I am sitting near a veteran trader, but he is more of a scalper and tape reader. it seems like it is hard for him to articulate exactly what he is doing(prob the same for most traders like this). He has made it clear that reading the tape comes with time. I do devote a good period of the day looking at the level 2 etc. Currently I am just trading based off of the basics I was given during the first couple weeks of trading.(S/R, trend, volume etc.) Also incorporating stuff that I have noticed as I've been looking at things.
I replied to this question about two times, but it has yet to show up. For the first two weeks there was some training...now its more of I ask questions and get an answer to certain setups or how the market is playing out throughout the day. I do have a trader sitting 1 seat away from me. He is a scalper for the most part and trades using order flow. Like hes told me it takes time and there is only so much that he can articulate to me. The other head trader in the room is more of swing player so he just gives guidance on general things.
Here is an exercise: Post how you think you messed up the COST trade. If you get the answer right, copy that onto a sheet of paper, and put that sheet of paper right next to your keyboard tomorrow morning.
Is there a right answer lol...well I would say in this case I should've just moved the stop to breakeven or kept it where it was at considering it was so small. After that I could have trailed out the stop above any significant lows that were put in place....all in hindsight of course! Position management is something that would've definitely helped in this situation!
Shan, I've got some bad news for you. If you don't have a mentor your chances of success are close to zero. There is a huge difference between a veteran trader joining a prop firm and a newbie. I can tell you right now that when you work at one of the bigger prop firms in Chicago, they run you through the gauntlet training you. My buddies that work in NY for the large investment banks go through a comprehensive training program. This job is way too tough to sit a guy down and have him just wing it on his own. You need to sit next to a guy and work with him one on one. Even if you sit there silently next to him and not say a word, you will be able to pick up what he is doing. Seriously Shan, if I had to trade in NY without a mentor, I never would have made a dime. And I knew guys that never got into a a group and never had a mentor and they never got a check. Not a one of them.
Did anything change to make you close the COST trade? It never showed any weakness, except for relative weakness to the SPY. On that note, I haven't found any use trying to play off of stuff like that. It seems easiest and most effective to me to just trade what I see on the instrument I am watching.
Same goes for you. You need to sit and watch that guy trade. If you are not smart enough to figure out what he is doing, you are not going to figure out the markets. Watch his patterns, his behavior. This is how all children learn from the time they are born to the time they are 6. They watch and observe. Sure it takes time. But you need to utilize the resource you have sitting next to you. Look guys, me and many others here were blessed to learn how to trade in a really easy tape and still 90% of the guys at our firms failed. This is a tough tape. The stock game for the most part is over. You need a mentor now more then ever. You are NOT going to "figure" it out. That is not how trading works. The whole reason guys go to prop firms is to sit next to veteran traders. Don't squander that resource.
Look at the chart man. Reading the COST chart 6/20/11 Morning pennant formation breaks to the upside thanks to market up trend. During market pullback within trend, COST consolidates near highs. This is BULLISH. You did a good job, you bought a slight dip in COST, a stock presenting a bullish technical pattern and exhibiting decent relative strength. As the market made a NEW high, you had every reason to expect another push higher. Your first target is 99 cents, where you exit a portion. Your stop on the rest is 80 cents, as there is no reason the price should drop below 80. If it did, it would mean something has changed. Your entry was great, 80.66. Fantastic entry. Your stop should have been just below 80.60. If you can't risk 7 cents, you will never win this game. The chart GAVE you your stop, as clear as day. All you had to do, was set your stop, sit back and let the trade go. You had a 43:7 reward risk ratio, you had a bullish pattern, relative strength, an up trending market. You had absolutely NO reason to bail from your trade for a pathetic 3 cent profit. You will find it very hard to get good, QUICK moves in stocks that are out of play. In this case, you found a great trade in a stock that was not in play. COST's relative strength continued throughout the day. It made new highs while the market double topped and drifted lower / sideways. THAT, is how you read the tape. COST was actually a great setup you found. So, if you were to write a lesson about your COST trade on a sheet of paper, and place it next to your keyboard so that you do not repeat your mistake, what would you write on that sheet of paper? "Stay in your trade, and honor your stop, until the reasons that got you in the trade begin to crack"
I have access to one the head traders a couple seats from me. Throughout the day I ask him questions about trades and what hes watching etc. At the end of the day I usually ask questions a couple trades that I entered and he gives opinions on them! For the first couple weeks we spent a considerable period going over what he does and the setups that he looks for etc. I incorporate that stuff into my trading. They have told me that I need to develop my own style and find where I fit in. As of right now I don't know if I have the opportunity to do what you are suggesting. I'll see if I can push for some more one on one interaction! Appreciate the suggestions!