The Subconscious mind...

4. limit your holdings in shares to 10% of the low average of volume during the low volume part of the cycle.

when you cull and sort you will find that you have to cross out some stocks that are too low in DU volume. Do it.

Lets say you have noticed by now that the number of shares in each stream is doubling every fifty days or so.


Sooner or later the number of shares will be getting high enough to cause you to have to trade in such a way that what you hold exceeds the normal block sise going through on the T&S. You "print" prints of your trades from this for keeping your logs, jounals and notebooks.

so this narrowing of the universe is handled. Now you begin to see that the partial fills for an exit or entrance are getting strung out. The ratio is about 1 to 2 going in to going out, respectively.

So be prepared to add another stream of money occassionally and you may have to duplicate the account as well.

you must stick with the universe though. It is what gives you consistent profits. for any stock that i trade I require that it do what I want for a trade at least 5 times within the last six months.

 

5. do partial entries and exits by using block sizes that do not exceed the block sizes showing on the tape or T & S.


Most T&S block sizes change most rapidly on the BO day when the volume velocity gives you a projection that the DU will be hit within 1 and 1/2 hours of open. The 0 to 7 day.

Trade with market orders only and see how long your fill takes just to get used to trading in and out.

If i am entering to hold 100,000 share of a 30 dollar stock with one stream of capital I plan on having my broker pace the market with orders that keep me at 10 % of the cummulative trading. He has the order and is sitting there getting the job done and I occassionally ask for a progress report and then he adjusts his effort if he is behind (the normal situation). I call knowing what the answer is and he knows when i call i want that answer.

Summary

I started small 300 dollars. I added 50% of my pay check until my pay equaled my trading commissions. At that time I switched from working and just doing the prep in the evening. I also during the start up took longer vacations (1 month/yr at IBM). the third year I picked up a 1960SL in Kopenhagen and I no longer had regular reporting hours at IBM since I was a data system trouble shooter reporting to the director of manufacturing.

This all was a time of easy trading except there were no charts so i had to make my own and there were no computers so i had to do my own culling and sorting. Also there was no monitoring capability during trading hours. I used the phone to call in orders. I never met my broker in person either up to the time MLPFB made their thrid and final mistake trading my accounts.

Today it is harder to make money because people do not know how to learn to make money any more.

Summary for you

Learn to annotate charts taken from an excellent universe that is modified daily. Enter on volume BO's within the first 1 and 1/2 hours of stocks that you have sorted to BO before the BO occurs. Start keeping preparation and monitoring records (use the stock logs that are on the jack hershey site in MSN. Keep a log of your trades and segment it by money streams. Count on doubling your capital every 50 trading days. There are 5 fifty day doubling possible per year, ordinarily.

It is my opinion that none of the three of you I named are doing very well in using the wealth of support available to you to get on the ball.

 

grob - why is it important to enter with the same average t&s print size?

i can see the relevance if you are doing mega size, but for a lot of stock traders who may be doing a a few thousand, then their orders wont spook the markets too much will they?

is this just a drill, for when they are of big enough size?

cheers

 

Thanks for the great replies. I appreciate the effort you put in.

To take on a few points I will go as I read your replies.

1. I have a steady universe and I will add and remove from this universe as ideas pop into my radar. My stable universe consists of stocks that are relatively coordinated. I trade them nearly everyday (RIMM, AAPL, ADBE, etc). These allow me a daily comfort where I trade based on classic signals using reversals, pivots and flags. They vary in price but the volume allows efficient exit and entry for the size I trade.

Other stocks that get into the picture are usually momentum stocks that look to be displaying some strong trends. CAFE was a good one yesterday as it full-filled the "3rd wave" idea in a base-over-base price action. Opportunities like that do not get discovered by my self too often (a lack of research on my part).

With respect to EPS and RS… well I do not use indicators or fundamentals in my trading. Purely price and volume. I think you are saying to screen potential plays using EPS and RS. That I will definitely look into. What about screening using price action only?

“You buy when the volume is coming out of dry up (DU) and going to a maximum volume.”

Exactly. I do this using a 3min chart. This means that I am a very short term orientated trader. I feel safer that way and I need to break away from this mold.

2. 6 to 8 days… well, it will take me time to become comfortable with that. I carry overnight 3 days at the most and the price has to be doing exceedingly well. I do not like staying in one stock to long – I start to get attached to it and this hurts my objectivity.

By cycles, you refer to time, correct? I am thinking price.

In terms of your scoring approach, I do something similar. I do not believe my selection is really an issue at this time.

"holding" is what you do not know how to do with your randomly picked low quality stocks. the basic causes of failure, doubt and opinions swings you have created for yourself.

I agree with you that I do not know how to hold but I do not think quality of the stock has much to do with it. Quality in my mind is the quality of price movement. If I see good price movement, I see a high probability trade – that’s it. The idea behind my approach is to find good quality price movements – I could care less about the equity itself.

I believe my selection strategy is sound. I also believe that my self doubt and opinion swings are not caused by my selection method – they are caused by psychological issues I have yet to resolve. I have childhood issues with insecurity and this causes my anxiety and a very high self-criticality. In my fear of making mistakes I get anxious and impulsive and hence I make them. I need to resolve my psychology.

Because of the above, my trading plan is never broken. My longs and shorts always meet a criterion, but, once I achieve my goal with the trade – it is usually a monetary goal, I take any information being presented and only look at the adverse. My thought process at the time is “I exceeded what my goal was for this trade, take the money and do not get greedy”. The issue is that on many occasions I should be BUYING more at that point because I am not able to see the truth behind my impulsive and scared (and useless) behavior. I am looking for a way to eliminate the fear caused by winning in what is commonly known as a loser’s game.

3. The scoring system is something I will research and from a cursory look, it seems similar to my approach. I essentially look for inconsistencies in the price action. This could be any number of things, my decisions to buy, sell, hold stem from my experiences.

4. I am still thinking about the 10% rule.

“you must stick with the universe though. It is what gives you consistent profits. For any stock that I trade I require that it do what I want for a trade at least 5 times within the last six months.”

Are you saying that once you find a stock that you can produce consistent results on then stick with it? I have several that I trade on a daily basis where I can do this.

5. My entry strategy consists of scaling in using 100-200 share increments. I am all out when I reach my profit target or if the price action doesn’t conform. I have very strict rules about this – they range from feeling doubt to technical price violations. I am very aware of my emotions and my mental composition – as soon as something is not right, I am out.


Overall, you have outlined a good system and as with any good system, the user is the weakest link. I have faith in my system and will have to do some research on the ideas you presented in order to make any significant changes. I will say however, given what you have outlined, no matter how sound the strategy, a poor trader will f—k it up. Period. No two ways about it, I am the weakest link behind any strategy I choose to use.

Jack, if you read back, notice I did not address any strategy related info in my posts. I was referring to psychological aspects of becoming a better trader. I do not care about making more money at this point. It would only take some minor changes in my strategy to achieve that. What I care about is getting my mentality to a level where my trading is flawless. This is my number one priority.

You know and I know well that rules for holding and strategies for entry as just words on a piece of paper. The real heart of the matter is in the execution and it takes a well functioning mind to execute. This is what I and others are getting towards in this thread (I believe).

 

Very very good post. I will enjoy going to where you are and doing some tweaking on your turf.

You can see that I am much more timid than you are. I am 10 times more risk adverse than you are and the consequence for me is trading in a groove and just pouring money continually into my accounts.

When a person goes to trading where more and more descretion is involved the quid pro quo becomes optimizing what is allowable and what is not. I will tweak from the viewpoint of giving you more by taking away the least possible freedom..

more later....

 

thanks.

 

I've read your post thoroughly and repeatedly. I am answering you in an over all manner rather than going point by point. were I to go point by point, there would still be some difficulty in commenting upon the topical stuff that is most important to you.

There are two sources of the issues you bring up and want to fix: your past and your trading strategy and approach. Everyone has issues regarding their past and they just come along as part of the package. I do not give them much weight in influencing the development of a successful trading regime.

Where I to describe what you are doing I would not do it in the manner that you did. I find that you have a "collection" of items that form your approach. This assemblage and how you formed it has consequences which you have articulated. Let me build a link between your approach and the emotional construct you are experiencing.

continued.......

 

continuation.....

My contention is that you are a person who uses a visual sensory monitoring system primarily. That is all the knowledge that you have for doing analysis is largely shapes and pictorial.

Second, you predetermine what "success" is on a per transaction basis.

With this in mind, I would like to suggest to you that as time passes you have little knowledge and internal support for doing observations, doing analysis and making decisions related to time. We need to address and deal with this.

I am trained to search and render aid in spaces that are in total dissarray. Operating in the dark and in hostile environments as a team player requires an excellent and comprehensive SOP. What is to be avoided at all costs is getting anxious about the context as a result of analyzing where you are. Where you are does not matter; what matters is knowing how and what to do at all times to solve the emergency at hand.

Above is the operational picture that I have of you and which you can attain if you are able to synthesize into your operations what I am going to suggest to you.


Sensory processes are paired with the emotions. Emotions come as a direct result of sensory inputs and the mind producing "feelings" and biochemicals. You are in a space where you do not have access to the best array of visual information. By changing the setting and context you will be able to sense more comprehensively.

This input will not be too useful at first. This is because you do not presently have in your mind what you need to compare against what you will be seeing. This will prompt some feelings that are disconcerting when you "see" internally that you cannot do analysis and decision making. you will determine that you need more information and knowledge however.

You have proven to yourself, absolutely, that there is a causal factor (s) for your "feelings" and their is a cause of the behaviour those feelings precipitate.

That takes care of that issue.

the other predominant issue is the one where you move from contion A to condition B. Condition A is achieving the process of getting to your predetermined goal (In itself not too good an approach). Condition B is making the money still on the table after your goal has been reached. Beginners who are trading in situations where they do not know what is going on spend a lot of momentary time (time after time in a sequence) of setting goals that justify getting out at the wrong time (too early).

Here in condition B you lack almost all knowledge required to be able make money in this condition. That can be remedied as well.

From here on out in this post I am addressing the "fix".

We fix your anxieties with knowledge and analytical skill development. Before that, we enable you to "see" the market situation which, in turn, sets up all the new knowledge requiredments.

You have a very isolated look at the market because of how you monitor. P and V on the 3 minute are insufficient.

I could give you a set of drills to do to make the point but I won't. Instead consider that you are just in a hyper sensory place and lets eliminate that by surrounding it on both sides. Use a long duration fractal as you base of observation and only go the 3 minute as required. At turning points on the 3 minute use a faster picture to slow down the 3 minute relatively speaking. both of these factors will almost destroy your dependnance on the 3 minute.

For the beginning always use a longer duration fractal where each bar fills the width of the channel. this will keep you moving from one fractal to another according to the pace of the market. this will also kill the singular importance of the 3 minute chart.

For the faster than 3 minute observations change to a non chart manner of observation. The more modern DOM displays (button) are good for this. Absolutely do not go to a 1 min chart.

As you acquire knowledge in the context of your "collection" of things in each of these monitoring domains, you get a lot of anxiety out of the A context of getting to you "goal". Use a technique of goal changing that parallels the way you scale into trades. Each scaling in deserves a goal change in some manner. This will make A GOAL less rational and soon no goal may show up based upon your approppriate monitoring.

Context B is where you need to have the comprehensive SOP for getting to making all that money that irrational goal setting took away from you. If you note well, you will find that just after you consider goal setting mentally and allow yourself to consider not setting a goal, you find a sort of soft peaceful relaxation comes in the space momentarily. you will find a tensing up as you return to not allowing your self to not set goals. This is because you instinctively knw that in nature and natural setting there is no goal concept at play. Survival is not a goal. What is survival? Good.

The goal divides A and B. You are going to succeed in B by adding on all three monitoring timing levels the boundaries of the volume action. Add the price boundary too as a second thought. If you can bound then you can articulate the path across the bounds for making money.

Once you have a good collection for this, then you will find that the anxiousness of trading the B context is gone and what replaces it is the stimulation of being in "anticipation" of next steps along the path and modifying the path as required. Their will never be any boredom.

Let me know when the goal drops out of the pictures. By then you will see that A and B are the same situation in two different parts of the profit taking cycle.

The combination of all this stuff will quadruple your money velocity. The other factor is your personal energy. You will have to find uses for all the energy that is going down the drain now in anxiety; I recommend that you use the new energy for non trading family activities that do not resemble your youthful activities.

 

Jack,

I am working on a reply.

Anyone else have any comments on these ideas?

As a remote trader, I have zero contact with other traders. My friends know nothing about what I do hence I have no means to exchange ideas other than through this site.

I will say that what has been said so far by Jack is dead on.