Doj: I actually have to be a little nice here b/c your mental game looks to be just a hair off. Maybe you can do a little meditation before Monday's session to bring you back into your zone? P.S. In spite of you being a filthy piece o' shite trader, I fully expect another winning streak from you. I look forward to next week's PNLs.
I received an inquiry today that got me thinking (it's OK for traders to think on weekends; just be careful about too much thinking while trading) and I want to post it and my reply because it helped me consolidate my plan for the coming week. *************** Q. I was wondering if you use a specific formula for trailing stops? Do you have a set profit target in mind when you enter a trade? A. I am a fairly new day trader and stops are still problematic for me (I gave up several hundred dollars in profits yesterday simply by moving tight hard stops to break even too quickly, and $500 more by not putting in my intended hard stop and using a mental stop instead on one of the fastest moving stocks there is). After carefully evaluating all my trades this year, I've determined that using a tight stop and leaving it in place until the trade moves at least half way to my intended target before moving it to break even should produce the strong consistent results I am accustomed to. The tight stop allows me to evaluate a re-entry on the trade if stopped out, without incurring the risk of larger losses. I just read in a trading book last night that many professional traders may exit several trades at or near break even before catching the nice runs. These are called "scratch trades". My growing experience has demonstrated the immense value of this approach. My trading style is counter-trend trading. Some heavy hitters scale into these sorts of trades even as the price runs against them. I've tried this method and my few large losses this year were a result of this method, though it was very often quite successful as well as long as the trade moves in your favor before the loss becomes too large. I very recently decided that a tight stop/re-evaluate method is more in my comfort zone, because of my small account size. Having to manage a large draw down is distracting to say the least, even if the eventual loss is small, or the trade becomes profitable. So this week my plan is to take strong setups, use a tight stop, leave the stop in place until the trade moves close to 50% of the way to my initial expected target. The stops I set are based on near term S/R levels (high or low of the day, or high/low of the last move). A break through these levels against the intended direction of my trade means the trade will very likely fail, so I'm comfortable with that stop as long as it doesn't violate my max loss for the trade. retire45 posted yesterday in his journal a question to ask: "Can my stop survive?" If the answer is yes, and you have a strong setup, put on the trade without hesitation. I have found that for me the best profit target is based on the price reaching the opposite end of the stochastic spectrum or reaching the trend line if I am trading against the overall trend. There are tons of strategies that work well and it's important to find the ones that let you trade in your comfort zone and allow you to manage risk easily and without emotion or rationalization.
No you are not the only one Doji I did that for a while when i learn to trade of PA, and when it comes to executing on a demo platform, it took me a few months, but i picked up a lot of bad habbits hehehe (and I would advice trading without loggin in chat) took a few months to shake them off, and build confidence to turn up the leverage, well.. good thing takes times you know
Thanks for posting that last one ND I was going to ask you the very same question Good information in that post. I have another question for you- what material did you read /study from when getting prepared for your trading and what books/ other materials would you recommend? It seems you do alot of studying/reading on trading and I'm wanting to do some more myself, so I'm wondering if you have any recommendations
QT, Here's my self-education in chronological order and it includes the most valuable books I've read: Feb-Apr 2008: Unemployed after sale of business, stumble into the idea of trading stocks to make money and have several successful swing trades, followed by some big draw downs that "come back" and make good money. This is hands down the worst thing that can happen to a new uneducated trader. Mar-May 2008: Learn about options from Etrade seminars, make incredible profits very quickly, then incur some big losses. Why? Because what happened from Fed-Apr taught me that "good" stocks always "come back". Until they don't. May-June 2008: Learn about stops from Etrade seminars. Read "The Market Guys' Five Points for Trading Success". Placed my first short trades (a quick day trade based on news, and a couple put option trades based on 52-week highs). Watched Oliver Velez' free webinar where he promotes his prop firm, but provides very intriguing day trading strategies based on candlestick analysis, S/R and retracements. Learn about candlesticks and paper-trade these strategies for a month. Read Josh Lukeman's "The Market Maker's Edge" July 2008: Start actually day trading. Day trading went well. Attempted some swing trades and options trades with poor risk management (even after reading Market Maker's Edge), and lost a bunch of money. August 2008: Discovered stochastics as an indicator and began studying them in real time while trading. October-November 2008: Hit a bottom, left with little confidence, and no other job prospects. Read Oliver Velez' "Tools & Tactics for the Master Day Trader". Decided it was "do or die" time. December-Present: Finally became profitable trading small size, exercising somewhat better risk management, and continually applying my hours of screen time to better and better pattern recognition. I still read a lot, just finished Mark Douglas' "Trading in the Zone" which is all psychology. I don't want to "overeducate" with every possible form of technical analysis, because I feel that I have solid strategies and risk control at this point. So my advice to new traders: Get hours and hours of screen time with a sim account before jumping in, and NEVER forget risk management comes first!
Thanks for the reply ND- very good info was Oliver Velez' webinar the source of your "learning about candlesticks" or did you read any other books on that subject? would you recommend all of the following books? Market maker's edge Trading in the zone Tools and Tactics which would you recommend the most? I'm going to order some new reading this week Speaking of SIM accounts- how does that work? I'd love to trade a sim account for awhile, but I'm not sure how you get it setup.. does Etrade just allow you to trade with fake money? I wonder if I call up Ameritrade if they do that..
QT, I would highly recommend all three books. I had just learned about candlesticks prior to the Velez webinar, but the webinar clarified my understanding hugely, helping me learn to read price action and crowd sentiment through candlesticks in real time. I can't emphasize real time enough, because analyzing a static chart at the end of the day is like Monday morning quarterbacking, IMHO. Each time-contrained candle lives an entire life before leaving its final footprint to interpret as the next time period begins. The 3-minute candle that has you searching for an entry might start by forming a big green bar (bullish), then abruptly pull back and through to leave a red shooting star (bearish). At the end of the day, all you see on the chart is a big red shooting star and the short setup seems totally obvious. Watching 6 charts in real time 5 days a week for 6.5 hours a day over the past 10 months still leaves me learning something new nearly EVERY DAY. As for sim trading, I found out last week that with Etrade I can only set up a watch list portfolio, where you buy or short the stocks you want on the list, then watch how they perform over time. There is no actual real time sim trading at all. However, they have a demo account you can trade futures, and I will soon know if it's real time or not, as I am getting it set up soon.
- $88 My goal for today was to take my setups and stick with my plans. I did not take more than a small portion of my setups, but did fairly well with discipline on my trades. Short CECO @ 24.45, overbought, SPY overbought, failure to make a new high. Stop @ HOD, covered @ 24.30 just as it touched oversold for a $78 gain. Short ORLY @ 34.20, overbought, SPY overbought, stop @ 34.35 just above previous resistance, hit with slippage for an $88 loss. Short ORLY @ 34.46, overbought, SPY overbought, stop @ 34.56 just above previous resistance, hit for a $48 loss. Short ORLY @ 34.63, overbought pullback from failure to make a new high, stop @ 34.76 above previous resistance. It pulled back to 34.53 and slowly moved up. I really had to sit on my hands to stop myself from scalping the $50 at oversold when it stalled, but the plan was for a stronger retracement of the climb, and I did not move my stop. Watched it climb back to 34.73, where it failed yet again to match the previous high, but then made a higher low @ 34.54. Normally I wouldâve taken off the trade there, but I wanted to try sticking with my stop, eventually hit for a $70 loss. Short DRI @ 34.86 overbought run up near HOD, SPY overbought, stop @ 34.96, just above previous resistance. Covered @ 34.68 for a $88 gain. I did not follow my exact trading tactic on this. Iâm supposed to move stop to b/e when the trade reaches halfway to my intended target and instead I covered there, leaving some nice profits on the table. Short DRI @ 34.82, stop @ 34.92 just above previous resistance, moved stop to b/e, stopped out b/e.
Wow day like this, when DOW is down over 300 points,a clear trending day,I thought today you will be making whole lot of dough.what happened!You got to increase # of shares girl,I know you can do it,to reach next level.