I have to agree with BROTHER Daniel on this one to a great degree. Speaking for myself and many other traders (Brethren) I have worked along side of, at the end of the year, the difference between a good year and a not so good year boils down to really a handful of days. Take out your worst (for example) 7-10 days, or your best 7-10 days, and it is day and night. Of course, this is for much more a truism for us "non-scalper" style traders. In the environment we have been stuck in now for a long while, I find that even I, a "position builder" style trader have had to adjust to try and eek out a few bucks on a more consistent basis, like BROTHER Candle implies is his method. But over the years, it has been more feast or famine on a day to day basis. Truly, if I could have just been able to take my one best day of each month of the past 8 years I have been "daytrading" (overnighting mostly), I would have cleared more than I did overall. So obviously, there is not a lot of room given to miss the great opportunities. Each of us has our own style. For me, it was the big swings. Each day has a great impact on the year. This style definitely NOT recommended for the self- funded trade from home guys. But as a firm trader, this is what worked for me and my "unindicted coconspirators". Win big, lose big, and be right just a fraction more frequently than wrong. Probably not the way to trade right now, (and I do not). But it was more fun and more exciting when that approach was feasible. Hope those days return before I am too old to push the buttons. And of course I hope I have the buying power to take advantage if those times do return. So I think Dan's point is well taken. While these days I (for all practical purposes...everything is relative) no longer "swing for the fences", it is important to grab the rare opportunities...to step it up relative to the norm..... when they present themselves. On Thursday, I found myself pretty much frozen out waiting for a significant dip that just never came. So in the last hour I had to do what I do in those situations. Start nibbling on the long side. (Usually this in itself will cause a dip.....timing is everything). But at some point you have to "get on the train". As it worked out, I just kept adding and adding. Very important to take advantage of a good mark. So even though I was very late to the party, I was still able to capitalize on the day. It is crucial to keep in mind that when you have a very good mark, it is time to add. Particularly in the last hour or less of the day. You have room to get out if the momentum dies, or even if there is a reversal. Of course many will disagree. They will grab the good mark and sell into strength. Which is what I would also do early in the day. But the closing hour is a different animal. We have not seen this kind of close in a long time, so caution and a great degree of healthy doubt prevented me from really loading the boat as I would have in an up trending market, still, since this adding to winners in the last hour is my consistent strategy, I was able to capitalize at least enough to have a far better than average day (average over the past few months). Again, as Mark Douglas said in "Trading in the Zone" you need to be fearless (as opposed to reckless). So a good mark allows this. These are opportunities. Recognize them, and cash in on them. They aren't that common these days. A rule of thumb for us who have been together for years is a 1% mark is a green flag. Always add to to this kind of unrealized profit. Because a 1% mark is clearly only going to be seen when we are in a very strong (or weak on the short side) momentum situation. Golden opportunities. Peace, rs7
RS7, I take your points... on obvious, big days, such as Thursday, I cash out very nicely for 5 figures by doing size for points across several issues simultaneously (foot kept on the pedal cos the day has already shown its a big day)... but such days are rare... what keeps me in the game for the long-run is day-on-day consistency... on less obvious days, I may take a dime in large size (several times in the course of the day), but then see it run a further 2 bucks without me... but that's just part of the game and ya can't win em all... but at least when I am taking a dime, I am doing so with a greater degree of certainty than if I was swinging the fences for a buck or two... on balance, I suppose I prefer to keep my capital exposed to the whims and fancies of Mother Market for as short a time as possible, unless Mother Market is telling me she is feeling hot (like she was on Thursday)... But, hey... there are many ways to skin a cat and end up with the same pound of flesh... Just my 2 cents...
Brother Candle....I agree. And I tried to make it clear that I thought Thursday was an aberration in the environment we have been in. I hope I was not unclear on this. I was really trying to put the day into a perspective of what has worked over the years. With the uncertainty of things as they are now, I do NOT recommend going balls to the wall even on a day like Thursday. Because we just can't "trust" the market to follow through. My post was more of an allusion to my overall approach. Not my more tentative (cautious, reasonable, level-headed....pick your term) way of trading in this environment. Obviously we are in an environment now where anything can happen. One word of news about Iraq, or Al Qaeda for example, can change things instantly. The world of trading like the world on the whole is a far different place since 9/11. Or at least we are AWARE that it is. So this awareness makes it all the more difficult to truly trade looking for the big scores. Grinding it out is what we need to do overall to stay in the game. I hope that I made this clear...if not in the last post, then in this one. There are never "sure thing" situations. But my point was pretty much to not trade "scared" when you have a good mark.....a nice "cushion" is IMO something to be exploited. Peace unto you, my Brother Candle. And I admire your discipline to remain detached and consistent. I myself have had to "re-learn" how to trade in these more recent times. It took me a while to adapt. Believe me, I lost a bundle during the time I did not adjust my style. And it has been a long haul to dig out of a hole I dug very fast. As has been said to me, (by my firm....it's their money) I was given a bulldozer to dig the hole and a teaspoon to fill it. We ALL had to learn to trade smaller size, smaller expectations (profit targets), etc. Again, Peace Brother Candle (and to all our Brethren) (keep up the good posts Candle Man, and keep the polls coming) rs7
I know I am quoting you a bit out of context here. But still, I will always believe in letting winners run. Or more appropriately in todays market, keeping a position that you have no reason to exit. If you exit a trade that, if you were not already in, and would think of getting into at the very time you are getting out (booking a profit), I will have to say this is not a great strategy. I am NOT saying you are doing this. I have already said I quote you here out of context. My point here is to make clear to less experienced traders than yourself, the simple concept that just as you should have a reason to enter a trade, you should have a reason to exit one. In your case, perhaps a target profit is a reason. I can't argue against this. I just don't personally use targets of a dime (on listed stocks particularly), because between the commissions and risk of a poor fill make a dime a bit tight. But that is just a personal thing. There is NEVER an argument to be made against making money. It is just a matter of style. Peace, rs7
Dearest Brother rs7, Again I take on board your points, my brother... on the highlighted quote above, I suppose it depends on your size... if you are doing large size (a line of 3000 - 10,000+ shares) on a liquid issue, commissions don't impact on per trade expectancy in a way that they would do on smaller size... in any case, it is my firm view that the scalping that I allude to cannot feasibly work for smaller size, given the less than desirable interactions of hit rate and commissions which combine to produce a meager (if at all) positive statistical per trade expectancy... With the loving and fraternal warmth that can only be felt between brothers, Candle
if you're paying the same per share rate, then commissions impact just as much. unless you have a commission cap.
I think we need to keep things in perspective here. "Easy" and "Pay Day" is very subjective and is determined by the type of style, system, etc that a trader 'employs'. Objectively speaking -- a trend day higher with that much force had no choice but to hurt the majority of players, for that is the nature of a surprise side romp that runs into the close without ever giving much back. Majority was stuck on wrong side Thursday and a great number of 'disbelievers' were adding fuel to the fire in the late afternoon. If it were a 'pay day' or 'easy' day for the majority then it would never have happened...
... yes, if you are paying the same share rate across your entire size... but if the rate drops with size OR if you pay a fixed commission (irrespective of size), the advantage to size kicks in...
Agree. No such thing as "easy". Yet when we get in a trend, it becomes "easier" in that consistency works. Whatever the trend may be. If we had a long period of anything, trading would be easier. This has not been the case at all. Was it ever easy? I think when Dell and AOL and MSFT and INTC and CSCO, etc. went up virtually every day, yes, it was relatively "easy". Certainly "easier". When IOMG went up every day (and it did for a while), that made life "easy" when I could SOES it. Ah, such nice memories! To me, recognizing repetitive behavior in the market is the most valuable thing as far as making things "easy". But recently, every day is unique. We are just sort of bouncing around in a narrow range. Even this in theory could be "easy" if you noticed that down mornings become up afternoons, etc. In other words, anything that happens more often than it does not. But I haven't noticed anything at all happening consistently enough to build positions on. So here, I agree with Brother Candle and the rest of the scalpers, of which I was never one, but recently have had to resort to. The only thing that seems (as always) to be consistent, is to short sudden run ups in weak stocks (or indices, or futures, or whatever you trade), and to buy after sudden and severe dips in strong (fill in the blank). We can almost sort of KNOW if we buy into up movement, we are going to lose. So it makes sense to short where you know you would lose if you were to buy. While I am not that nimble to trade this way (getting used to it slowly....an old dog "learning" new tricks that I always knew but didn't fit into my style), it is interesting to see how, for example, Nitro is in and out of a position faster than I even can fill in my order entry field. A big advantage of trading one instrument like he does. I trade individual issues. So while I can load a trade, and I do....I always, for example have MSFT and INTC loaded into a montage window, if I want to do an issue that stands out that I am not already prepared to do, I don't have the time to react as fast as Nitro can with his minis. So for now, I guess those quick little scalps are what is working best. Peace, rs7