HELP: Beyond Intraday Trading

Discussion in 'Trading' started by Hitman, Sep 2, 2001.

  1. WarEagle

    WarEagle Moderator


    I have had a similar search, and always thought one day I would be trading many instruments, stocks, futures, forex, etc. Basically running my own global hedge fund, just not with anyone else's money. Who knows if it will ever happen. I just want to be really good at one thing now. But it is always good to set high goals.

    A few books I've read (well, except one) to add to your list:

    1) Fundamental Analysis. Personally I've never cared about fundamental analysis. But I suppose there is a place for it if you plan to take longer term positions. I don't know any good books for stocks, but if you want to learn about futures fundamentals, Jack Schwager (of Market Wizard fame) wrote "Schwager on Futures: Fundamental Analysis". This one I haven't read, but I've been told its quite thorough.

    2) Futures. My favorite book on futures is "The Futures Game: Who Wins, Who Loses, & Why" by Warwick, Tewels, and Jones. Its in its third edition I think, so its not brand new, but it covers most of the important topics regarding futures trading.

    3)Options. The extent of my options trading has been a few long positions and some covered calls. However, I found that Lawence McMillan's "McMillan on Options" and "Options as a Strategic Investement" seemed to be the Bible of options strategies. Someone with more options experience, like ArchAngel or zboy might have a better recommendation.

    4)Commodities. See the above entry for futures. By the way, commodities are not easier to trade than stocks, just different. Some may trend more or have other characteristics that you like and better fit your style. However, it is difficult to trade intraday, because many commodities are illiquid and heavily manipulated in the short term. I traded wheat for awhile and had my head handed to me. Of course, I've learned a lot more since that experience but have had no desire to try again. Many of the great commodity funds made their names because they caught the huge trends of the 1970's and 80's. They got lucky, and when the markets quit trending they got killed. Kinda like many EDAT traders have experienced the last year or so. But in a diversified portfolio, there is probably some room for it.

    5)Bonds. I agree with Hoyler. John Murphy's book really opened my eyes to how bonds and stocks interact with each other and their effects on other markets.

    6)Economy. Can't recommend any specific books here, but a basic macroeconomics textbook, while boring as heck (I can say that, it was my major in college :) ) will fill in many of the gaps that you wouldn't have without some econ coursework in college.

    7)Currencies. I've looked high and low for good books on currencies. The best I've found is "Trading in the Global Currency Markets" by Cornelius Luca. I don't have much to compare it to as there isn't much else out there. Also, I found the interviews in the Market Wizards books with the currency traders very informative.

    8) Business management. While I highly recommend getting a business degree, given your past history in college and your dislike for it, there are other sources. For the quick and dirty stuff, you should look at the Portable MBA series. There are books in this series on various topics from investment to business management. Every Barnes and Noble carries several of these in the business section.

    Finally, one last book I read recently that I found interesting in that it lays out a strategy for global investing (when you finally have the REALLY BIG BUCKS to move around) is "The Hedge Fund Edge" by Mark Boucher. I believe he runs a hedge fund and gives a lot of insight into models he uses for allocating his capital around the globe. He uses it all...equities, bonds, currencies, futures...the ultimate trader heaven.

    Best of luck to you in what will be a very enlightening pursuit.

    Hope this helps,

    #11     Sep 3, 2001
  2. Hitman..

    i think i understand how you feel.. one of the most difficult decisions of my life was when i made the decision not to go to college.. logically i knew what i wanted to accomplish and knew i didnt need to buy a college education to do it.. emotionally, i felt alot of pressure from society and it was difficult to watch everyone else completing advanced degrees while i sort of did my own thing.. i questioned myself a thousand times.. i think in the beginning a big part of what pushed me to excel in my work as a salesman was a fear of having made the wrong choice.. i needed to succeed to prove my worth to my friends, my family and myself.. the problem that i kept having was that every time i would have a small victory i would rationalize it or in some way diminish its importance.. but every time something would go wrong, i would really let myself get beat up over it.. after a few years of working really hard and not getting very far, i went to hear Shad Helmsetter speak at a conference.. afterward i bought his book "What to say when you talk to yourself".. that book taught me how to change certain destructive habits.. and the techniques he teaches helped me to become more consistent and focused as a salesman.. once i learned to stop beating myself up, i found that my motivation for working progressively changed.. i went from being motivated by a fear of failure to being motivated by the pleasure of doing something well.. and over the next couple of years my ability improved tremendously because i was doing something that i was good at and i was motivated to constantly look for a better way to do it..

    now im 27.. most of my peers have been to college and some of them graduate school.. how many of them could stop what they are doing now and "fall back" on a second profession that would pay them 100k a year?.. ive been able to volunteer many of my summers in other countries working with disadvantaged people including helping to construct two orphanages for AIDS orphans, one in Malawi and one in Mozambique.. last year i had the pleasure of teaching english to second graders for 2 months in China.. how many of my peers who went to college have been able to experience so many other cultures and meet so many fascinating people?.. most of them would probably like to but cant because of the debt they acquired going to school.. im not against college at all if thats what someone wants to do.. but i have no regrets.. well, except college would have been a great place to meet women =)

    anyway.. schools dont have a monopoly on education.. obviously, you are working hard to gather the appropriate information on trading.. i encourage you to also spend some time to figure out exactly what it is that motivates you.. and check out some psychology books that can help you understand yourself better.. your future is extremely bright.. the best years of your life are ahead of you.. anything is possible.. anything..

    #12     Sep 3, 2001
  3. Atlantic


    i guess for many traders there will come the time, when one asks himself about all the sense of what he is doing.

    i mean - you sit in front of your screen all day long - you're buying, you're selling - and even if you are doing well sooner or later there will come the day when you recognize that there has to be something else.

    that's for sure the reason why some famous traders engage in - or even create their own charity projects (think about soros for example).

    trading for me makes sense in many ways:

    1. you are a part of global economy like anyone else. traders add liquidity to the markets - without short term traders the markets would not work.

    2. you can make a good income if you are good in what you're doing (in fact i myself am not that far - but i'm on the way ...)

    3. you LEARN!! you learn what really goes on out there. if you are a trader and make a living with it - what's the problem? going to college may be great - but even if you made your mba doesn't necessarily mean you are more of use for anybody.

    4. as mentioned - if you are that good as a trader one day you will have the opportunity and also the wish to help somebody who wasn' t that lucky.

    overall i guess becoming and being a good trader can be a way to create a VERY useful and happy life in many ways.
    #13     Sep 3, 2001
  4. Hitman,

    My advice is simple. Keep at what you are doing until you are generating consistently profitable days (even if that only means a $1 profit). Try and get 70% of your days at breakeven or in profits. And try to keep your 30% of losing days to smaller losses than your winning days.

    Some days will clearly be untradeable. Stay in cash on such days, rather than turning such days into loss-making days.

    Once you have reached consistent profitability, simply step up your share size.

    The main thing is to keep doing what you have been doing. Just get good at one thing and let it be your bread and butter.
    #14     Sep 3, 2001
  5. @ Hitman

    Knowledge is nothing without the skills to implement this knowledge.
    Skills come only from experience, experience comes from doing - not from studying alone.

    What will you try to accomplish with your quest ? Being a financial wizard ? Do you really think , knowing all the financial backgrounds of companies will help you to become a better trader ?

    Do you want to be among the ranks of those thousands of blue-sky fund-managers and analysts which lost gadzillions of their clients money in a few couple of months, although they might be among the brightest minds in the financial community ?

    Remember 2 years ago the huge hedgefund desaster ? This fund was managed by 2 or 3 nobel-price honored financial masterminds. But still, in the course of 1 - 2 years, they lost billions of $ in the markets. Guess who took all that money ? Most probably clever traders who where able to read the markets correctly, instead of trying out theories.

    Think about the goals you had just 2 months ago. You wanted to be in the 10 percentile rank of the top traders, as I recall correctly.

    Consider you would be there already and make 1 Mio bucks a year, would you even think for one second about all that what you've listed here ? I guess not.

    Take 1 step at a time and don't let a frustrating month ( at the age of 22 ! ) carry all your goals away.

    Don't bother about missed opportunities or what other people may think about traders.
    Just keep on trying to become a top trader - think you're on good way - but, as with every tough job, it takes some time to learn.

    No one becomes a specialist in what he does with just a few months of experience. Learn to survive during the hard times and bring in your havest in better times - which will inevitably come sooner or later.

    Keep you head up.
    #15     Sep 3, 2001
  6. tradex21


    MICHAELDAY AMEN AMEN This guy (Hitman) is just tearing his guts out over this crap. The Big Money Is made in the Big Leveraged Move. I think he needs to give Crude Oil, Bond, Currency, Sugar futures a go. The era of the intraday stock move for .18 cents is coming to an end. These new rules are totally going devastate volume etc. Wake up and smell the coffee.:cool:
    #16     Sep 3, 2001
  7. Hitman

    Take a look at your journal (I guess you posted it here)

    when did you break your rules? Take a good look.

    You are letting one bad month get to you. This isn't how to trade. Keep your losers small and let your winners grow. This is the best time to learn, as a trader we learn from our losses.

    Did you take trades that weren't your normal signals?

    Did you take bigger positions than what you are used to?

    Did you hold on to a loser longer than you should a few times?

    The losses will keep happening until you do this review. It''s the tuition of Wall Street and it will repeat itself each time you make a mistake until you have fully grasped the concept of what the market was trying to teach you.

    #17     Sep 3, 2001
  8. Rigel


    I think I have noticed a pattern in your posts. Maybe. Both of your loosing streaks seemed to be preceeded by a change in your trading style. During the first streak you said something like "I quit using bullets, I don't know why, but it's been downhill ever since". You started using them again started to be profitable again. Preceeding the second streak you started using Bollinger bands. Maybe there are some fear and/or greed issues involved.
    #18     Sep 3, 2001
  9. dozu888


    I agree.. It's too hard to do intraday stocks now. Again come to my previous post on this topic about real supply demand, to summarize my theory:

    Think of a market as a pond with a bunch of fish in it. You got big, medium and small fish. Big fish (mutual funds) make money by fundamental research, sector rotation etc, they create waves of momentum in the pond. The medium fish (hedgies) make money by riding on waves created by the big fish, through arbitrage etc. And the small fish (daytraders) make money by riding the wave created by both the big and medium fish.

    OK, take a look at, and look at their published stats of daily volume, their top 10 frequently make 10-20% of a stock's volume traded that day on Nasdaq, plus all the other pro firms, remote outfits and individul home based traders, I would estimate at least 50% of the hottest nasdaq stock volume is done by small fish. Now that is NOT a good odds, as all the small fish try to ride the same wave, you got tough competition for executions and easier wiggle-jiggle by market makers.

    As I mentioned in the previous post, in Forex only 7% is done by small investors. So you get the picture. I am sure there are plenty of other instruments have a much more decent big/small fish ratio than stocks.

    From another angle, just look at all the commercials pushing daytrading firms, software, hardware, seminars, books to the stock traders (lots of the pushing is shamelessly done on this site). In comparison, the amout of "pushing" for commodities and currencies seems still in it's early stage.
    #19     Sep 3, 2001
  10. Hitman,

    Not to forget, you always pay some tuition for learning new stuff.
    You were using BB bands for some of you trades. This is perfectly normal. Everytime you learn and use some new strategy, you tend explore the good and bad of it.

    I almost never trade NYSE until i read about the GNP and tape reading post by P2. So far I been able to benefit from tape reading on NYSE.

    Built up you confidence, once you are very confident, increase the size like candletrader, or p2. That is where the big money is.

    Personally I sometime trade few Ks shares of low volume stock.
    e.g last friday, one point i was holding 4k CECO.

    Don't get discourage by just 1 bad frustrating month.
    #20     Sep 3, 2001