Ok, Im just about ready for to hit the sack so I wont get too much done here tonight, but starting tomorrow I will start to post educational material here on this thread for people. Now that Neo-the-geo has exposed me as "the biggest fraud" I might as well try to sucker more of you poor folks in. (I always wanted to be the biggest!! Do I get a prize?) Brandon
I've made this point a number of times both here and in the chatroom, that its important for a trader to know the difference between a trend and a range. Not only that, but know how to trade in either, and realize that a trend is not a range and a range is not a trend. This is an older example of a range bound trade (from early Dec) but the concept is valid and you could have applied it today..Im just too lazy to make a chart. You can see on the 120 minute chart that the range was unable to break, so thats the most important thing..we are still in a range..and knowing that you will look for something to tell you to short it because we are at the top of the range. Looking at the 15 and 30 minute charts, they are both saying the same thing..very big run up (so at least a rest) and to the top of its band (avg range). Now looking over at the two minute chart, in the circled area you can see where it starts to break down, you can make out the three lower highs. The agressive thing to do would have been to work shorts starting in there, with an additional trade being offered at on the bear flag to the 20ema. So the first shorts would have been between 40.80 and 48.90 with a stop above 41 (HOD at that time) with your downside objective being around 40/40.25. Then as it came down and bounced off the lower band, you had the bear flag offering another entry at 40.50/60 with a risk to about 75. This would have been a bit more aggressive to take since you dont have any protection on the earlier entry though. http://www.tradingfrommainstreet.com/charts/QQQ2.gif The same concept applied today when I short MSFT. We are in a range so its not much to get excited about.
When it gets right down to it trading is pretty simple, or at least the concepts I work with are. When I look at a chart I basiclly want to know what its doing (up, down, sideways). Then I will look for volatility situations, support, resistance etc. I like to use a 20 period EMA on all of my charts because it works well for me. When I have something in a good trend, Im mostly trying to look for retracments in strong stocks (2 or 3 strongest stocks in the 2 or 3 strongtest sectors, or vice versa for shorts). When the market is in a range I try not to pee my pants at the top of the range thinking we will break higher and not to wet myself at the bottom of the range thinking its going to break lower..just take a deep breath and tell myself..."self, we are in a range". Over all it works ok for me. Ive bought a number of tops and sold a number of bottoms. Ive had some loosing months and some nasty days (the chart below shows a trade from July 5th of 2000 when I lost half of my account on a gap..I threw up 3 times that morning, but managed the trade ok I guess and Im still here)
I've always learned more from my mistakes then from anything else..so I figure I can share a few and hopefully someone else can learn from mine and save their Wheaties some morning. This was a pretty good entry and should have been a profitable trade, but I got greedy and screwed it up for myself. ENTU had been basing well (resting whatever you want to call it) for a few days, and when it finally did breakout from its range I took a swing long position. I held on for a few days..and you can see that on 6/30 it really ramped up strong (what you cant see becauase I dont have intraday charts that go back this far is that in the last hour of the day the stock was just screaming). I should have taken my profits there because my sell rule came into effect. But I ignored it because I thought the stock would pull back to 75ish, I could buy some more and ride it up to 90ish or something crazy. One the 3rd the stock gapped down pretty well and never held its gap (again giving me plenty of signal that the trade is over according to my orginal entry plan and I should get out)..but I had changed my idea in the middle of the trade and I was gonna buy a new car with this trade no matter what. So anyway I help on and then on the 5th I had a nice welcome back present from the market. The point here is that this really didnt have to be a loss. I had a great entry, and all of my sell rules gave me multiple chances to get out..but I had changed my plan in the middle of the game so I screwed myself. Brandon Ps...dont worry about the Wheaties..the cat cleaned up after me They like milk I guess.
This one is rather wordy..sorry in advance. Im really not trying to make it into a book. The popular idea among traders is that if I can just find the "right" system or pattern I will be profitable. Traders think the market is a battle that pits them against "the market" but in fact nothing could be further from the truth. Like so many things in life, in the market what it really comes down to is you. You are your own opposition. If you look at the trading landscape there are thousands of ways to make money, maybe more. There are scores fo chart patterns you can use. Simple things like bullflags and bear flags form the basis of much of my trading approach. I have found they have the best Risk/Reward ratio of any pattern when traded correctly. I promise you though, people are going broke using bullflags and bear flags. I also love the "Oops" pattern. Over time I have found it to be my most accurate (highest % of winning trades) pattern, and it also gives out a very nice payout. You know what? People are going broke trading the "oops" setup as well. Given the above, there are two conclussions you could arrive at. A) Nothing works and I might as well stop trading now, return this book for a refund and get about my life. Those who are successful at this are just lucky, statistics would dictate that some people will make money even if it is only via luck. or B) There is much more to trading than a simple mechanical method or setup. That what seperates the winners from the loosers has much less to do with with setups than the loosers think it does, and much more to do with "something else". What is that "something else"? My take on it is that the something else is a mental edge, and that mental edge comes from the difference in the manner a winning trader looks at the market, as opposed to a loosing trader. I will use a pretty personell, non trading example here but it has everything in the world to do with trading. I don't know how many of you get migraine headahces, but those who do know they are not any fun at all. What if you had one all the time, I mean 24/7 and it would not go away. Noting would make it better except for brief periods of time were strong narcotic medicines would give very temporary relief. Several years ago I go pretty sick with a viral infection. For about 3 1/2 weeks I held a steady temp. between 101 and 105, and also during this time I had a very accute migraine, something like a 22 on the 1 to 10 pain scale. Eventually the fever and virus cleared up but the migraine did not. The theory being that because of the intense pain and high fever my pain receptors turned "on" and did not turn "off". So the end result of this is that every minute of every day I have a migraine. If I stop to think about the pain level, its at a pretty steady 6 unless I get a flair up. I have been to most of the prominant (and some not so prominant) headache/pain doctors and clinics in the country. For the most part, after many tests they all come to the same conclussion which is, "Gee, it really sucks to be you" They can do some tests to figure that Im in pain, but they can not find anything medically to treat it. For some time the only relief I got was from Morphine or Demerol IM or IV injections at the doctor. I was doing this fairly often because it was the only time I was not miserable. For some time the pain got to the point were I did not get out of bed at all unless it was to go to the doctor. I was in bed, in a dark room almost all day for about 9 months and was suicidal because of the pain. If you were to talk to me about anything, it would only be my pain. That had become the central focus of my life. How bad it is, how bad I feel, and God damn it how bad you should feel for me. During this time I am continuing traditional medical treatment, trying to find the magic combo of medicines or whatever. Nothing was coming of it. Finally I ended up at the Pain Managment Clinic run by the Mayo Clinic. It is a very intense 1 month program for people who are basiclly at the end of their rope. By the time you get there, it has been established that you are in a heck of a lot of pain, and that nothing medical science has to offer is going to work for you. By that time all the Biofeedback, Narcotics, Surgeries, Physical Theorpy, Dietary changes, Acupunture etc had been tried and failed. (Bullflags, Bearflags, Penenets, Triangles, Oops, Black Box Systems) I of course went into the program hoping that they had the magic bullet. Some pill I could take, or surgery or anything they could come up with at all to make the pain go away. When I got there, I expected to find the very best Neurologists and Anestesiologists in the world. I was in for a big shock when I found that there was one staff physician ( a psyciatrist) and a resident, along with numerous clinical psychologists and nurses. But, there was not a single "Real" pain doctor. When I got there I sat down with the Medical Director of the program, and the psychologist who had been assigned to me. We talked for a few hours about my headaches. What makes them better, what makes them worse. Do I notice any signals before they really flare up.Anything that can lead to a flare up? For me its certain smells, or not exercising enough, or exercising too much. Getting too much or not enough sleep (mostly too much), not eating enough and once I have them any sound or light is just horrible. So we went through that and I got into the program and met the group of people there. A pleasant group of people, so they asked me: "How are you doing?". As per my routine I started to talk about how bad my headaches are and Jeez I hope they have the magic bullet here, but they did not let me get any further. No they said, "HOW ARE YOU?" So, I stumbled and thought for a bit, but I didn't have much so I went back to the tried and true, my headache. Again I was stopped, this time by a the nurse who ran the group meetings. She said "Brandon, are you simply a walking headache? How are YOU? And I really did not know what to say, because for a long time that had been my life. I was a walking headache. I was in the program for 3 1/2 weeks, and really the entire point of the program was to let a person know that, everything has been done to try to ease your pain (every setup tried, every chatroom a member of, every seminar attended for the traders out there) Every medical treatment that everyone knows about, and every one that very few people know about too. Its all "been there, done that", and the end result had been the same. Nothing, I was exactly were I was when I started. That is, I was bedridden, in terrible pain, miserable and suicidal. But their program focused on taking the control of your mind back..you don't have control of the pain, but you do have control of you (you cant control the market, you can control you response to it) During the time I was there, I fought the program almost the entire time. It was not at all what I wanted to hear. I was miserable, I had a god damn headache and they would not let me take my fleeping medicine. But, in the last week, and after I left, the program started to sink in and its had a major effect on my life. The pain is still there, in fact over the last year and half it has gotten more intense, and it still becomes overwhelming from time to time and I have to take morphine for relief. But that is not what is important, what is important is the fact that I get by. Nothing has substantially changed with the headaches, but what has changed is more important anyway. What did change is how I associate myself and what goes on around me. Instead of trying to have control over the headache, which is not possible, I now realize I do have control over myself. Much like a trade, which I have no control over, but I can control myself. Most traders screw themselves over in the way they relate to themselves in the market. And how is it that they relate themselves to the markets. Money and being "right". When they are positive, and more traders are winners than loosers they are doing wonderful thank you very much. When they have taken some stops and are down everything sucks, screw you and leave me alone. So, the only way they have to relate to themselves in the market is by the amount of money they are making or loosing, the number of trades they are right on vs wrong on. Good or bad is defined by, how much did I make/loose? If the trade made money, it was a good trade, if it did not it was a bad one. If you make money today, it was a good day, if not, its a bad day. Good Trade = One I made money on Bad Trade = One I was stopped out on. Good Day = One that was profitable Bad Day = One that was not profitable But looking at it in this manner tends to lead to larger and more frequent losses. A better way to look at this is to say, did I have a valid plan and follow it? If yes, good, if no bad. A bad trade is one that you did not follow your plan on, regardless of the outcome. A good trade is one you followed a valid plan on, regardless of outcome. This of cours is not how most traders CHOOSE to look at things. Most traders try to read all the books out there about patterns and setups, but in the end, if they associate things in a screwed up way, they will get screwed up results. Nothing will ever matter if the association is wrong. Nothing will help you. Its not easy, its probably one of the hardest things you will do. It wont seem natural. It will seem like exactly what it is...very forced (like getting up and trading even though I have a headache and I want to die if I think about it too much)...but slowly, it will come around. Look at trades in the context of an overall plan and I think traders will have better results. Brandon PS..Please..no migraine cures..I know its in good faith..but seriously Ive heard em all.
Hey, nice work B! I hope you didnt think of me when you said Neo-the-geo disguised you as a fraud ??? It was another neo, im sure cos I like your work Alex
All the Croatians Ive ever met are stand up people . No worries at all Neo. I know that sometimes I come across wrong. I can seem like an arrogant smart ass at times (when I inevitably blow out my trading part on account of being a lousey trader and the guru thing drying up..I'll write a book on my world class smart ass techniques) but its just who I am. I stay positive all the time (or 99.9%) and thats a lot of how I do it. Thats a lot of the key to trading too. If you are screwing things up, you have to find it and change it, but you always gotta believe it can be changed.
@Brandon Post your true 2001 P&L right here. No need for audit. Just type it in. I dare you to do that! I heard your friends in Utah don't think much of you. They say that you are a horrible trader. @Chris I can't post the same challenge to you. I am confused with all your trading partners and mentors etc. As you say in your post "we" trade and "we" do this and that. So "we" is not what I'm looking for. Final words, a chatroom operator isn't necessarily a thief. He provides value just like Wade Crook does for his groupies. Most often, it is a person who can see all the angles, but doesn't have the balls to put his own money where his mouth is. A very scary thing is that if you take a person like Ken Calhoun for example, who will put you in as many as ten trades in a matter of minutes, while not having the slightest clue about order routing. lol. How do you think he will manage all these open position when I know for a fact he wouldn't even know what route to go to enter or close ONE position. And then they tell you ... hmmm sir ..... you need to be fast to trade Nasdaq stocks. And the way he runs his room. Man you should really go there for the entertainment. "Who's your daddy" is one of his favorites. Oh and don't say a bad word about him or you will be banned! lol. The other Ken, Mr. Wolff is a classic. I think Brandon, Chris S., Bo, and Vad can tell stories about him better than I can. When was the last time he put ont a trade? 1950??? Peace my friends, and don't be fooled my friends, the only motive behind these posts is to get your business. But the "count" will get them all. Make no mistake about it. The count will deliver. ex chatroom moderator
Id be suprised if I had any friends in the desert such as things went there. Thats ok, my life will go on and so will theirs. As to how much I made, you seem to think you know a lot, and I have no problem with that, it doesnt hurt my feelings. You think Im a fraud etc. Thats probably not the worst thing thats been said about me, and Im sure there are other people that feel the same way for whatever reason. There is really nothing I can do about that except that I think they are wrong, but its hard to change peoples perceptions, and its not worth my energy to try. If I made $150 a day, then thats only pocket change right? If I made $15,000 a day then Im a liar (and I would be in that case if I said that) and if I lost $150 then Im terrible. So I don't see the point of getting into this with you. Im in the process of getting a series 3 and when I have that everything I do will be audited by the good old Federal Govt. Ill let you know when I have everything set up,when I do feel free to get my reports. I wont feel bad, they will be happy to accomadate you, and the numbers will be pretty much black and white so you can see for yourself if you would or would not be happy with my trading performance.
Unfortunately not all gaps are favorable. When a gap occurs that is not favorable you need a plan in place that will help you to deal with this situation. One of the dangers of holding overnight is the gap that blows your stop on the very first trade and there is nothing you can do about this, they will happen a few times if you hold things overnight. Your first reaction is probably to say "oh my"...or something to that effect anyways.."my stop is blown, I must get out right now". In most cases that is the worst thing you can do. Why? Are we not supposed to keep our stops? Yes you are. But this is a special case, calling for special rules. Our first rule of trading is to always follow the rules. Our last rule is know when to break them. This is a case where we bend them. Here is our case scenario and action. We are long XYZ from $45.15, our stop is at $44.25 and the close was $45.40. All looks nice at the close so we take the position overnight. For whatever reason the next morning the stock gaps down to $43.90 on the first trade on the next morning, which exceeds our stop. Here is what we do: 1st: Don't panic. The world is not over yet. 2nd: Sit on your hands and do nothing for the first 5 or 15 minutes of open trading. Mark the low. This may be the hardest thing you have ever done, but it is a must. Most gaps fail so remember that you have that on your side. 3rd: If the 5 minute low is violated get out of 1/2 of your open position. Sit on your hands again. 4th: Mark the 45 minute high and low in your stock. Both are important. If this 45 minute low is violated you must get out of the rest of the position. Now remember we are watching the 45 minute high here as well. We use the 45 minutes xone becuase this is a major reversal period intraday. This is the only time in our trading that we truly break a rule. Rule #2 says never ever average down. In this case, however, if the 45 minute high is broken we will take a small position and trade it as any other trade, also treating the remaining open shares as we would any open trade. The stop is moved to below the days low but we will be very very quick to take profits on the small averaged down lot. Now let me say that the last part of rule #4, and maybe the entire way we handle gaps may seem blatantly against all the rules of successful trading that we have ever learned. On the surface that is true. Look deeper though and you will see the logic. Remember, almost all gaps fail. This does not mean you shouldn't keep your stops, it just means you must use a new one.