The trader who never was

hii a_ooiioo_a:

I was reading John Murphy’s Technical Analysis of the Financial Markets last night and I happened to come to the page where it said “the strongest three month span for the stock market is November through January?” which is right now. He also stated that “the strongest month is December (ending with the well known Santa Claus rally just after Christmas).”

So with that in mind, I am going to go long until Santa Claus comes to town.


Virtual Trader

 

Try to trade on paper what you might in reality. Trades on paper have no emotional value, real money burns a lot faster than funny money.

 

Dgabreil:

I know what you mean dgabreil. Trading with real money is emotional. When I was in the prop firm trading with real money, emotion wasn’t the only thing that would affect my trades. You know, when your job/career is on the line, trading becomes a different thing. The firm gives you 3 months to trade. They have the “either you make it or you don’t” attitude. There was no second chance. You just have to figure out your way, as time gets closer to the end of the third month. You’ll have nightmares of getting terminated. Everyday, you hope you will finally get it. You hope you will know how to trade. You try your best; you do as many trades as possible trying to learn as much as you can while the firm recruits a new batch of trainees, ready to take your place. You’ll feel constant pressure and stress until the day you either make it or get terminated.

For me, the nightmare has come true. Pathetic as it is, funny money is all I got. I take it as seriously as trading real money.

Virtual Trader

 

Friday, November 22, 2002

Today I increased my QQQ stop from $24.10 to $25.25, which is the lowest point of the previous dip. Currently, my unrealized gain per share is about $2, but if my stop is hit, I am going to be down $0.04 or more per share.

To be honest, I don’t know what the outcome of this method will be, but I guess the only way to find out is to follow the method with discipline.

Virtual Trader

 

"I know there are software such as Esignal, Qcharts, MetaStock Pro, etc. that are used for selecting stocks, but they are too expensive for my paper account. "

Virtual Trader

You need some charting software. The more ways you can look at charts and price action the better. Ideas spring from the data they present. They have lists like unusual volume, stocks that gap etc., that can be used as a springboard for new ideas. You probably know this already but for me it wasn't books it was charts that gave me a method. Good luck.

 

Not necessarily. There are online sites, such as stockcharts.com, that have a wide variety of scans.

--Db

 

VT:
You are using longterm investment methods such as fundamental data, upgrades, downgrades etc, to make shortterm trading decisions? Not going to work if you want to be a trader. Right now, you are basically guessing and you have a 50/50 chance of being right, maybe less.

If your sure you want to be a trader, you first need to unlearn the standard investment-type finance teachings and learn the technical aspects of chart language. This technical knowledge is neither easy or cheap to come by. But after 2-3 thousand hours of studying realtime live market action - such as the behavior of price, tick, the AD line, and volume on the major indices through a variety of conditions and time frames, and many months of realtime practice trading, then it all starts to slowly make sense. You can read books and get tips, but ultimately you have to grind it out yourself. No shortcuts to getting there. Slowly a method develops that you can call your own, and you notice your chances of being right has now climbed to 80% or even better. Now you are ready to start realtime trading.

In practice trading you must use small size, 1 contract or 100 shares. If you do well small then increase the size. It is not realistic for beginners to trade multiple thousand size. When you acquire sufficient capital to trade realtime again, use 100 share size through a low cost broker like IB until you have consistent profits.

Consistently profitable trading is difficult. So is becoming a chess master or a pro athlete. Anyone who wants to become proficient at trading should realize that the cost is quite high.
Not trying to discourage you at all, just the reality of the business.
I do wish you the best and good success.

 

Futurecurrents:

I totally agree. Currently, I am using BigCharts and the things I could do are limited. It is pretty hard to develop any trading ideas/strategies without a pattern scanner.

Virtual trader


Dbphoenix:

Thanks for the url. Stockcharts.com is very useful and it got a lot of nice features. I really like the market carpet. I can see who the market leaders are and how they are doing.

Virtual trader.

 

David1:

I have to agree that the fundamental data I was using to make my trading decision wasn’t useful. The fundamental stuffs I learned from college have no value when it comes to dealing with the real thing. There is no way to capitalize on the news and fundamental data because they have already been discounted into the price by the time I got the data. So the best way is to use technical analysis.

Right now I am learning the basic of technical analysis-like identifying trends, continuation patterns and reversal patterns. I can read some indicators and their buy and sell signals, but I am not too keen in using them. One reason is that I don’t know how they are created. So until I’ve learned and understood how they are put together, I won’t base my buy/sell decision with it. Another reason is that most indicators (oscillators) pick top/bottom and that is very risky for a trader. The third reason is that some may be redundant. Like the Average Directional Index (ADX), the trending/non-trending signal it generates could be seen from just observing price movement itself.

When I was at the prop firm, I was able to study real time market action with level II, T&S, and Qcharts. It was very useful to see how each stock behave differently to ups and downs of the S&P futures and how just a simple upgrade/downgrade could affect the stock’s behavior. Unfortunately, I don’t have any resource to study the market anymore. May I ask what you used to study real time market action before you began trading?

I understand trading is difficult, but I just don’t want to give up.

Virtual Trader

 

Monday, November 25, 2002

Over the weekend, I stayed at home sitting in front of my computer, drawing resistance and support lines and trying to identify chart patterns on S&P and Nasdaq. I can see things are looking bullish. The inverse head and shoulder pattern is forming on both Nasdaq and S&P 500 6-month chart. Double bottom could be seen on the S&P 500’s 1-year chart. I don’t think the market would have major decline for a while.

Virtual Trader