Thanks Sam. I've been thinking about trying a few different things in my journal over the past few days ever since I read your PM. On Monday or Tuesday, I may start posting real-time trades for breakouts/breakdowns and for fades (but for fades I'll probably have to post after I'm out of the trade). I'm also trying to figure out a way to post charts that aren't from my trading platform. Thanks for all of your help and keep kicking butt man!
Thanks for the kind words baller. Prior to what I'm focusing on now, my key focus was a market inefficiency play (which I can't name because it may return -- it's still around but occurs a lot less frequently) and selling volatility (fading momentum). $700-$2000 was a good day in 2009...not in 2008. The problem was that in one bad trade fading momentum, you can give back a few days profits if you're not careful, and I've had to learn that lesson a number of different times. Also, it's a very reactionary play. I need market participants to buy or sell a position inefficiently in order to have an OPPORTUNITY for a setup. Sometimes, days and days go by without a solid opportunity. It's a great style under the proper market conditions. When volatility returns it will be a great approach again. Hopefully I'll be proficient enough in my breakdown/breakout trading so that I'll be able to ride the short down and then reverse the position and get long -- but its difficult to shift that fast -- something to shoot for I guess. Anyway, I grew tired of watching stocks rally/selloff on news or because that particular industry group was in-play/not in-play -- and I had no strategy to trade that setup---left me feeling helpless. So I had to adapt or be resigned to daytrading fades for the rest of my career and I didn't/don't want that. If you know anything about fading stocks, you're probably familiar with the fact that, in most cases, going with the trend offers A LOT MORE profit potential and MUCH MORE opportunity to clearly define your risk prior to entering a trade. When playing reversals, 100% reversals are certainly NOT the norm. When you get those, enjoy them. Thanks.
http://www.traderslog.com/mark-douglas-video-interview/ Just watched this video. It had some very interesting nuggets of wisdom. Btw, I have no idea what wizetrade is and I am not promoting it. Also, I've never paper-traded, but Mark Douglas makes some great, great points. Here are the key things I got from the video: When the pattern presents itself, there's no point in analyzing, no point in judging, and there's no point in trying to figure out whether it's going to work or not. Trading errors come from believing that because the pattern is present, that it's going to give me a winning trade on THIS trade. This is a faulty expecation model. Does a pro think about whether the trade will work or not? No. He knows it's a waste of time. He focuses on risk. He also focuses on how he takes profits. When you play a slot machine, you enter into it with the belief that you know that you're participating in an event with a random outcome. As a result, your expectations about the outcome are in perfect alignment with the event itself. Most traders, if you compare trading to a slot machine, the difference would be, that with a slot machine, we can't play until we've accepted the risk. We actually have to remove our money from our pocket and put it in the slot machine or otherwise we can't play. That implies that we've accepted the risk. THEN we wait for the pattern to show up. If the pattern is a jackpot -- great. If not, then we may be willing to put another quarter in and try again. The difference with trading is that, the pattern shows up FIRST in the market. THEN, we have to put up our money -- meaning how much we are willing to risk to find out if it's going to work. BUT, most traders, because they analyze, they judge and build a case for the pattern being right, they talk themselves out of believing that the risk even exists. They don't truly accept the risk because they don't want to be wrong. They don't understand that this is not a right or wrong game. Trading a technical methodology or a technical pattern has nothing to do with being right or wrong. It's an odds game. You have to take every single trade because you don't know the sequence of wins & losses. You also have to identify your risk/trade. You also need a money management plan on how you take profits for winners. You must eliminate the potential that the market is going to disappoint you. Trading is a probability game --- if you're trading technically. There's nothing to think about (except risk and taking profits), you do not know the outcome. If you paper trade, you should view your paper trading results as a graphic representation of the mental skills that you DON'T have. View your paper trading account as where you COULD be if you had the mental skills that allow you to do exactly what you need to do without reservation, without hesitation, without fear --- with a carefree attitude. I certainly got a lot from his insight. I'm mostly familiar with all of these nuggets of wisdom except the last one regarding paper trading, but sometimes it helps to hear the same things presented in different ways.
Cancel that. I received some pretty good advice from another ET member, and I'm going to forgo the posting of real-time trades. Thanks.
This guy's results speak for themselves. In my gut I know he's right. A lot of exit rules that I have for losers work on a risk-management basis, but often these attempts to mitigate risk are just exits into noise during the prevailing trend. I know a number of millionaire traders...none of them use stops -- if anything they use alerts. No one wants a shitty market order fill. I use alerts. Exiting because of an alert is an entirely different thing than exiting because the price action says that I'M WRONG. This post may have little to no relevance to anyone reading this journal...its just a stream of consciousness for me to reference tomorrow morning when I review my charts. Yes -- I know it's Sunday.
I'm reposting some of this guy's posts here for myself. I find them to ring very true from what I've seen from the most successful guys around me.
+2487.73....pretty efficient day today...still making some poor mistakes, but I'll never be perfect. Surprisingly nice profits for what felt like a pretty slow day. The leading stocks performed well today. As long as the leaders stay strong and constructive, I don't see any reason why we should be pulling back. I missed out on that huge upmove in XOM...trades like that have huge position size/profit potential. I hope that some day soon I'll get to post that I made $10k+ just on intradays trades like that. The potential is certainly there. A few of the stocks that I'm going to be setting alerts for tomorrow are: ROVI OTEX JKS EMS CTSH AAPL TSL BHI CMI SLW ARW DECK COH ORCL BTU WLT may also offer some good trading tomorrow b/c that stock is so volatile and they missed on earnings in a large way. "Get really clear about what you want to change. Define what it is and then totally commit to doing it."
+$757.99 -- 63,600 shares Super duper slow day. Not much of note to trade today. Today was a down day in the market and my breakout filters were a lot more quiet than on up days. On days like today, I'm going to have to have some earnings plays and some short ideas coming into the day. There weren't many fade plays that are the type that I trade except for STEC, and I should've made a killing on that spike. Worst trade of the day: I shorted 1k GMCR @44.04s around 11:05 central and had temporary brain fart and didn't stick to my rules on exiting winners (why I choose to randomly break rules I don't know) and covered for a whole .24 cent gain. Horrible. Should've had more shares on that short and shouldn't have covered until around 43.45s. Poor job. If GMCR had retraced that entire move from yesterday, I wouldve been sick to my stomach that I botched that trade for no good reason at all. You can go broke booking profits if they're small. Best trade of the day: Not the most profitable, but the most intellectually rewarding -- TLCR My filters identified TLCR as it was falling -- I didn't see any news -- I saw that it was biotech and the price action looked like news, a big seller came in on the offer, the wide spread tightened for a few seconds, I got short 24.51s b/c it looked like news...it immediately spiked down and I covered 23.50s on the way back up from the low of the spike before the news came out. - almighty Fed minutes tomorrow - PPI, Core PPI, Housing Starts, Building Permits, and Oil #'s tomorrow -- someone on Fast Money said earlier this year to never be short oil (USO) this year -- only be long or flat oil ---> he's clearly been wrong on that call thus far - Overall market is still healthy as long as the leaders' action remains constructive (AAPL closed on highs). Volume today certainly didn't feel like there was any type of real distribution in leading stocks. Every time the market gets weak, it seems like the money rotates into a different sector. The upcoming economic data on Wed & Thurs may offer more insight as to whether this is going to be the beginning of a pullback or not. Today's action certainly isn't threatening the prevailing trend.
Great quote. I actually totally turned off my P&L to only focus on execution 2 days ago. I'm going to stick with it.
Sorry for not posting as much as usual, as I've really been focusing on the process of what I'm doing and focusing on automating as much of the process that I can. I think partial automation of my trend trading is about a month or so away, so for now I'll still be trading it 100% manually. I've been posting in the P&L thread, if you're interested in my P&L. Tomorrow morning should be interesting. I'm hoping this is the beginning of the long awaited minor correction that many PMs have been waiting for as an opportunity to put more capital to work. I stayed up a little later than usual to come up with a few short ideas besides the normal long ideas. Obvious long ideas are GLD SLV USO... If you're watching these charts, I suggest you go through each of them and look at the S/R trend lines to determine what you think the best entries will be...if it wasn't so late I'd do it here. Some of my long ideas are also possible short ideas depending on the price action tomorrow. Longs: ARUN BIDU FNSR NVDA WLL RVBD RL AMZN BBBY LVS WYNN COH CMG CTSH ORCL EOG LULU FTNT NTES APKT CRM SLW VXX Shorts: LULU SWKS RVBD AAPL OPEN EXPE LIZ STEC SYNT ENOC ACOM HOLI ARIA WLT Earnings watches (obviously this may change depending on how they report) - M (generally trades somewhat volatile on earnings); JASO & TSL (solar stocks have been on a run) âWhatever course you decide upon, there is always someone to tell you that you are wrong. There are always difficulties arising which tempt you to believe that your critics are right. To map out a course of action and follow it to an end requires courage.â R.W. Emerson