I'll tell you what's wrong with you

Discussion in 'Psychology' started by bbot23, Apr 14, 2011.

  1. bbot23


    You're not trading the right product. It's not that you lack discipline, focus, passion, money, or time. It's not that you make mistakes from time to time and have no "edge."

    The stock you're currently trading just sucks, and you keep going after it even when it doesn't put out, even when your signal told you to trade it YESTERDAY and not today, even when you lost money, even when there's no volume, even when it's the choppiest piece of crap you've ever laid your eyes on, even when you tell yourself it's the last time you're trading it.

    Do you know why I netted 4g's last month on EWJ over 3 trading days? Because there was an earthquake, a tsunami, and nuke alerts that made everyone run for it.

    Do you know why I netted 1500 on NSM last week's tuesday? Because there was good news on it and it was HOT.

    Do you know why I netted 2g's monday on LVLT? Because it was part of a buyout.

    There's plenty more of those, but what do those three have in common? news and VOLUME

    Do you know what I've lost since then? A lot! On mistakes! I panicked a bunch of times, made keystroke mistakes, only took 1 or 2 cent profits instead of 5, got shaken out here and here, didn't listen to myself, and yet what happened? I came out on top. Why? Because the instruments I used were amazing. Because any hesitation was quickly confirmed or disconfirmed. Because the stock I played could not be GAMED by some jerk-off with millions to play with when the stock trades ridiculously low volume. Because it was a short when it printed RED, a long when it printed GREEN. Because the L2 didn't fake me out at all.

    Oh I almost forgot. All of the above were day trades. I didn't give a damn WHAT news was on them. I just cared that there was something! Seriously, whatever you're doing, you're overthinking it.

    Anyway. Guess what I did after that? I didn't go back to those products!

    The difference between you and me is that I play stocks that don't bullshit. Your "stats" include a lot of unpredictable events like news and big ballers in Russia and China that manipulate prices to screw with algos and little dudes like you and me. You will get burned by situations like that, so avoid them. But when there's a train, you hop on it. I don't care if you're a sissy, if you make mistakes, if you miss the level, if you've lost on the stock before, if you pay crazy commission, if you're not sure on your technical analysis, or if you're the biggest amateur trader in your prop shop. The point is, you have to pick the right stock. The rest is easy.
  2. Roark


    How do you systematically find these products? Scan for 20X average volume or something?
  3. bbot23


    Just screen finviz for top volume and if there is a symbol in the top 20 that you don't recognize, check it out. I don't trade every day, I don't force trades.

    The point of this post was that it's not necessarily a specific formation and/or combination of signals that give you a statistical edge, which is then ruined by your lack of inexperience, intuition, mistake-making, selective trading, etc. It's that you don't even have the right product to begin with.

    Or put differently, the stuff I trade give me a, say, 80% success rate on my trades. If you count my mistakes, early outs, lack of getting in, psychological fear, bad averaging, etc, then maybe that success rate goes down to 55%. But it's still better than chance, and that's the most important thing.

    Apply your knowledge and inexperience to the right product. You will still profit.
  4. lynx


    Just curious, what would you do about EP? They were up 5.5% today with a volume of 25 million shares. I got that from the finviz top volume screen.

    There was news that they have decided to develop an oil field themselves, rather that than sell it. The price shot up but stopped at resistance so I would not really say that there is a strong technical case to buy there.

    Whe you run the finviz screen, do you go by top absolute volume or top relative volume?

  5. bbot23


    25mil is not insanely abnormal, and I only look for top absolute volume. EP had close to 1mil in the first 15 minutes, which is not special.

    Just don't force it. If the top volume before 10 is still Citigroup, Microsoft, Cisco, Intel, SPY, etc, then move on.

    The special thing about an abnormal volume leader for the day is that EVERYONE wants to trade it. So many institutions and investors are turning it over that technical indicators and traders with the power to manipulate the market are crushed under the volume and rendered meaningless. The only stuff that holds is reading the tape, and it's actually readable - unlike on stocks that print a lot of bogus stuff.

    And probably the best part is if you're on the wrong side, you will know it. You will be scared by the insane amount of prints going against you. It will spook you out because of how abnomal it is. We're ALL used to seeing the regular T&S flow of information at specific time periods of the day and specific L2 depth levels. Once the circumstances change, your psychological fear and excitement take over and you start relying on more primal instincts. Think of the time you got shaken out from some volume spike on a stock that was technically holding in your favor. It swipes 5 levels, triggers your out right under support, and then comes back to its level. The stocks I play don't even do that unless they are committed to that direction.

    The point is, you need to wake up every day, put on your big boy pants, and screen before going into a symbol. Don't just ask ourself which ones are clearing new 20-day highs, which ones are coming off a 5-minute bullish pennant, or which ones have strong fundamentals. If that's all you're doing, you're just selecting stocks based on YOUR criteria, not on the BEST criteria that's out there.

    And btw, the stuff I preach apply to short-term day trading, borderline scalping. Obviously if I'm playing stuff that trades over a 100mil, I can go in 10k shares and expect the market to stay unaffected. Leverage is important too.
  6. jokepie


    +1 and Thanks !
  7. lynx


    bbot23, thanks for the clarification.
  8. any other criteria besides UV?maybe one or two?SMAs, S/R, pullbacks or maybe reverse?
  9. newtoet


    Interesting thread. Would AGO yesterday (Friday) fit into your method? I traded that for a nice gain, and it seems to go along with what you are saying.
  10. Roark


    Pretty impressive volume spike in AGO:

    Volume: 25,090,837
    Avg Vol (3m): 3,168,400

    Up 24% on the day. Still didn't achieve the volume that SPY and C usually have. You would have had to buy at around 10 AM and sold about an hour later to make coin on the long side. It was mostly big gap up and then not much after that.
    #10     Apr 16, 2011