10) or a few minutes of T&S. If you don't see a solid reversal, jump back in. Don't worry about fees, if you're trading small size with p/share pricing, a dollar or three for a stop is better than losing an extra ten without it.
5. A similar example of Circle 3, I'm probably long, but like I said before, beginner = patience.
6. The higher highs and higher lows (excl. open) looked nice, but after a reversal and 20-30 minutes of lower highs and eventually lower lows, get over the last trade and go short. Some trailing stops may be hit, follow Circle 4's advice and jump back in after identifying a continuance. Nothing too fast and no big sexy moves here, just clearly defined reversal points all day.
7. I like Circle 7. Eventually it'll be a good day, but first the market will play with your patience and conviction. I (experience) found a nice move after the open, but you (doing what you should as a beginner) waited until the move was puttering on fumes to go long. Stops hit fairly quickly. We then find a choppy trend which will eventually turn into...
8. Lower Highs. After the morning move, lower lows are still a ways out. Identifying a trend doesn't have to involve both higher highs and higher lows or vice versa. I (experience) have found two solid trends, you found one. Don't wait too long. 8 could have easily turned back choppy at noon, and if you're waiting too long you're missing the significant moves and hitting several stops along the way. In this instance you've found (at least) a 1.1% move.
9. Don't stay in the market too close to the end of the day. Those extra pennies aren't worth the small price movement. If your day-trading, be out by at least 10 minutes before close.
10. Based on what has occurred the past four days, today will start as a short based on a week long trend. Experience is short at the first sign of the open retracement. Beginners follow later, as this is safer anyway, after spotting lower highs and low.
11. You've hit a trailing stop loss order (or at least with a retracement like this you should have) The new reversal turned back down quick, this is why after hitting trailing stops you watch T&S. Ticking down, down, down, further down the spiral it goes. Don't wait for the next candle here, it's worth risking another stop for a super-quick move like this. Don't be scared of stops, know and respect they're purpose, but keep following the trends when they're moving quickly.
12. & 13. I'm shorting again somewhere in here, but I'll probably get stopped out past circle 13. At this point in the day, I've captured big moves at least twice already. Here is another good example of circle 2, check out the choppiness of the uptrend, green-red, red-green. Nothing clearly defined at the time, even though it is a trend, it's choppin along. You could follow that uptrend till close, but you'll be hitting several trailing stop loss points along the way. Your choice, but I was probably out for the rest of the day after the stops following 13.
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Disillusioned http://www.elitetrader.com/vb/showt...695#post1133695
Quote from 2manywhiners:
This is a reality check. Log it into your checkbook, and find some satisfaction in knowing that you have been paying your dues. Not sure how long you've been at this, but guess what, you have not failed.
Payed, have you, all of your commissions? And still, after all of this time, have a trading account do you? Already know you, that which you need.
Okay, now that I'm off my Yoda trip, you need to find some satisfaction in knowing that you're not one of the 95%, or whatever it is, that failed at trading. You did not lose. Put that into your mind. Log that into your checkbook. Maybe you're not yet one of the 5%, but you never will be if you keep your current mindset.
"Every battle is won before it is ever fought."
I'm not saying that I drink from the holy cup, by the hand and the grace of God, or any of that Holy Grail bullshit. I don't. But when I started out I wasn't as lucky as you. My account was getting gouged. Bludgeoned to death very quickly. I had to learn, it is Kill or Be Killed.
Trading is simple... That being said... Trading is NOT easy. The winning plan is conviction. It is belief in what you are doing. Adhering to the rules, adhering to your guidelines. Develop a sound trading strategy. Target Profits MUST be larger than losses. If the expected per/trade win percentage is 1:1, then develop a plan that can continue to exist at 1:3. Losses MUST be limited. If your Target Profit for any particular trade is $2.00, and your Stop Loss is $1.00, but your actual Average Winning Trade (over a long period of time) is $0.75, then you are going to, on average, lose money. Trading is a numbers game, and getting the numbers right is half the battle. Over-exposure will kill the new trader. Many new intra-day traders who end up losing are in the market for 7+ hours a day. Why? Do you feel a need to get even with the market after a loss, so you jump right back in? Are you feeling a bit greedy, like you just gotta get that extra $0.05, only to lose $0.15 more? Are you up on the day, but down after commissions? Is that a good reason to jump in head first? Capital Preservation is of the utmost importance. You can NOT make money, if you run out of money. Put Capital Preservation above all else. Period. Risk Management is the name of the game.
Any Ego is too much of one. I am not a winner. I am not a Loser. I am a market participant. I am not winning. I am not losing. I am long. I am short. I am not up. I am not down. I have a vested interest in the market's direction and where it is going. Effective analysis is key, not an under utilization of available resources, not analysis paralysis either. Know what you need to know. Ignore the noise. Trade with the market. Go where the market wants to go. Ride the waves. Don't buy tops. Don't sell bottoms. The most important indicator is, and always will be, Price.
Quit going long during lunch in stocks that consistently chop or go down during that timeframe, even in a Bull market. If you trade intra-day, then trade intra-day. Do not take home a trade that was losing, only to find it gapped down even more overnight. If you have multiple trading time-frames, trade in multiple accounts.
Don't short Oil during a war crisis in the area of the world's largest supply of Oil. Not even if the Bollinger Bands, or the Moving Averages told you to do so. On the flip side, don't go long Oil after reaching historic highs during an oil crisis. It may go higher, it may not, but if it is not a trading vehicle that you specialize in, fight the urge and avoid it. Trust me, Cramer was not the first to coin the phrase "Pigs Get Slaughtered." Don't trade on fundamentals alone, if you are a short-term trader. Don't go long just because a moving average made a cross-over, it is a lagging indicator which means it has no bearing on future direction. Look at the orders, look at the ticks, look at the charts, look at the buyers:sellers, look at the market advances:declines, look at the corresponding exchange's direction, look at the sector's direction, how weighted is it in its corresponding ETF? What is that fund doing? Read its news, what is the sector news? What are its relatives and what are they doing? Have you found a better prospect yet? Collectively, what has all of this information told you? Go Long? Go Short? Avoid it altogether?
Like I said, Trading is NOT easy. But that doesn't mean that it can't be simple. In my opinion the most valuable indicators are not the ones on the price charts, they are all of the independent variables that come together to form a matrix around each trade. Look at all of the variables surrounding the trade, when a large percentage of these indicators match what the price chart is telling you, pull the trigger and make the trade.
Really, it's all only as simple as you make it. You break one rule, and you will lose clarity. You break a few, and those very same rules will end up breaking you.
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Disillusioned http://www.elitetrader.com/vb/showt...063#post1137063
Quote from 2manywhiners:
Pretty good posts indeed. I agree there is no Holy Grail, or at least it's not a Trading System with specific rules that any TooL could follow. Good Money Management should be common sense for traders, but far too often it isn't. So, I just wanted to point out a few things my earlier post didn't mention.
I am not worried about money while I trade. I trade like it's a game. Some times I win, sometimes I lose, but you can never be in a trade because you need the money. That's when people start trying to will the market to do things that it just refuses to do. I have had some pretty good trading days, only to find out at the end of the day that I was down $50. "Oh well, I followed the rules and it should have been worse." I have had days where I thought I had traded terribly and assumed I'd lost $$$ only to later find out I was up $50. "Damn, if I had followed the rules this could have been a good day." Look at it this way, Surgeons are not thinking about how much money they are making while they conduct a procedure, they're concentrating on making sure the surgery goes as planned and they stay prepared in case it doesn't. They're not worried about money while they work, so why should you?
Another big thing you have to understand in order to make it in trading is Personal Finance. Many good traders have run out of capital in a matter of months, because they didn't have their own personal finances in order. Just because you made $15,000 in May, does not mean you should go and buy a $1M house. Sure, you could have afforded the mortgage payment in May, but you have to be prepared not only to not turn profits in June, July, and August, but you have to be prepared to lose February, March, and April's profits too. It's hopefully just a worse case scenario, but how many times has the Dealer in our lives dealt us the wrong hands at the wrong times?
I try to live of of 1/4 of what I gross, so my goal for the first week of every month is to make enough to pay the bills (Even after taking the summer off from trading, I've still got my living expenses covered through the end of 2006) After making what I need to survive on, everything else is relatively stress free. If I have a down month, I tighten up spending significantly, I don't put it off until later down the road, because later down the road might be even worse than the current bad month. On the flip, I bank every bit of the excess $$$ from really strong months. I don't go and blow a bunch of money on stuff I wouldn't have been able to afford in a normal month.
Unfortunately a lot of traders don't understand these things, and when I am telling someone that they just don't "Get It", I'm not referring to how they have or haven't been trading, I'm referring to the whole picture of trading that they just don't see. This is the Sistine Chapel, and many of the people looking at the Art of Trading think they can "see it all" in just one painting in a hallway, and they never look for anything else. "I saw a brochure, I know all about it." I still haven't seen all of the art, and I really don't think very many ever have seen it all, but that doesn't mean I should quit searching.
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http://www.elitetrader.com/vb/showt...675#post1241675
http://www.elitetrader.com/vb/showt...681#post1241681
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Disillusioned http://www.elitetrader.com/vb/showt...689#post1241689
Quote from 2manywhiners:
First of all, if you're a new intra-day trader, this is probably the most important part of the entire post...
"Trading is a numbers game, and getting the numbers right is half the battle. Over-exposure will kill the new trader. Many new intra-day traders who end up losing are in the market for 7+ hours a day. Why?"
In my opinion, lagging indicators are the devil's little secret of the brokerage industry. They're simple and they lull new traders into a false sense of security. They tell traders one of two things, when the indicator does this then that means buy, or when it does that then it means sell. If you're planning on trading over long time periods (days and weeks) or investing, then lagging indicators could help... however if you're trading inside the same day, lagging indicators are only telling you that you missed some good moves from a few minutes ago.
In my experience, looking at moving averages on intra-day charts tends to trigger cross-over buy/sell signals after the move has been made and the stock has hit a temporary support or resistance level. Meaning that buying and selling intra-day based on an intra-day chart's moving average signal will (typically) put you in a position that tends to stall or reverse more often than not.
So, what are my independent variables? That depends on the Security at hand, it's technicals, fundamentals, and how much it's weighted in its corresponding index.
For example, we could look at WWY (Wrigley) and find out what the independent variables surrounding the trade were for today. It's listed on the NYSE, which was up this morning, but since it's not a large market cap, that doesn't really matter. The Dow took off and basically everything else followed. Variable number 1 = DOW, Nasdaq, S&P, Russell, and NYSE were all taking off straight out of the gate this morning. This makes the morning, and most likely the rest of the day a Long only trading day. This means you shouldn't be shorting anything with this much of a bullish market sentiment.
Variable number 2 = NEWS. Wrigley announces $.53/share from $.46, which beats expectations by $.04 That alone is probably reason enough to go long, but we've got a quite a bit to still look at first. The CEO steps down and a family run company announces a non-family related CEO for the first time in their history... Good or Bad? On a bad earnings report, this usually means good news, but not for traders, this is investor news... Today, they could have reported that Mickey Mouse was going to become the new CEO and it still would have been good news.
Variable number 3 = analyst recommendations were fairly neutral, and off of great news, that means an expected neutral/underperformer is more likely to break out... Look for a big week, but I wouldn't trade it tomorrow (unless they announce that Mickey really is taking over...)
Variable number 4 = Dow breaking 12,000 just after the open. Bee-lining toward 12,100.
Variable number 5 = Volume with little resistance. Looking at a 5 day chart, WWY had gaped up today before it took off and ran further. Meaning that it had exceeded the previous levels of support and resistance very early on, and that it would be more likely to just keep running.
Variable number 6 = Volume and Level II. Wow. A monkey (Jim Cramer) could have seen the "Buy Me Now" signal from this one.
Variable number 7 = the Chart. Candlesticks. No MA or any crap. Volume bars at the bottom. Clear the chart of all the crappy tools, and learn how to read the signals inherent on Price and Volume alone.
Variable number 8 = Screening tools. These are very important, and can also be very simple while retaining their effectiveness. Ask jho how important I think these tools are, and how underutilized they are. As far as what I screen for, I'm not telling. But come up with an ideal time frame for your style of trading, what and how you want to trade, and toy around with the things that you feel are most important in regards to how they will affect where the price is going.
The Matrix around the trade is all of these variables and what they wholly add up to. If the overall market sentiment is very bearish, but the other variables are bullish, then the matrix is not forming a consistent path to an appropriate decision. Don't make the trade. Sit on your thumbs if you have to, but if the important factors of a trade are not (mostly) adding up to the same consistent conclusion, then follow the rules and search for something else.
Like I said, Trading is NOT easy. But that doesn't mean that it can't be simple...
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BLaH, BLAh, BLah...
Disillusioned http://www.elitetrader.com/vb/showt...493#post1242493
Quote from 2manywhiners:
Forming a Matrix of Independent variables around your trading decisions does not make trading easy. I'll give you that one... Look, traders should be learning all of these things right from the beginning. If a new trader doesn't understand the functions of the market and why it moves the way it does, then in my opinion that trader should not yet be trading. I know being a trader or investor is one of the easier career moves anyone could make because it doesn't require any training or being hired on at a firm. All you have to do is open an account. That doesn't mean that trading is simple or easy. If new traders don't understand the intricacies of the market, then they should learn before jumping off a diving board into a pool of sharks...
Market direction
News
Analyst recommendations
Volume and Support/Resistance
Price and Volume Charts
Level II and Advances: Declines
Screening Tools
Market direction What we're looking for is a uniform direction from all of the major indices. Everything up means Long only. Everything down means Short only. If there is a mixed reaction then experience will be trading both sides possibly at the same time, however new or young traders should probably wait out a uniform direction. Same thing with a market that is chopping around with no solid direction.
News Scan the News wires for anything released after the previous close. Mostly it's just stuff that's irrelevant to intra-day trading, but the stuff that really makes stocks breakout or breakdown big are usually found here.
Analyst recommendations Recent upgrades/downgrades are the only thing we're looking for. These are intended for investors who want their hand held, so we're not buying or selling anything based on what these clowns say. All we want to see is if and when one of the analysts changed their mind, and how many of them did it at the same time with the same rating. Again, do not buy or sell b/c of an analysts buy or sell rating. We're only here for a confirmation of a previously held notion.
Volume and Support/Resistance Looking at the volume alone can hint at the possibility of how fluid the stock is, how well it is moving, and what the price is reacting to (news, technicals, rest of market direction, etc) With Support and Resistance (as in previous price levels, not MAs or Bollingers) we're looking for something that has already broken it's recent resistance (or support) or is not too close to it yet. You don't want to buy anything if it is very close to it's previous resistance, but hasn't broke through yet. If it has already soared past it, then that's usually a good thing, but it depends on what the Price and Volume charts say...
Price and Volume Charts I've spent countless hours on ET explaining how Price & Volume candlesticks work. If you use the search function, you'll find some gold buried somewhere around posts 150-250... Otherwise, you should look into some detailed explanations of how this works. Most candlestick books have entire chapters or even sections of the book dedicated to Price and Volume patterns. There are far too many to learn from one post, but within a few weeks of looking at these charts, it'll click and you'll suddenly start recognizing things while they happen and not after they're done. http://www.elitetrader.com/vb/showt...&threadid=70650 I found it for you... I posted a chart attachment and some explanations for basic Price&Volume chart reading. Have fun.
Level II and Advances: Declines This is important after I've looked at all the other variables. If you're familiar with Level II, then you already know the purpose of incorporating what is happening on your Level II screen into your decision making process. If you don't... WoW. Start reading Intro to Trading books.
Screening Tools I use multiple screening criteria for multiple market directions, times of day, and types of trades. Some screening criteria is very simple, like Price between $X.xx and $YY.yy with Volume between W and Z; and some is a bit more complicated, like screening specific long-term technicals, intra-day technicals, and basic fundamentals of a company into one screen. What is the purpose? I have screens for up days, down days, sideways, choppy, etc. Morning, Lunch, Afternoon, etc. Short, Long, Short one related vessel, Long the other, etc... I highly suggest all intra-day traders learn about the basic fundamentals of companies, what their significance is, and learn the functions of long-term trading and investing. It will open doors to your understanding of what exactly is occurring intra-day and why. Investors and Institutions still control the markets intra-day... when traders learn that, light bulbs start to flicker...
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BLaH, BLAh, BLah...
Disillusioned http://www.elitetrader.com/vb/showt...687#post1242687
Quote from 2manywhiners:
Attainment of knowledge is of the utmost importance in trading. Once traders begin to learn how markets work and what exactly is affecting large price swings (while they're occurring) then it becomes simple. Never easy... but simple.
When all of these variables are aligned, the trade is a 90% (or higher) lock. I'm not grinding it out for pennies or nickels. I'm looking for $$$ and % points. So by saying it's a 90% lock, I'm not saying the trade is a lock for a half dozen pennies, I'm saying it's a lock for quarters or dollars...
Successful trading (consistently and on a large scale) takes time and knowledge. I'm only trying to provide the key. You still have to be the one to open the door...
Best of Luck to all...
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BLaH, BLAh, BLah...
Rules for Starting Out - general tips to live and die by PM
I'll give you some very valuable tips for starting out, but just remember what * said earlier, "everyone is different." Don't expect to win early on, expect to learn how the market functions. Don't worry about your strategies (plural; different strategies for the many different directions of the market) as much as your risk tolerances (ie Stop Losses, trailing Stops, and the % of capital in any one sector) Trade small (early on) at either a discount broker ($7/trade or less) or at p/share pricing. Never trade more than about 10-20 round trips in a day, and you don't have to worry about hefty fees too much.
If you develop a strategy where you're using more than 20% of your trading capital on any one trade, BE VERY CAREFUL. Many successful traders won't tell you how they trade, most successful traders also trade different strategies, but few of them trade more than 25% of their capital in one trade. Whatever your specific risk tolerance is, probably isn't as important as having at least a small amount of diversification. Don't put too much capital in any one sector.
Knowledge is power. Knowing the overall direction of the market is almost always more important than looking at the technicals of any one, or handful of, specific stocks. The psychology of the market usually dictates price action more than chart patterns. Many, MANY traders never pick up on this, and trade purely on technicals. If the overall market is trending up, why go short because of past data? Makes sense right? Well, most traders don't trade short very often, so why go long when the overall market is trending down? I'm not saying technical traders are wrong, I'm not saying fundamental traders are wrong, (I don't consider them traders though, they usually trade long term so they're investors) what I'm saying is that whatever reason you chose to enter a stock, you need to know that what a chart says isn't always what a stock does. Market direction is very important. Know it, and you'll know your appropriate strategy.
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BLaH, BLAh, BLah...
Rules for Starting Out - general tips to live and die by PM
Position size is very important, but often only because it is overlooked. Sector depth (or the % amount of trading capital currently proportioned in one sector) is probably much more often overlooked. If a trader has 30% or more of his capital in one sector, even though it may be diversified by 3 or more different stocks, he may be subject to what I call a Sector Dip. Such an example would be buying multiple stocks in one sector (buy signals being based on technical data) and then listening to the direction of the overall market, instead of the market sector. The technical data may suggest long positions, the weekly market direction may be trending up, the intra-day overall market direction may be currently moving up, but after entering the trade you realize that the specific sector may have already been shaky or may have just been starting to reverse.
Diversification is important, but it is not always necessary. Sometimes I trade multiple stocks based on what is happening in their current sector, but when doing so I ALWAYS make sure that I know exactly what the corresponding sector is doing. There can be a lot of money made through Narrow Diversification (that's what I call it, made it up myself; several stocks = diverse, one sector = narrow.) Just make sure you know what the sector is doing. Like I said before, I trade what moves, and what moves well is always changing. Note: ETFs can be a good vessel, but I usually trade them based on what the overall market is doing. Like when I'm inside of a down day, during a down week, I really like to short. However, when a specific sector starts a break out many of the low-end, low-value, and low-volume stocks tend to lag behind the breakout, so going with the Best of Breed (I never follow Cramer's footsteps, but he does have fairly good philosophies) is usually the best option for these types of moves. When a sector starts to fall though, most of the lower-end stocks tend to follow suit much quicker. Try trading the Best of Breed and ETFs simultaneously. Depending on the type of move I do this occasionally too.
By the way, I often trade against the trend, but rarely past the first 30 minutes to first hour of the open. The market direction usually changes around this time anyway, and most of the best moves occur in the open. Letting morning breakouts run can bring in $$$, regardless of where the market goes. But beware, they often run out of gas before the end of the first hour, and sometimes when they do they bomb. So I'd say that always knowing where the trend is heading is probably more important than always trying to trade with it. Starting out though, The Trend is Your Friend is an excellent policy.
I don't (usually) trade the first 5 minutes though. Usually I let the market direction of the previous day and week tell me what to do in the open, but sometimes I listen to Big News too (important news that will effect more than one sector, segment, and market.) Interest rate changes, dollar/currency moves, earnings reports, dangerous weather or disasters, wage increases, terror/jihad... you know whatever will have an impact on the trading day.
I really feel like I get a lot back by helping others, so I try to do it often. Starting out though, it is very important to keep asking questions. This isn't grade school, where other kids might make fun of you for raising your hand all the time. The more questions you ask, the more knowledge you will attain. One question answered almost always prompts a new question. After a handful of years, I still ask other people questions, and while I take what most people online say with a grain of salt, there are some people on ET I almost never question. General rule of thumb is, if they have over 1000 posts, and were on ET in the 1990's, they probably know what they're talking about. Not always though, some of those guys were the ones who scorned me in 2002.
So, ask away and I'll help as best I can. And I'm not saying you should make any exceptions for me. You should always question the logistics of anything anyone says before taking it to heart. That's just one of my philosophies of Life though...
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BLaH, BLAh, BLah...
http://www.barchart.com/ ETFs on 5-12-2006 PM
check out the percent on the day. Prime example of my previous explanation. Ever tried to short a whole bunch of individual stocks in a short period of time on a down day? Hard isn't it? ETFs, for traders, are primarily used for days like today. Easy in, easy out. For upward momentum days, many of the worst of breed stocks lag behind, so the moves are smaller than they are on down days. There is money to be made on down days, you just have to know where to find it. It was a very long time before I came across this strategy, I used to wait out down days by not putting anything in the market, and just watching. Now, I am more consistent on down days shorting ETFs, than many mixed momentum days. (DOW & NASDAQ up, S&P down... etc)
PS the charts always update every ten minutes, I'm not sure if the links always change too. When I sent this, all the ETFs were in a -0.06% to about -5.3% range. 200 of them I think. While not exactly fish in a barrel, you still have to use charts and sector news to weed out imposters and gap hoppers, today was a good example of trending intra-day price movements.
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Price and Volume PM
"I don't need analysis paralysis." How very true that statement is. I thought I did when I was starting out (I think I read about every technical trading book there was for beginners) and I was trying to use every indicator available, the only problem is that I almost never made any trades because indicators were rarely in sync. Then as soon as any indicator turned to a sell, I got out. Big waste of time if you ask me, unless you're specializing in 5 stocks or less, and that's all you trade. I don't have time for all the nonsense though, PRICE and VOLUME. MA's and all they're clones are pretty much useless. For long term investments they can be useful, but intra-day they're manipulative more often than not.
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Average Daily Volume and Price Ranges PM
I typically trade anything between $10 and $100. I've made certain exceptions before though. Google is a bit too volatile for me. Some traders claim it's no different than a stock in a $30 - $40 range, but I always seem to get stopped out of it faster than stocks under $100 (using %s and not $ stops). 200,000 ADV should be more than adequate if: you're not making rapid executions, you're not trading all or most of your capital/BP in one trade. I don't trade anything below 50,000 ADV, but I'm almost always 100,000 or higher.
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BLaH, BLAh, BLah...
A General Description of How/What I Trade & the Cup of Christ PM
I buy morning breakouts long (not gaps; I base a lot of trade decisions on % gains, but never from yesterday's close, only from the open), cover gap reversals in the lower range of weekly support and resistance (triple check your news sources before entering trades on 'technical' gap reversal setups) and short ETFs on down days. I watch a lot of volume bars and price candles, and run a lot of screens with a dozen different screening tools. It always seems to come down to controlling risk though, in the end. Find the right stops, and keep a keen eye on your profits. I use trailing stops to lock profits, but I usually seem to exit a reversing winner quicker than the trailing stops knock me out of it. It's almost like a sixth sense when a move has ended, but I guess lots of volume and stalling prices help too.
As far as a holy grail, trust me you'll never find one if you don't look. I've been searching for years, I haven't found it, but I have found more $$$ than I thought possible (think 2001/2002's mentality). The original SOES bandits never would have found theirs if they hadn't been looking. Come to think of it, maybe that's a big part of the problem with traders like ******. Maybe its just that they're not hungry anymore? Not willing to find a new edge, even as the old one goes away, perhaps?
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Growing the Account and Personal Finance PM
As far as my trading goes and where I'm at, it keeps evolving. I try to live off of about 1/4 of what I gross. So my target for the first week of each month is making more than I'll spend for the whole month. Everything else is bank and taxes. The faster you can grow a Margin account, the faster you can grow it even faster than before. Choppy markets like this one suck, but I've covered my Mortgage, for the whole month, after just the open of the first day of the month before. It just makes everything else the rest of the month that much easier...
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BLaH, BLAh, BLah...
More to Come. Feel free to offer other insightful quotes. Newbs, PLEASE feel free to ask questions. Post em here or PM, I'll answer either, but posting here will get you more in-depth quality answers. And to the other comedians on ET...
Please don't start the Shit Pie throwing contests... Just eat them by yourself in the corner... 
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BLaH, BLAh, BLah...
This thread of yours is a great idea, I'll be sure to keep it close to me as long as it's helpful. A few questions, you don't seem to like technicals, how do you know what the market is telling you? How do you analyze volume? What about candlesticks?
Where does your edge come from?
Thanks for the support. I've been wanting to start a thread like it for a while now, I just kept putting it off.
Quote from Renegen:
This thread of yours is a great idea, I'll be sure to keep it close to me as long as it's helpful. A few questions, you don't seem to like technicals, how do you know what the market is telling you? How do you analyze volume? What about candlesticks?
Where does your edge come from?
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BLaH, BLAh, BLah...
If newbies are invited I'll be happy to give my contribute 
You seem to pay a lot of attention to the global direction of the market. I'm still wondering to what extent this has influence on a stock; depends on the stock, I guess.
Anyway, what I noticed is that you didn't mention indicators like TRIN. Do you think it's useless?
Also, how about looking at options to get some feeling about where the stock is going?
Thanks
First of all ... I would like to thank 2many for bringing all this into one thread. A whole thread about your previous posts, talk about a massive ego Alright kidding aside, me and 2many were talking about starting a Q&A for beginning traders. I have been busy with my job (the one that pays me everyday) so I've been putting this off ... must be his way of saying get your ass in gear jho.
Ok one thing I noticed is that you can read from books and posts about all the rules of trading but until you're actually trading you don't TRULY understand and learn from it. For example, everyone knows when a trade goes against you, you should cut your loss at your predetermined point. End of story, no more. But guess what, you won't truly understand until you get burnt bad by not cutting a loss. In my first two weeks of trading I was burned twice for not cutting a loss, it took away all my profits. Since then (about a month after) I have cut every loss where I intended to.
More to come later ... hopefully we can keep this thread civil.
You know how much I like to stroke my own ego... jho has had some very insightful posts of his own, not to mention PMs, and I'm sure he'll start posting some of them when he gets some time. jho is still a bit green in his trading career (sorry for letting the cat out of the bag buddy), and in our numerous conversations he has pointed out many interesting things that I never would have seen, and posed questions I simply assumed young traders and newbs would have already known... Your welcome, and thanks to any and all for posting their own (or more of mine, of course...) useful insight.
Quote from jho:
First of all ... I would like to thank 2many for bringing all this into one thread. A whole thread about your previous posts, talk about a massive ego
Ok one thing I noticed is that you can read from books and posts about all the rules of trading but until you're actually trading you don't TRULY understand and learn from it. For example, everyone knows when a trade goes against you, you should cut your loss at your predetermined point. End of story, no more. But guess what, you won't truly understand until you get burnt bad by not cutting a loss. In my first two weeks of trading I was burned twice for not cutting a loss, it took away all my profits. Since then (about a month after) I have cut every loss where I intended to.
More to come later ... hopefully we can keep this thread civil.
from www.investopedia.com
Quote from andread:
If newbies are invited I'll be happy to give my contribute
You seem to pay a lot of attention to the global direction of the market. I'm still wondering to what extent this has influence on a stock; depends on the stock, I guess.
Anyway, what I noticed is that you didn't mention indicators like TRIN. Do you think it's useless?
Also, how about looking at options to get some feeling about where the stock is going?
Thanks
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BLaH, BLAh, BLah...
jho is still a bit green in his trading career (sorry for letting the cat out of the bag buddy)
" A wise man told me that, no matter what you trade, the secret to success in the market is simply good risk management. Cut losses short, wait out the winners. "
he's right about the first part. as for the second part... not necessarily.
"Is 0.20 an ideal stop loss? No, not if your target movement, or the probable movement, is 0.10. If the target were say 0.5, then 0.2 could be acceptable, however it depends on many different variables when it comes to where a stop should be placed"
what matters is positive expectancy. stop (and targets) are SETUP dependant. if one is swing trading equities, using certain styles, it is absolutely correct to cut losers short and let winners run. however...
this is not necessarily the best way to trade. it is dependant on character of market (you are trading), trading style, timeframe, etc.
for example.
one setup i use has a stop of 11 pts, a first target of 6 points (then move stop to entry) and a 2nd target of 9 points. the tertiary target is market internals dependant.
this does not fit the above meme (cut losers short bla bla bla) in that the stop level is larger than the target. in fact, it's the complete opposite.
however, with this specific setup (and many others) i can be assured of over 82% winning trades, and a nice positive expectancy EVEN THOUGH my initial stop is WIDER than my initial target.
why?
because with THAT setup, that is the proper stop distance.
so, one of my first rules is that many people will try to take narrow rulesets and think they apply across the board to all trading styles, modalities, markets, timeframe, etc.
that is absurd but constantly repeated.
For the post that my specific comments came from, the original poster was making very quick trades (like 5 - 30 minute trades, from a PM I think). In that time period, letting a loser run for 20 minutes when you don't expect to be in the trade for more than a half hour anyway isn't a good idea. In longer-term trades I use much wider stops than I do in intra-day morning setups. Sometimes wider stops are acceptable but for the most part, especially when it comes to beginning traders, a general rule of thumb is to cut losers quickly. As far as Target profits go, many of my trades never reach their target, because often times I exit positions when they start to stall (significantly more often during morning trades). I exit many of these positions before the price ever reached it's target level, expected win, or stop loss price levels. Because of this, my overall win:loss ratio becomes skewed. However, when I compare my trades that reach or exceed their expected price levels, to those that fell to the stop loss levels (non-trailing stops) my win:loss ratio looks much more balanced.
I agree completely. Trading rules and risk management vary greatly over the different time frames for trading. Traders have to adjust accordingly if they expect to win. Thanks for the insight whitster. Good post.
so, one of my first rules is that many people will try to take narrow rulesets and think they apply across the board to all trading styles, modalities, markets, timeframe, etc.
that is absurd but constantly repeated.
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BLaH, BLAh, BLah...
Well, talking about risk management, how about the % you put in each trade? I know many people say you should put a low amount, like 2%. Now, I haven't read van Tharp's bible yet (I ordered it, together with other books), but it seems a bit crazy to me. Hell, 2% means that I'm busy with 50 different trades at the same time. And I wouldn't like to leave some money in the account.
Quote from andread:
Well, talking about risk management, how about the % you put in each trade? I know many people say you should put a low amount, like 2%. Now, I haven't read van Tharp's bible yet (I ordered it, together with other books), but it seems a bit crazy to me. Hell, 2% means that I'm busy with 50 different trades at the same time. And I wouldn't like to leave some money in the account.
Quote from jho:
2% is the amount at risk. For a $50,000 account, you wouldn't want to risk more than $1,000 per trade. So if you are stopped out of the position, you don't lose more than $1,000. Your actual position size will depend on where your stop is placed.
Quote from jho:
Are you a swing trader or a day trader? What is your average hold length?
If you are a beginner I think your risk per trade should be less than 1%. The goal is to stay in the game long enough to learn from your mistakes. Right now my risk per trade is around 0.15%.
You had mentioned that you trade breakouts and look for % Gainers from the Open.
What do you use to scan for these %Gainers?
"Anyway, what I noticed is that you didn't mention indicators like TRIN."
i use TRIN, TICK, A/D (breadth), sectors, tape, etc.
i personally don't use any LAGGING indicators for my intraday dow futures trading. i will use them on swing trading stocks and commodities and occasionaly for investing (i invest mostly off fundamentals. charts are secondary at best).
with very rare exceptions, TRIN means almost nothing in and of itself, but is a great overall way (when taken in concert with other market internals) to guage the character of buying or selling that is going on in the market.
i often look for divergence to help give me confluence for a trade OR OR OR (very important) when i have conflicting internals, it is often best to just PASS on a trade (if a trade is not a high probability trade - why take it?)
for example
if TRIN is trending lower and price is remaining in horizontal balance, i would be very hesitant about taking any short setup. the TRIN trending lower means market pressure is building up AND there is risk for shorts. again, TRIN in isolation doens't mean that much. in concert, it is a nice guage.
another thing i have noticed is that TRIN is completely useless in the first 1/2 hour of trading, basically (at leat for me) and on OEX day as well.
OEX day is weird in general
Quote from Vista:
You had mentioned that you trade breakouts and look for % Gainers from the Open.
What do you use to scan for these %Gainers?
Try running some screens with % +/- from the open. Then build from there... I'd get into some more detail, but I'm slightly intoxicated and there's a half-naked woman waiting for me in my bedroom... Probably more to come later....
Me: Screening Tools I use multiple screening criteria for multiple market directions, times of day, and types of trades. Some screening criteria is very simple, like Price between $X.xx and $YY.yy with Volume between W and Z; and some is a bit more complicated, like screening specific long-term technicals, intra-day technicals, and basic fundamentals of a company into one screen. What is the purpose? I have screens for up days, down days, sideways, choppy, etc. Morning, Lunch, Afternoon, etc. Short, Long, Short one related vessel, Long the other, etc... I highly suggest all intra-day traders learn about the basic fundamentals of companies, what their significance is, and learn the functions of long-term trading and investing. It will open doors to your understanding of what exactly is occurring intra-day and why. Investors and Institutions still control the markets intra-day... when traders learn that, light bulbs start to flicker...
I couldn't agree more. Excellent post.
Quote from whitster:
...i personally don't use any LAGGING indicators for my intraday dow futures trading. i will use them on swing trading stocks and commodities and occasionaly for investing (i invest mostly off fundamentals. charts are secondary at best).
with very rare exceptions, TRIN means almost nothing in and of itself, but is a great overall way (when taken in concert with other market internals) to guage the character of buying or selling that is going on in the market.
i often look for divergence to help give me confluence for a trade OR OR OR (very important) when i have conflicting internals, it is often best to just PASS on a trade (if a trade is not a high probability trade - why take it?)...
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Concerning high probability trades and passing. Why do you pass? Do you have a better trade? Or you just prefer to leave the money in the account and not risk it? Wouldn't it be better to just risk a small amount, maybe using tighter stops or taking a smaller win?
Thanks for starting this thread.
What timeframe charts do you trade with? 1 and 5 minutes chart? Thanks
Jeez, I can't believe a half-naked women was prioritized before my important question. Oh well, I'll be more specific this time. What software do you find to be the most efficient for scanning for %Gainers from the Open?
"Concerning high probability trades and passing. Why do you pass? Do you have a better trade? Or you just prefer to leave the money in the account and not risk it? Wouldn't it be better to just risk a small amount, maybe using tighter stops or taking a smaller win?"
my trading methodology when scalping index futures is primarily small targets (smaller than the risk in terms of stop distance) for first target with VERY high positive expectancy. I basically let my setups (i have 21) run a competition with each other. I keep the most successful ones, and the less successful ones are prone to elimination.
i want a setup to have, generally speaking, extra points/factors of agreement, because i know (based on extensive analysis via excel etc.) that when I have multiple confirming factors, that the trade is more likely to workout, even than the overall average.
my least successful setup "wins" 72% of the time. I prefer hi-prob setups because it basically eliminates drawdown to a large extent (when you are using 72% + positive expectancy AND 5+ trades a day, it is very rare to have a down day) suits my goal (for index futures scalping), which is income generation, NOT capital appreciation
with those goals in mind, capital preservation is key, since it is the capital that i use to generate income.
i simply want to, in general, be entering trades where i have just tons of stuff "on my side" and let the retail traders chase breakouts and enter low probability trades that grind their accounts into parking meter money.
sitting out the "iff'y" trades sometimes results in watching a setup that would have been a nice moneymaker, pass me by. oh well.
i simply want to listen to what the market tells me.
also, the VAST majority of my setups are of the "fade" variety. iow, i am rarely playing "breakouts" or trend following, etc. so... since most of these setups (not all. but most) capitalize on reversals, i am not going to enter a reversal when market internals tell me the price action is more likely not to reverse (like the TRIN example).
Both, and longer... it really depends on what specific time frame I'm looking at for a trade... I should mention that I also look at multiple time frames and candle increments for a lot of my trades as well, as it seems to provide a better gauge for what a stock or etf is doing by looking at five or six day/one hour charts along side the one and five minute charts.
Quote from billp:
Thanks for starting this thread.
What timeframe charts do you trade with? 1 and 5 minutes chart? Thanks
If you are a new trader, try Yahoo!'s Finance Stock Screener, it's simple to use and it's free (but it's not real time unless you give them $$$) Or try SmartMoney.com's (I'm pretty sure you have to pay first) If you're using a broker with real-time Level II software, you probably already have these same tools available to you through the broker's software. Or if you're using RealTick, or something like it, they'll probably have them as well.
Quote from Vista:
Jeez, I can't believe a half-naked women was prioritized before my important question. Oh well, I'll be more specific this time. What software do you find to be the most efficient for scanning for %Gainers from the Open?
Again, quality post. But I'm wondering, do you use 20+ setups for just intra-day trades, or is that from day, swing, short-term, and investments combined? Also, do you trade (intra-day) in one certain trading style with the same time frame and capital risk:reward expectancy, or do your setups and stops (etc.) change when the expected trade time (length of trade) or market direction changes? For example, do you use different trading styles at 1pm, than you do at 10am?
Quote from whitster:
...i want a setup to have, generally speaking, extra points/factors of agreement, because i know (based on extensive analysis via excel etc.) that when I have multiple confirming factors, that the trade is more likely to workout, even than the overall average...
...with those goals in mind, capital preservation is key, since it is the capital that i use to generate income.
i simply want to, in general, be entering trades where i have just tons of stuff "on my side" and let the retail traders chase breakouts and enter low probability trades that grind their accounts into parking meter money.
sitting out the "iff'y" trades sometimes results in watching a setup that would have been a nice moneymaker, pass me by. oh well.
i simply want to listen to what the market tells me...
... The best bet for trading the open is to know your platform intimately, and know how the markets function expertly. Very, very few new traders can do that.__________________
BLaH, BLAh, BLah...
Instead of trading at different times, I would like to talk about trading with different time frames. Stocks are heavily influenced by news and fundamentals, so I would say that the bigger your time frame is, the less important the technicals become. I see that when holding overnight fundamentals are alreay becoming quite important; this is probably not true when you trade within a few minutes.
I've been trying to look at longer term strategies (haven't started yet and already want to expand ). I see a lot of potential, but I find it quite hard. Screening becomes more complex, and to test you need weeks or monts, compared to a few days, or maybe hours.
Any experience with this?
Yes. Regarding my intra-day trading, depending on what the markets overall are doing, and what time of day it is, and what my expected trade time frame is, my intra-day trading styles vary greatly. However, in my investing and swing accounts, all of the things I look at to base my decisions on are really very similar. Yes, there are a lot of fundamentals that I look for in my investment accounts, but I still pay attention to the most important indicator, price. Volume doesn't matter as much as it does in intra-day trades, but I still look for some long-term patterns. When it comes to trading swing or investment accounts, matching all the variables together is even more important than with intra-day trades. Over-trading your investment accounts will kill you long-term growth potential because you're not letting your trades completely develop. Make sure before you pull the trigger in these accounts that you're ready to wait out the trade, things on daily charts take longer to develop, so don't base your buy (or sell) decisions based on just price or a news announcement alone.
Quote from andread:
Instead of trading at different times, I would like to talk about trading with different time frames. Stocks are heavily influenced by news and fundamentals, so I would say that the bigger your time frame is, the less important the technicals become. I see that when holding overnight fundamentals are alreay becoming quite important; this is probably not true when you trade within a few minutes.
I've been trying to look at longer term strategies (haven't started yet and already want to expand
Any experience with this?
__________________
BLaH, BLAh, BLah...
" Again, quality post. But I'm wondering, do you use 20+ setups for just intra-day trades,"
in regards to my futures trading (mostly YM but i do a little gold, oil and corn as well), i have about 22 setups (several "are similar enough to arguably be different versions of one setup. but there are 22 right now).
2 of those setups are overnight setups. all the rest are intraday.
it is totally dependant on market character, as to which i take.
i have one setup that i have not traded in over 2 months. others i might trade 4 times a day. it just depends on what the market is doing. there are setups for most market environments.
" or is that from day, swing, short-term, and investments combined?"
i use a much more fundamentals oriented approach to my longer term investments and stock trades. sometimes, i basically own't use ANY TA, other times, it is a combination, and rarely it is TA only.
like i bot UARM at IPO as an investment. that was 100% fundies.
CROX and HANS were some other nice investments that i banked off of, and were almost entirely fundies plays.
obviously, intraday scalping index futures, my setups are not fundamentals based
but for investments and longer term stuff i like to be contrarian and somewhat fundamentals based.
" Also, do you trade (intra-day) in one certain trading style with the same time frame and capital risk:reward expectancy, or do your setups and stops (etc.) change when the expected trade time (length of trade) or market direction changes? For example, do you use different trading styles at 1pm, than you do at 10am?"
my targets and stops are predetermined for each setup. they are based on the structure of the setup/and themarket i am trading.
i don't have different styles for time of day, but i do have differnet rules. like, there is one setup that i NEVER use within 1/2 hr of cash market close. why? because it doesn't work nearly as often. i am not "allowed " to use it then.
i am also much less likely to consider a "breakout style setup" (although i rarely trade breakouts anyways) during the "doldrums" hours of 11:30 am to 2:30 pm EST
"I'm curious because I trade early morning breakouts, as a retail trader, with very low win:loss percentages, but my trading style at noon or 1pm is not even remotely similar to what I'm trading at open."
i trade index futures, and i would say less than 5% of my trade volume is any sort of "breakout".
"What I preach about aligning the variables of a trade before pulling the trigger is not what I'm actually doing in the earliest minutes of the open (and how could I, when most technicals are completely out of whack because of the opening gaps, crazy volume, and the like?). However, what I've been trying to teach new and young traders is that the numbers are important in trading successfully, but not more so than understanding why exactly the market does what it does. I've NEVER recommended that a new trader start out trading morning breakouts/breakdowns because, in my opinion, they truly need a well lit trading environment to work in, and not a dimly lit basement with flickering light bulbs. As I've explained before, new traders need to focus on less volatile trades, with at least moderately longer trade times (unless it starts moving against them of course) so that they can develop a healthy understanding of the markets and why they work the way they do."
well yes. one fundamental difference betweenindex futures (or even corn, oil, gold, etc.) is that they are not closed all night. so, even though I consider cash close to cash open levels for "gap" purposes, etc. one can also look at the overnight session (and premarket indications of volume, instiotutional interest etc.) to get an idea of "do i fade the gap, stand aside, or go with it?"
i have an almost entirely quantitatively based decision matrix with hard #'s that answers these questions for me.
so, there is almost no subjectivity whatsoever, to early morning trades, only a decision (before i enter) as to which gap setup or early morning setup to use (i have 3 differnet version for example of one gap play, based upon the size i want to use, and target/stops i want to use)
"I'm not going to tell Vista that I think he shouldn't trade breakouts, but only because I'm not familiar with his experience level. He has been on ET since 2001, maybe he's just looking for some new alternate trading styles to explore. If that's the case, and he's well experienced in other trading styles, then have at it and ask away... If you (anyone) open trades in the first half hour, especially highly volatile ones, and then try to stay in that trade all day long, then you'll be losing a LOT of trades. I don't trade breakouts for very long. Win, Lose, or Draw I'm out in a matter of minutes, not hours. The problems that most (and by most, I mean MOST) beginners will likely encounter with them is that they can (and regularly do) move in the opposite direction than they were just headed, and when they do it happens very, very quickly. Trading multiple positions at the open (the uncharacteristically volatile ones) for a beginner is damn close to account suicide too. It truly is amazing how fast the gag reflex is in human beings. I've been trading the open for a while now, and my doctor claims I'm becoming one of the leading experts on Spontaneous Projectile Gag Reflex Syndrome ... The best bet for trading the open is to know your platform intimately, and know how the markets function expertly. Very, very few new traders can do that."
i realize the characters of indexes *(futures) are differnet from stocks. but i tend to avoid "breakouts" because i know how the institutions use them, which is primarily to get the retail trader into buying the daily high/low, which is *usually* the WORST time to enter long and short respectively.
i have to have some REALLY robust market internals to play a breakout ON the breakout (e.g. a buystop entry to go long). almost all my entries are limit orders either fading the market direction, OR buying a breakout on a pullback.
okay, so let's talk about TA and systems. In the longer term fundamentals seem to play a major role, but what about in the shorter term? I mean, obviously after the news is out, given the fundamentals, everything is left to the market, and then the only thing you can do is look at the charts. Still, if you look at a chart you can be much more precise if you know what is going on in the background. The same setup can have different outcomes depending on the situation of the company.
For this reason I would think that indices, futures and forex are probably easier and more effective to trade on a pure technical basis.
How different do you think a pure mechanical system can be, in terms of performance, in these different markets?
P.S. I appreciate you guys answering these questions. I would also like to encourage other people to join.
Thank you
Alright here is a PM from 2many, I was asking about bear markets.
In Bear markets I only take a certain number of hits (losses) before I call it a day. In a bull, I tend to keep going all day long. I have less patience in stock selection in a bull because the consequences tend to be less severe than in a bear. In a full bear market, I tend to trade ETFs long on the occasional upday, In a decent bull market though, I just throw capital around in a half dozen or so individual stocks and wait for one to move, then I exit the rest quickly and move that capital into the gaining position (often times plural). In a bear market, I implement more screening criteria, or squeeze specific criteria tighter for the purpose of shooting for a higher win %. In a good bull, I tend to shoot first, shoot later, then ask questions after shooting a third or fourth time. What was that- BAM!... Good bull markets are good for long side trades, because 6 or 7 out of 10 will make money, even if there was no particular reason to go long in the first place. Good bull? Flip a coin, you're odds are heads and tails both make money. Bull markets make everyone heroes, bear markets make us either broke or humbled.
I would like some more discussion on bear markets. I hear some traders say ohhh he made those gains in a bull market, he's no hero ... ok sure I understand but why can one not make good returns in a bear market. Is there a lot less opportunity? Less intra-day volatility? You say bear markets can kill traders, how so?(If he is just as comfortable going short as he is going long) What are the differences between bull and bear markets? What are some big obvious things you noticed and what are some small little details you observed?
great post
thank you for posting so much good information in one easy to read post.
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Trading is an Art. Expressive, Dynamic and Beautiful
Quote from 2manywhiners:
.... As I've explained before, new traders need to focus on less volatile trades, with at least moderately longer trade times (unless it starts moving against them of course) so that they can develop a healthy understanding of the markets and why they work the way they do.
[/B]
I'm sure I'll add some more to these subjects later, but for now... Well said. New traders take note, different trading setups for different market conditions is one thing books rarely mention. However, as whitster explained, trading styles that change with market conditions are very integral for many traders. Listen to what the market is telling you and make your trades accordingly.
Quote from whitster:
...i have about 22 setups... ...2 of those setups are overnight setups. all the rest are intraday...
...it is totally dependant on market character, as to which i take... ...others i might trade 4 times a day. it just depends on what the market is doing. there are setups for most market environments...
...my targets and stops are predetermined for each setup. they are based on the structure of the setup/and themarket i am trading.
i don't have different styles for time of day, but i do have differnet rules. like, there is one setup that i NEVER use within 1/2 hr of cash market close. why? because it doesn't work nearly as often. i am not "allowed " to use it then...
In regards to the first part of the post, yes this is part of what I try to explain when I talk about aligning the different variables. A well stated post andread. As far as purely mechanical rule-based trading goes, I'm probably the last person who should comment on their performance... I've never traded a mechanical, any-idiot-can-do-this, system. In the long-term, I don't think there is one that can consistently outperform discretionary trading. Mechanical systems can often times forget what truly moves prices... the herd's sentiment. Good post.
Quote from andread:
okay, so let's talk about TA and systems. In the longer term fundamentals seem to play a major role, but what about in the shorter term? I mean, obviously after the news is out, given the fundamentals, everything is left to the market, and then the only thing you can do is look at the charts. Still, if you look at a chart you can be much more precise if you know what is going on in the background. The same setup can have different outcomes depending on the situation of the company.
For this reason I would think that indices, futures and forex are probably easier and more effective to trade on a pure technical basis.
How different do you think a pure mechanical system can be, in terms of performance, in these different markets?
P.S. I appreciate you guys answering these questions. I would also like to encourage other people to join.
Thank you
I'd prefer to have some others join in on this topic, but I have a few things to add myself... "He's no hero": If a trader made a 70% net in 1999 or even 60% in 2003, one could say that "he's no hero" although I wouldn't... If a trader made (with a sizable account) 40% net in 2004 or 2005, he has some serious credibility though. Take a look at some NASDAQ charts from those years, you'll see what I'm talking about. On the flip, If a professional trader (with the ability to short multiple vessels) lost 40% or more during 00/01 or 2002 then he's a retard (this is arguable because in 01/02 everyone thought it was just a pullback for quite a while, so for arguments sake lets just say during the several month span of the biggest drops in the techs). Nobody is a hero while the trend is their friend, but when you outperform a trend (or perform well without one), that's something to be acknowledged and held in high regards when discussing one's ability.
Quote from jho:
I would like some more discussion on bear markets. I hear some traders say ohhh he made those gains in a bull market, he's no hero ... ok sure I understand but why can one not make good returns in a bear market. Is there a lot less opportunity? Less intra-day volatility? You say bear markets can kill traders, how so?(If he is just as comfortable going short as he is going long) What are the differences between bull and bear markets? What are some big obvious things you noticed and what are some small little details you observed?
You're welcome. (ego stroking is fun
Quote from dnaj65000:
thank you for posting so much good information in one easy to read post.
) Feel free to add or ask.For young traders (in my opinion) the best bet is to learn patience. Not just in the length of trade, but patience in stock selection, patience in market timing, patience in exiting trades, heck... patience with the learning process too. Overtrading is a common mistake made by young traders (and sometimes experienced ones too). The markets move very quickly (on good days anyway) but the ability to use good judgement and determine when to not trade is easily as important as what to do with a stock that is stuck in the mud.
Quote from billp:
Thanks for answering the previous question. Have another one.
You mentioned that traders need to hold onto their position unless it moves against them.
That's the difficult part. How do you determine that if the trade has not hit your stop loss yet? It could be just noise or it could be that one should really get out of one's position. Advise needed. Thanks
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BLaH, BLAh, BLah...
Thanks. What about for swing trade if it has not blown past your stop loss yet? Do you wait for at least 1 whole day? TIA
Quote from 2manywhiners:
To answer your specific question though, if you're holding a stock that is moving only a few pennies and/or see-sawing back and forth, then just get out of it... unless it's only been a few minutes and your expected trade time is hours. (New traders, write down the entry time if you have to, just don't make assumptions about how long you've been in a trade. When you're still green, twelve minute trades feel like hours.) When a position is/was just chopping around, look for something else... Can't find anything? Then don't trade anything. If a stock is approaching a stop loss, and is showing you little reason to stay in for a bounce back, then go ahead and exit. Just remember to exit when you're supposed to exit. Don't keep mental stops, you'll end up watching it blow right by them. Don't jump right back in after taking an exit from a losing position either, especially when it has yet to re-pass your first entry, or if you can't find any other quality setups. Don't overtrade. If you've made several trades outside of your target time-frame, whether you are up or down, then just sit back and watch what's happening and wait for the market to tell you what to do. Sometimes the market just keeps telling me to wait longer, and that's alright. It's okay to trade only a few hours of the day, just make sure that you're trading the good hours and not the bad... And don't use that last statement as an excuse to be lazy or slack off either. If you're not in a trade, do something constructive. Start screening for new positions, or run some laps, or post advice on ET...
It depends. If you've found a better trade, and the current one is stalling or slowly (steadily) moving against you, then I'd say yes... Just don't forget about PDT rules and what your broker does or doesn't allow for. Also take into account how long your time frame is, and whether or not you'd probably take a loss the next day to move on to a new trade. If you'd likely take on a new trade, then take that into consideration when making your decision... Just don't exit early regularly for the many reasons previously stated...
Quote from billp:
Thanks. What about for swing trade if it has not blown past your stop loss yet? Do you wait for at least 1 whole day? TIA
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BLaH, BLAh, BLah...
Too funny!
Thanks. One of my biggest problem when holding the stock overnight is tackling the 1st hour of trading the next day. 1st hour is usually more volatile and have a LARGER RANGE where support/resistance are being tested and gaps may occur.
If a stock gaps below/above a prominent support/resistance, I will know how to tackle it. The problem comes when it gaps/not gaps and trades in the middle of 'noise'. The problem is the 'noise' range may be a rather large one. Also, when price keeps going down (for example), it does not necessarily mean that we should exit our long position as it can then turn up again. The 'larger trading range' ie stop loss that we have to allocate to allow for this noise more often than not seems unjustified to me. Do you have any tips on how to handle the 1st hour of trading when you already have a position from yesterday? TIA
http://www.elitetrader.com/vb/showt...907#post1271907
Quote from davesaint86:
I was having the same problem. The stress was killing me. I've tried all kinds of systems and strategies. I found a systems I like now. Not get rich quick but it I'm making money now and sleeping well.
www:{spriestocks.com (Free trial with no credit card required)
Quote from davesaint86:
Not BS - SpireStocks works. Free 30day trial. No credit card needed. Trialed it in July paper trading. Started real-time on August 3. Gained 11% so far. Not a get quick rich system.
I don't usually hold positions just for overnights... Most of my overnight trades are several days long, so I tend to wait for a reason to exit when positions chop around inside of my stop and target range... That being said, maybe you should try to add more criteria before entering a trade, or adjust targets or stops... Patience is a virtue, and I'm tired. I'll get back to this one later... sorry.
Quote from billp:
Thanks. One of my biggest problem when holding the stock overnight is tackling the 1st hour of trading the next day. 1st hour is usually more volatile and have a LARGER RANGE where support/resistance are being tested and gaps may occur.
If a stock gaps below/above a prominent support/resistance, I will know how to tackle it. The problem comes when it gaps/not gaps and trades in the middle of 'noise'. The problem is the 'noise' range may be a rather large one. Also, when price keeps going down (for example), it does not necessarily mean that we should exit our long position as it can then turn up again. The 'larger trading range' ie stop loss that we have to allocate to allow for this noise more often than not seems unjustified to me. Do you have any tips on how to handle the 1st hour of trading when you already have a position from yesterday? TIA
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BLaH, BLAh, BLah...
PM to undisclosed ETer...
...It's unrelated to the last few posts, I just needed to park it somewhere...
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BLaH, BLAh, BLah...
The Sky is Falling... Futures Going To Get Killed Tonight!!! http://www.elitetrader.com/vb/showt...520#post1281520
Just because the ET (and other trading websites) consensus for Market Direction is often times decided by the Bulls, don't hesitate to go with your gut and prepare for the market to take a dive. The early bird gets ...Well... check out December 1st and the first four hours of the day... Just don't start listening to the Doomsday crowd regularly without your earplugs in.
Quote from 2manywhiners:
Actually, the sky is falling in half the US... (snow storms) I'm in one right now, and I'm surprised nobody on this thread mentioned the weather factor that everyone is worried about for retailers and the like... CNBC wouldn't shut up about it during OTM... That and the terror/jihad crap... I'm personally going to lay off the first five or ten minutes of the open, then I'll be waiting for the panic stricken stupid money holders (A fool and his money are lucky enough to get together in the first place) to start bailing out of positions... If we do see any significant drops (which I suspect we might) I'll be selling right along with the rest of the herd... Only difference is I'll be covering later, and they'll be kicking themselves...
Quote from 2manywhiners:
Kerkorian dumping all of his GM stock, NYSE's problems with order routing, NYSE volume mystery, terror threats against stock market platforms, British Airways (BAB) contamination problems, Wal-Mart reports a sales decline for the first time in 10 years, winter storms talk and the effect bad weather could have on retail, Dow's been on a 1999-style coke binge for the last few months, buy recommendations popping up all over the place for tech stocks...
...And I've been accused of being an über-Bull before...
Quote from 2manywhiners:
I vote for me... either way...
covered shorts and flat... I'm going to go shovel my driveway... And then burn money to stay warm...
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BLaH, BLAh, BLah...
Posting Live Trades... And Selling Systems http://www.elitetrader.com/vb/showt...479#post1284479
Quote from 2manywhiners:
Can't sleep, so I figured I'd humor ken and illiquid...
I'm fairly flat short & mid term, I've been taking profits since before Thanksgiving... Tomorrow Intra-day I'll be looking for PFE and possibly XLV shorts, depending on the overall market and sector directions. HHH and its underlying stocks are possible shorts. USO and OIH are long options for intra-day, but I'll probably wait for something else to pop-up on radar. I'm selling off HAL (at some point tomorrow) and adding to positions in DO (I was first in around $40, then started selling in May before my summer vacation, back in it mid-sixties and again at seventy) and GSF (those are long term though)... I trade breakouts at the open (not the big gaps, so quit laughing
12-04-06 10:25 AM EST; Quote from 2manywhiners:
ASCA, TTWO
shorted USO, out...
Quote from 2manywhiners:
I offer up my Ryan Leaf 1998 rookie card, and of course the lint from my left pocket and the old gum wrapper are still on the table... It's obvious that I really need this system, so that I can figure out the secret to trading...
...Because I was buying ASCA @ 31.72, then at 32.67... Out at 33.13/12...
...And TTWO @ 18.56 & 18.57, then at 19.17, then again at 19.44, and yet again at 20.02... Out at 20.09/08, then 20.05...
Now, those trades to you probably just look like the nickels in the Salvation Army donation pots at your local Dollar General (we all know you can't afford to shop at Target on your student male nursing budget
Selling a good idea is always much easier when it has already become realized, and has achieved some validity through the observation of past trades. Even then, system peddling will be met with skepticism. And rightly so. After all, if he makes so much money... why not just give it away?
Quote from 2manywhiners:
100% in five months is not impossible, just highly improbable for a new trader. I made (net) well over 20% in May. Do you remember what May looked like? Most of that came in a two week span to boot...
...Such a system is readily available (just not easy... LoL), and I give it away FOR FREE to those on ET who open their minds, and not their excessively large mouths...
...No we're not all born with fat accounts. In fact, I was born naked in a manger... Because I am the Son of God! (Why not make outlandish claims, after all you're making 100% and still only have $7k...) Do you really think that somebody just handed me a bunch of money and said "Go forth and Play?" No... I am self made, and still trading retail (technically speaking...)
...$XXX,xxx in 2005 and 2006... And I took the entire summer off from trading this year. I've been at this for a while now, and it is a lot more work than most beginners want to believe. It takes hard work and dedication. Unfortunately, trading as a career tends to lure in people who half-ass things part of the time, and completely slack off the rest of it.
I'm not saying that I know everything there is to know about trading, I don't because I'm still learning everyday, but if you want to get serious about this, trying to sell a system to ETers is not a great way to go about it... I've had my fun here, but its winding down (you can only kick someone so many times before you feel obligated to call an ambulance...
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BLaH, BLAh, BLah...
The best advice for a Prospective Trader (hint: Know when to fold 'em, Know when to walk away, Know when to run...) http://www.elitetrader.com/vb/showt...190#post1329190
Quote from 2manywhiners:
I had dinner with a friend of a friend recently, and I spoke to him and his son about what it takes to become a self-employed full-time home-office trader. His son missed the boat on Vet school, and has recently decided to use daddy's money to become a trader. Kid seemed bright, but a bit too naive and warped by mass media, i.e. he said not only Cramer's name a dozen times, but actually referred to Cramerica at one point... His ultimate goal is to start a hedge fund, but for now he's looking for an annual 50% to 75% or more return on Daddy's retirement savings, which is actually a fairly big number (upper 6's, but lower 6's for the first 12mo). When I told them both, after the kid's spiel, that I would give them the best advice anyone could ever give them, they were both fairly heated. "Don't walk away, Run!" I believe were my exact words, I kind of felt like an asshole. I remember when I first got into this career and how everyone was giving me the expert advice of "Don't walk away, Run!" whether they were actually an expert or not, and I remember the "I'll show them" mentality I had at the time. I almost felt bad, but then I recalled how everyone else actually was right, and how hard it was to admit defeat, as well as how long it took me to really start to figure things out. I took the hard path, and thus far I've surpassed even the most surreal expectations of even myself. I thought about that shit long and hard, how much shit I had to crawl through before I came out the other side still smelling like dung... I did at one point almost feel bad, but all I had to do was remind myself of the realities of trading and the failure rate for ventures like theirs, and that was all I needed to relieve my conscience.
Quote from 2manywhiners:
I spent the majority of dinner trying to ask questions that should have had an easy or fairly straight forward answer, but I was getting responses that were often unrelated to the questions I posed (I made the assumption that the answers were unknown, hence the rambling about something unrelated or already discussed). That and the growing attitudes led me to my decision to tell them exactly what I thought... Right, wrong, or indifferent. I still think I did the right thing.
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BLaH, BLAh, BLah...
Re: Trading Consultants
See page 10 for details about low-life spammers.
Quote from trade4living:
**** ******** specializes in Day/Prop Trading. We can help you in all aspects of trading...
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BLaH, BLAh, BLah...
Re: Re: Trading Consultants
So I clicked on the links to see what the douche bag was selling, and not surprisingly I found a website that just reeks of a bucket shop...
Quote from 2manywhiners:
See page 10 for details about low-life spammers.
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BLaH, BLAh, BLah...
One of the most informative threads on ET that I have come across.
Any advice for those who dabble in futures?
Yeah, don't walk away, RUN!!!
Quote from saxon22:
One of the most informative threads on ET that I have come across.
Any advice for those who dabble in futures?
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BLaH, BLAh, BLah...
NYSE vs. Nasdaq (my take as requested by PM)
In my opinion, there's no longer much of a difference between the two. Sure, you could point out two dozen stocks on the NYSE that act completely different than two dozen on the Nasdaq, but take into consideration that there's just as many NYSE stocks that act completely different from other NYSE stocks and vice-versa.
Low Volume, Low Volatility Stocks
New traders would probably do best trading them as opposed to the tweaked out crackhead stocks. You can watch patterns develop at a much slower pace, and adjust to the speed of the fast paced high-volume highly volatile stocks by slowly integrating them into you trading methods. I personally prefer stocks that run around like Jason Statham in Crank.
Cutting Losses After a Few Pennies
Don't do it. It's just my opinion, but if you took the time to read more than two of the pages in this thread, you probably shouldn't be chasing pennies or nickels... The introduction of decimalization to the stock markets killed the SOES bandits and their scalping of 1/8 and 1/4 points. If you're targeting 1/4s or 1/2s, but exiting trades after a couple pennies or a nickel then you're going to get shaken out of 90% of your trades. And that even includes the trades that would have gone a point or more too. If you're targeting nickels or less, then good luck is about the best response anyone will give you.
Scalping the Bid:Ask
Try it yourself if you refuse to listen to 99% of the traders out there who say scalping is dead... you'll eventually learn the hard way... Another Caution: avoid anyone wanting to sell you anything related to trades with target profits under a dime. This falls under the previous cautions. They're called 'arcades' or 'snake oil peddlers'. They're not quite as sophisticated as bucket shops and boiler rooms, but sometimes they can be even more tempting to new traders.
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bump.
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another bump.
Beginners: I'm not on ET very much anymore, but if you have questions post them on this thread or send jho a PM and ask him for his take. I'm too busy these days to even check my email, let alone throw pies at people on ET, but I wanted to give this thread another bump because I think it has some decent guidelines for young and new traders... And my opinion that you shouldn't take advice from people online as gospel, still stands. Regardless of who posted the advice, do your homework and research it yourself. Good Luck.
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Wow. That was a pretty good post. I think I'll pat myself on the back...
Quote from 2manywhiners:
Thanks for the support. I've been wanting to start a thread like it for a while now, I just kept putting it off.
As far as not using technicals goes, I just don't like using lagging indicators to make buying and selling decisions for intra-day trading. Swing positions and investments are different, but to me, making decisions based solely on old data is simply not efficient enough. Most of what I do in the morning is about finding breakouts, and those stocks tend to do things that most technical analysis can't explain. News, changes in fundamentals, or sector related occurrences often help to explain highly volatile swings. There is nothing wrong with trading purely based on technicals, I'm just not very successful at it.
How do I know what the market is telling me? Good question. First, the indices help show market direction. When multiple indices are trading in unison that is a good indicator of what individual stocks are likely to do, but checking an individual stock's related sector is still important too. News and an assortment of other variables come into play as well. Mostly like I try to explain in my posts regarding "forming a matrix" around trades.
How do I analyze volume? Well, if you're referring to the volume numbers on a Level II screen, I look at how much liquidity there is at the time the stock is on my screen and what it has been doing so far for the day. High volume (above its average daily volume) early in the trading day with little resistance almost always points to some kind of corresponding news, like merger rumors, earnings reports, pre-earnings hints, new technologies being unveiled by XYZ, CEO leaving the company, SEC investigations, etc, etc. Volume by itself says little, but it does help to point you in the direction you should be looking.
Price and Volume? Are usually the only technical indicators I look at. I've posted on the subject numerous times, I'm pretty sure I put a few in this thread too. Basically, KISS (Keep It Simple Stupid) really helps to cut down on confusion, and a bit of research into candle and volume patterns will do wonders for your trading, even if you use MAs or Bollingers etc.
Where does my edge come from? Two words. RISK. MANAGEMENT. I've posted numerous things on this subject before. Tomorrow I'll check what I've already posted in this thread and maybe I'll try to dig up some more. Basically risk management is the name of the game. I'd be willing to bet that with proper risk management, even a monkey could net positive returns (see Jim Cramer). I never double down either. Sure It'll work every time, and I'm not being sarcastic here, It really will work every single time, right up until the time where you blow an entire account (see Numerous Funds that doubled down on Enron and the like). Buy low, sell high is for adventure seekers. Trying to buy the bottoms and selling at the very tip of tops can kill an account when you're wrong. You can be right, and still lose money. Buying too early, or selling too early will drive a man crazy. Conversely, waiting too long and buying tops or selling bottoms is equally bad. Using market orders is not the end of the world. Using stops for a beginner is a must (I still use them). Trading is a numbers game (I know I've said that before) getting the numbers right and understanding exactly why you're in a trade, why it is you're buying, and why it is you're selling is key.
I have a philosophy. "I trade what moves best, and what moves best is always changing." Basically, don't be afraid to branch out. I know a lot of beginner books tell you to specialize, but trust me, no stock regularly has significant volatility and easily predictable moves. I screen stocks before (most) every trade. A lot of the time I'm trading stocks I'm not readily familiar with, and sometimes stocks I've never heard of. Just remember to do your homework, and the faster you get at research (with breakouts anyway) the better.
Good luck. Keep 'em coming.
Like I said, I'm not on very much anymore but I think this thread is about the only worthwhile contribution I've made to ET. So I'm going to periodically bump it so beginners can easily find useful guidelines and equally important warnings.__________________
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Scamming Scammers and the Scams They Sell http://www.elitetrader.com/vb/showt...494#post1651494
Investools, InvestTools, Invest Tools, etc... Is a ridiculously overpriced business model designed to Rip Off prospective beginners. These businesses' practices are shameful, and unfortunately, they exist in very large numbers... Such as WizeTrade and the like, but more appealing and less bucket-shop like.
Quote from 2manywhiners:
Admittedly, I didn't read every post in this thread, but I read enough... Here's my take on Investools:
I was recently asked by a friend of my family about how to get her money back from investools. I briefly told her that I honestly knew nothing about the company, but that if she feels she was scammed, that she should try to contact the FTC to file a complaint about the company. After that brief conversation, I had another conversation with her about the companies history with consumer complaints. IT IS BROAD. However, when I began digging into what little knowledge she was provided by the company in exchange for her money, it became clear (at least to me) that she will not be getting ANY money returned to her from Investools. She was provided with VERY BASIC knowledge of investing, and in return paid significantly more than she should have. Was she ripped off? In my opinion, VERY MUCH SO! But, that's just it, my opinion is that of a professional equities trader, not a consumer. Ma and Pa Smith from "Wherever, NY" didn't know anything at all about investing before going to Investools, and after spending all that money they seem to be very satisfied with their "ROI" that Investools supplied.
So, if you're interested in INTIMATELY learning how to become a successful investor, or more importantly a successful trader, then you should most definitely NOT invest in Investools. Instead, go to some of the TradersExpos (tradersexpo.com) and take the FREE seminars the first time. If you like what you see, then pay the $50-$500 for the multi-day seminars. From what I've read about the 2-5 hours of actual knowledge you receive in those Investools weekend seminars, they will not even compare to what you can get at the pay seminars from tradersexpo. Although the "mentors" running the individual seminars will usually plug their own books, it won't be a high-pressure sales tactic. The other thing you should consider, is that the authors who are there mentoring are proven traders and investors who took the time to WRITE A BOOK. That can't be said about Investools coaches. They get paid to teach, and they learn what they teach by going through an orientation through Investools. That orientation is designed to train them to teach paying customers the Investools source material, NOT how to make money through investing or trading. Think about it... First, though, you should pick up Introductory books for investing. Then graduate to DVDs. If you're not interested in becoming a statistic of a SCAM, then DON'T USE INVESTOOLS. Use your head instead.
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THE SKY IS FALLING!!! (again...) http://www.elitetrader.com/vb/showt...624#post1647624
Quote from 2manywhiners:
Bearish conditions? Maybe, but this is no 2000... The techs burst in the Qs was burning rocket fuel, when it ran out the burst affected unrelated parts of the markets. Look at the Dow, its quite a bit higher than in 2000. S&P is in the same area as in 2000. But the NASDAQ isn't even close to where it was, which is proof of what the problem was. An over-hyped tech market. Even if a sizable bear market were ahead, it wouldn't even resemble 2000... The most recent bubble was in the housing market, not tech stocks or oil or metals.
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Please tell me if this is Stupid http://www.elitetrader.com/vb/showt...062#post1629062
What do you think? Stupid, or not?
Quote from 2manywhiners:
Is this your trading Plan of Action?
You "specialize" in less than ten stocks, 90% of your trades come from these stocks, and usually from only one or two of them.
You only have one time frame for trading (ie 5min-30min).
You'd rather miss a trade because you couldn't get your limit order in fast enough, rather than pay an extra $0.01 or two on a market order.
You spend more on commissions in a week than you make in a month.
You trade from the long side on at least 9 out of 10 trades.
Your trading account has less than $30,000.
In overly bearish market conditions you trade less, yet remain long.
You know the name of Jim Cramer's book.
You paid over $1,000 for WizeTrade.
If so, then you are in a box. Congratulations.
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Poker vs Trading (again) http://www.elitetrader.com/vb/showt...506#post1646506
Fun. Yes, there is a magical feature called "Search"
Quote from 2manywhiners:
Trading is like playing Razz, 7card Stud, and Omaha...
Most of the amateurs involved have no clue what they're doing. They jump in head first, lose more than they can afford to, and then go complain about it on internet forums.
Quote from Don Bright:
LOL, certainly some validity to that.
Don
Quote from insaneinvestor:
PS there have been many posts like this - This site should really have a search feature to look for key words and phrases. It would prolly eliminate 1/2 the postings.
Quote from 2manywhiners:
Alas, a brilliant idea! In fact, so brilliant, that someone else thought of it first. Look at the top of the page, and to the right. This magic feature you seek is called "Search." It is quite a novel concept, and I think it will revolutionize the way people "surf" on the "intra-web."
Quote from insaneinvestor:
HAHAHAHAHAAH Oh my God! Don't I feel like the f**ing asshole.
well, it obviously needs to be more prevalent. (like in the top top center with everything else) HAhahahah
I bow to you sir.
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To Paper Trade, Or Not to Paper Trade...? http://www.elitetrader.com/vb/showt...154#post1652154 is that the question?
In regards to which broker to use for paper trading:
Quote from 2manywhiners:
Actually, there are quite a few. Most use delayed or historic data. There are a lot of brokers that allow you to use real-time data for paper trading if you have an account with the minimum balance, which is often less than $3k, but you'll have to dig a little because I pay absolutely no attention to paper trading...
Which brings me to my next piece of advice... paper trading is almost always seen as (obviously) the best way to get your feet wet as a beginner, but what most (all) new traders do not understand is that paper trading shelters your emotions and allows you to make decisions, often split-second decisions, with little or no consequence to the end result. In addition to inconsequential bad decision making, large wins based on questionable decisions will boost your ego to overloaded proportions (this isn't reserved for paper trading alone) and in the long run that can be very damaging to the young trader's psyche. My suggestion is that beginners take the appropriate amount of time to learn how the markets function intimately. That doesn't mean days or weeks, that means learn it part-time while keeping your day job. Most beginners DO NOT want to hear that, and in those numbers lies the answer to the question: "Why do so many traders fail?" ...Then, when you think you know what its all about (NOTE: you don't, and never truly will) go get your feet wet with small amounts of REAL money on the line. You won't make or lose very much, but its enough to add the type of emotions to the mix that you'll be encountering everyday of your career.
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Becoming a successful stock trader is very easy
You need to simply buy the stocks that go up consistantly
Stuff like AAPL MA GOOG RIMM BIDU EWZ FXI and so on..
Look for good fundamentals and strong buying momentum. A market cap larger than 10 billion is recommended.
You should hold on to your picks for a year or longer.
That seems more like becoming an investor.
Quote from stock_trad3r:
Becoming a successful stock trader is very easy...
...You should hold on to your picks for a year or longer.
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PM - Answers to a new trader's questions of which software to use, books that outline detailed strategies, how to find stocks that fit specific trading styles, and getting started in automation.
...To answer your questions though, Software bells and whistles are appealing, but most chart indicators are useless (for intra-day). Like MAs and bollingers and the like, they're all based on lagging data. That can be good for mid & long-term investing, but even then fundamentals are usually more important than the technicals. Like holding (long-term) a stock that is a large cap, but is still experiencing growth, has a low RSI, and is diversified into more than one sector or product would be much more ideal than buying a mid cap that is lacking growth, has a high RSI, and limited product lines. Even though the mid cap's Moving Average may be signaling a buy signal from a cross-over on a 200 day MA chart replete with Bollinger Band confirmation, the large cap with a low RSI and diversity is the superior choice (for the long-term). As far as buying short term (minutes or days/week) based on MAs or other lagging indicators, I highly suggest doing otherwise. I personally prefer using candlestick charts and reading nothing other than Price and Volume, at least for intra-day buying and selling. I have more detail on that in my thread "So you want to be a Stock Trader?" in the Career Trader section. (nice plug huh?)
There are books that will assist you in finding a strategy, but not too many that will give you monkey instructions on exactly what to do (as in so detailed even a monkey could do it). Most will gladly, and appropriately, help you find the trading style that is best suited to your personality, and then help you build your own strategies from there. None come to mind off the top of my head, but if you don't know very much at all about the rules of trading, check out David Nassar's Rules of the Trade at your local library. Most of it is just common sense (and useless to the experienced trader), but skim through it and see if anything catches your eye. You can read my review here:
http://www.elitetrader.com/bo/index...=66&CatID=1
As far as how to find stocks that fit your style or system, delve into the world of real-time Stock Screeners. I'd say it is more important to first expand your knowledge on how the stock market functions, but definitely brush up on what screeners can do. Ideas will flow.
As far as programming goes, I admit to possessing little knowledge on the subject. Before you plan to go automated, learn it manually and become profitable doing it the old way first.
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Money management, is this all you need? http://elitetrader.com/vb/showthrea...&threadid=98895
Quote from 2manywhiners:
ET. Same people. Same shit. Same tired old books in the "Books" section. Same pie throwing. Same same.
What's the point in posting anything of value on here? Seriously? I get as many PMs blasting me as I do PMs saying "I was digging up old threads and the 30 minutes it took me to read your 'So you want to be a stock trader' thread opened my eyes! Everything clicked and starting tomorrow I'm going to follow all of your advise to K.I.S.S. and take my first step to becoming successful.... By the way, what do you think of Stochastics and using 200 day Moving Averages for entry points for day trading and how do I scalp pennies and should I try to find a way to somehow incorporate Crop Circle Sightings into my trading methods? Super big thanks for the insight!"
What's the point?! Price movement, volume, market direction, blah, blah. Keep it simple and pull the trigger. You win. You lose. You have to be able to stomach this shit, or else you'll never make it. Some of my best trades I have made were Buying over-priced over-inflated stocks and riding them even higher. Because that's what everyone else was doing at the time. Or shorting into a bottom. Jesus. When market direction sucks, news sucks, short term fundamentals suck, and technicals suck (price and volume charts) it just makes sense sometimes to keep shorting even if it looks like the absolute bottom of a new bottom on a pretty chart with a couple of specks of green on the lower right side... Fuck your worries about entry points or exits. Look at the stock market like this: At one point in the future, Stock A is going to be trading at a higher price than it is right now, the same exact stock will also be trading at a lower price than it is right now. You don't have to predict what direction it will go... At some point in time, it will go both higher and lower than it is right now. Maybe 10 minutes from now it is lower, 10 years it is higher... the point is, know how long you will be holding it and cut it loose if it starts to go against you, vice versa get out while the gettin is still good when its in your favor. Ride the wins, cut the losers.
Money Management/Capital Preservation, Market Direction, Price, Volume, News?, Technical Screening, general Fundamental Breakdown... It's like Black Jack. The odds say your chance to win is about 50/50. But if you could add more chips after seeing your first card is a 10 while the dealer holds a 4, or take away some chips when you have a 4 and the dealer holds a 10, then there is no reason you should consistently lose.
And I'm drunk right now, so don't take any of this and go jump out of a perfectly good airplane thinking what I said is a parachute...
Cause it's probly more like a fanny pack with a pair of socks inside...
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Yesterday I posted a non-offensive reply to a thread about Jack Heresy's promotion of a website that is using his name to advertise their products. As far as I can tell the entire thread was deleted by a mod on ET instead of just locked down like normal, but either way my post was removed. In my post I stated that Newbs and young traders should never listen to a self-proclaimed guru without first questioning the logistics of the methods by which they trade. If not, then a fool and his money were lucky enough to get together in the first place... Jack and the other gurus make outlandish claims of consistent profits and daily % points, yet at least 95% of their followers never realize any significant gains while they rack up fees and loss after loss.
I believe everything a new or young trader needs to successfully start out trading the stock market (with short-term trades) is in this thread. No, there is no system or holy grail. No, not just any idiot can do it. No, I am not selling anything. Yes, I am all but done with ET. The site has looked the same since the first time I was on here in 2002. The books in the Books section never change. There are no useful screening tools or breaking news sections here. There are many more shit throwing contests on ET than discussions of any actual use to new traders... New traders can find much more useful tools, training, and community of traders by: a) using smart money, yahoo! pay services, seekingalpha, barchart com, your brokers software (use a name brokerage and know the platform intimately), and investopedia to answer questions. b) buy traders press DVDs and books, just make sure to not put too much stock into any one particular author or presentor, and don't rely too much on the so-easy-a-caveman-can-do-it technical tools and charting platforms they're sometimes promoting. c) visit the traders and forex expos in Vegas and Chicago and New York and do the seminars (pay and free) that make the most sense to you. Talk to as many people as you can, both vendors and other visitors and make sure to bring business cards and ask to swap emails with anyone you think actually knows more than you do or sems to know what they're talking about... then email them weekly and see if you can pry some knowledge or method details out of them.
Outside of that, just remember to look at everything objectively and examine the logistics of what you are being told/sold. Don't follow methods blindly. Question everything. Stay cool and calm in pressure situations. Formulate rules and follow them. And keep detailed notes on your trading and the results. Find your niche. Mine has always been morning breakouts and "narrow diversification" as explained in an earlier post in this thread. It works for me, maybe it does or doesn't work for you. Either way, find your own way. Good luck.
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2manyW,
Im sure you probably didnt know this but actually on the very first page of the "Spydertraders Jack Hersheys Futures" thread there are links to many pieces of info for people to do their due dilligence first, ranging from the terminology to concepts to just basic background info. Anyone who read that stuff and continued on would never been seen as following a guru blindly. And it cleary states that one should read all the associated links before moving on.
All the anti Jack people may have a point in terms of his communication skills and possible lack of manners but surely shouldnt argue that Spydertrader told people to follow the method blindly. The due dilligence was there from the start. If you liked what you saw, you proceeded. If not, then not much time was wasted
Quote from 2manywhiners:
Yesterday I posted a non-offensive reply to a thread about Jack Heresy's promotion of a website that is using his name to advertise their products. As far as I can tell the entire thread was deleted by a mod on ET instead of just locked down like normal, but either way my post was removed. In my post I stated that Newbs and young traders should never listen to a self-proclaimed guru without first questioning the logistics of the methods by which they trade. If not, then a fool and his money were lucky enough to get together in the first place... Jack and the other gurus make outlandish claims of consistent profits and daily % points, yet at least 95% of their followers never realize any significant gains while they rack up fees and loss after loss.
In my case, not much time was wasted. For others though, and you seem intelligent enough to understand what the purpose of this entire thread is for, I'm simply pointing out that following any guru or system of trading blindly is a bad idea. Not pointing any fingers at any particular guru or trading system/method here, but the more outlandish the claims the more skeptical young traders should be. I think most traders of any intelligence, and probably all successful traders, would agree with that statement.
Quote from The Swordsman:
2manyW,
Im sure you probably didnt know this but actually on the very first page of the "Spydertraders Jack Hersheys Futures" thread there are links to many pieces of info for people to do their due dilligence first, ranging from the terminology to concepts to just basic background info. Anyone who read that stuff and continued on would never been seen as following a guru blindly. And it cleary states that one should read all the associated links before moving on.
All the anti Jack people may have a point in terms of his communication skills and possible lack of manners but surely shouldnt argue that Spydertrader told people to follow the method blindly. The due dilligence was there from the start. If you liked what you saw, you proceeded. If not, then not much time was wasted
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How Long It Takes http://elitetrader.com/vb/showthrea...382#post1864382
Quote from 2manywhiners:
Two months is total bullshit. 5 years full-time is grossly over-estimated unless you're retarded... If you haven't started to seriously figure it out after 2 full-time years then you should reflect on whether or not this is even for you... But if you learn how the market works INTIMATELY by:
1) reading a lot of beginner books, buying beginner dvds, going to the trading expos
2) not buying into the hype of revolutionary "platforms" or "ta tools" or "trading systems" or "gurus"
3) taking notes on everything you've learned and formulating an idea of what type of trader/investor your personality is most suited to become, and what your trading styles should be
4) Opening a trading account with a reputable broker with a trading platform that is best suited to your trading style and watching the level 2 screens until your eyes are numb, learning the platform tools intimately (basket orders, trailing stops, screeners, news feeds, P&V charts, etc) and making small ACTUAL MONEY trades (like 5%, maybe 10%, of the size you'll eventually be trading) while recording every relevant piece of information on your results in a trading journal that you study religiously, as you tweek your style by constantly applying and re-applying changes based on what you're learning (by the way, try trading multiple strategies and numbers {at the same time} and see what works best in the different times of the day, days of the week, type of market, market direction, etc, etc)
Perfect practice makes perfect. Learn it the right way and you'll cut the learning curve in half.
Hint: Pay attention to the general fundamentals of the stocks you're trading short term and try filtering out those with poor fundamentals using screeners. %/$ gains in generally poor performers are typically just "noise", with the moves often reversing quickly or chopping around making short-term trades often pointless and/or randomly less predictable.
So you want to be a Stock Trader? http://elitetrader.com/vb/showthrea...&threadid=80319 (nice plug huh?)
All that being said, six months (of 18 hours a day of dedication to learning and understanding how it all functions) to two years (full-time) and you'll either be broke and on your way out or successful and on your way up. If you're still stuck somewhere in-between then perhaps it's time for some honest self reflection...
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To the career traders... How Long It Takes - http://elitetrader.com/vb/showthrea...147#post1873147
haha I posted the wrong url for my last post, whoops... Thanks for the PMs. If anybody has any other questions though, feel free to post them in this thread. How you crazy kids keep finding this thing in the search dungeon is beyond me. And the info on here for young/new traders doesn't really start to get relevant until page 2, in case you're seeing this thread for the first time...
Good advice for finding your own style and methods:
1) think for yourself and be logical.
2) act on it.
I'm thinking one of these days I'm going to put the stuff from this thread and a lot more helpful info into a pdf file kinda like "Anek's Holy Grail v 1.0" reference .doc file (http://www.elitetrader.com/vb/showt...596#post1871596) Not saying I agree whole heartedly with the AHG, just saying that the reference .doc setup for this thread would be pretty helpful...
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bump for shits n giggles
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Dow 30,000 baby!
Quote from 2manywhiners:
bump for shits n giggles
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BLaH, BLAh, BLah...
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