I agree with the last two guys. Don, your recent posts have been very educational and great to read. I hope you will stay on these boards and continue to discuss things with us, so we can all enhance our knowledge of the many aspects of trading.
Dear Mr. Clown: I too would like to reiterate what TraderJim and AAA have said. I agree completely. You've taken all the criticism here pretty well, I have to say - I hope you get what we're trying to say. There are too many good boards, financial and otherwise, that have been destroyed by advertising and spam, and I'd hate to see a site as good as this go that way, too. ps: Wally and the Beav said they stopped name-calling after they turned 50...
Don, As one who has called into question your motives and the validity of your initial notes, I want to thank you for the very obvious change of tone and information in your last number of posts. It's now pretty clear to me that you intend to make ongoing contributions to the board, and that's a great service to everyone.
uptik2000, no, ive never used realtick.. im using Qcharts and Ravenquote.. Don Bright, thanks for the insightful post.. you made the comment that trading can be as simple or as difficult as a person wishes to make it.. i was wondering if you would reach into your years of experience and share some thoughts on the psychological aspects of trading and on characteristics of successful and non-successful traders.. strategy aside, what seperates the top guys from the ones who crash and burn? i was thinking that with your years of experience training so many traders, you must have a wealth of wisdom on the subject.. thanks.. -qwik
Yes, I would love to hear from you Don, on the psychological aspects too. As you are someone who has been exposed to many traders over the years: a) regardless of an individual's trading style, do you see certain psychological characteristics in your more profitable traders that are lacking or minimal in the less profitable? b) are there any methods / techniques that traders who seek improvement can use to instil the psychological characteristics of the most successful traders into their own trading? Any thoughts on the psychology of trading (resulting from your years of observation of successful and less successful traders) would be very valuable.
Pairs trading takes several forms. You first start off by finding 2 stocks (generally in the same sector) that have "tracked" one another and (this is the more difficult part) have actually "crossed" each other in weighted pricing. Then you track the pricing differences (we use the "price difference" tab on the RediPlus charting package) to show this. We then enter a trade based on momentum (either long or short), and see if we can close that trade at a profit or, if not, hit the bid, or pay the offer on the other stock. This establishes an opening "price differential" - we then post that to our spread sheets and set alerts for activation of additional trades, or to close the position and start over. We try to pull out a pre-determined amount of profit, or else add to the position incrementally. This is the basic method, and after traders feel comfortable with doing this then we go into longer term (and a little more complicated) strategies. __________________ Don Bright (not an alias) Don, If what you meant was buy MWD if LEH is up or MER is up. That's not a new strategy. Everyone knows about it. Please clarify your strategy. FOR THE LOVE OF THE GAME! STOCKKBROKER
Qwicktrade, Your work on AOL/VIA is very interesting and looks to be very simple which I consider a plus. From looking at the charts I noticed that positions were opened at 1.1 deviation of the moving average of the price differential but that sometimes the deviation continued to 1.2 or 1.3. Obviously that means that you were in an increasingly losing position. My question for you is would you have a stop placed at some point to get out of the trade or do pairs always have to reverse to 1.0 i.e. a profitable position. My concern would be some fundamental event that would happen so that 1.0 could never be achieved again ala ENE or PVN Good trading Steve
Yes, I would love to hear from you Don, on the psychological aspects too. As you are someone who has been exposed to many traders over the years: a) regardless of an individual's trading style, do you see certain psychological characteristics in your more profitable traders that are lacking or minimal in the less profitable? b) are there any methods / techniques that traders who seek improvement can use to instil the psychological characteristics of the most successful traders into their own trading? Any thoughts on the psychology of trading (resulting from your years of observation of successful and less successful traders) would be very valuable. __________________ Ego is Dangerous Edit ⢠Quote ⢠Kill >From Don Bright: RE: a) above--The overall psychological makeup of a successful trader seems to consist of a "peaceful" and "objective" view of what they're doing. Too much emotion tends to make a trader get "happy too soon" and "stay upset too long"....(translation: they get out of winners too soon, and ride the losers, saying to themselves..."#@!# this CAN'T be happening" or some such internalization). Being objective, and realizing that the market, the individual stock, and everything else you look at in the marketplace not only CAN, but WILL do whatever it wants...and there is nothing you can do about it. You cannot predict a disaster, but you can plan for it. Good traders are sure that they will be "able to play the next day"...by being concerned about risk, but not getting into a state of panic. Many new people "freeze" when something goes wrong....and that is an awful way to go broke...it not only costs you money, but drives you to the nuthouse as well. We do go into some detail about how to handle situations emotionally (it is hard to "handle" an emotional situation, by definition, so we try to get traders to take as much emotion out of trading as they can). We have even gone so far as to suggest that certain people take an hour or a day off while they sort themselves out. Also, the basic breathing techniques, displacing oneself, and the other "secrets" taught by some "trading coaches" apply....mostly common sense....if you use it, you'll be ok. OK now to STOCKKBROKER Junior Member Registered: Oct 2001 Posts: 7 11-10-01 08:52 AM PAIR TRADING : A NEW STRATEGY? Pairs trading takes several forms. You first start off by finding 2 stocks (generally in the same sector) that have "tracked" one another and (this is the more difficult part) have actually "crossed" each other in weighted pricing. Then you track the pricing differences (we use the "price difference" tab on the RediPlus charting package) to show this. We then enter a trade based on momentum (either long or short), and see if we can close that trade at a profit or, if not, hit the bid, or pay the offer on the other stock. This establishes an opening "price differential" - we then post that to our spread sheets and set alerts for activation of additional trades, or to close the position and start over. We try to pull out a pre-determined amount of profit, or else add to the position incrementally. This is the basic method, and after traders feel comfortable with doing this then we go into longer term (and a little more complicated) strategies. __________________ Don Bright (not an alias) Don, If what you meant was buy MWD if LEH is up or MER is up. That's not a new strategy. Everyone knows about it. Please clarify your strategy. FOR THE LOVE OF THE GAME! STOCKKBROKER __________________ FOR THE LOVE OF THE GAME! STOCKKBROKER Edit ⢠Quote ⢠Kill >From Don Bright: You're right to a point, but I call what you're referring to as more of a "sector strength" strategy, wherein we must rely on "sympathy" moves without any quantitative back up. You seem to have a good grip on the concept, and would probably do well as a pairs trader (if you don't already!). Don Bright cocobop Junior Member Registered: May 1999 Posts: 13 11-10-01 03:23 PM Qwicktrade, Your work on AOL/VIA is very interesting and looks to be very simple which I consider a plus. From looking at the charts I noticed that positions were opened at 1.1 deviation of the moving average of the price differential but that sometimes the deviation continued to 1.2 or 1.3. Obviously that means that you were in an increasingly losing position. My question for you is would you have a stop placed at some point to get out of the trade or do pairs always have to reverse to 1.0 i.e. a profitable position. My concern would be some fundamental event that would happen so that 1.0 could never be achieved again ala ENE or PVN Good trading Steve >From Don Bright: You actually do "add to a losing position" when pairs trading, which is contrary to basic trading strategy. You pre-determine your risk parameters and use the "trade them down" technique for reducing risk while regaining some of the profits. This is another simple technique that is hard to get people to do (reducing risk while making back profits from trading). It takes a while.... Quantifying and graphing intentions concerns me a little, because you cannot predict the market conditions that may cause you to start reducing positions or closing out altogether. I prefer it if a trader says to himself "I'm willing to risk 25% of my trading money if this were to widen out by xxx point or xxx percent" rather than say " if this widens out by xxx percent, then I am closing it out" ....anyway, I hope this makes some sense to you all. Some of you really do trade some, don't you!! Glad to see some competent people working together. Be well all!!
Don, Thank you for your detailed answer to my question, which I have found very valuable. I took my monthly Sunday 'vacation' into the metropolis today, in order to buy some fiction, non-fiction and various magazines (as well as enjoy some great freshly brewed Italian coffee and some fantastic Chinese food). Anyway, to the point, I came across the November issue of Stocks&Commodities magazine. Quite pertinently, you had written a great piece on what differentiates a good trader from a weak trader. I just wanted to say that I found what you said there to be of great value too. Regards, Candle