There are some great ideas here. Has anyone read anything on setting up or testing pairs type trades or hedged type trading? Usually I raise cash when I get scared, but also know I could be doing way more on the short side. Leland, not sure if you have looked at the holders or the i shares, but things like the utilities holders, oil holders and some of the foreign ETFs have some nice trends and channels. www.ishares.com IBD also breaks there new highs by industry group, and picking a few stocks in an uptrend from a group has worked well for me. As opposed to just selecting one.
When I was a schoni trader, I would have a 30 to 40 positions sized up, depending on the situation. We would trade million or two on one side. All long, every semi, or every bank and broker...all depending. that was 99/first half of 2000. However, the April we droped 600 points in the dow, and 300 Naz, many of us decided to limit our risk, not all did but the smart ones. we started to trade lighter, but still have30 to 40 stocks. Then, we noticed that the moves were far harder to time and if you got caught, even half of a million long in 30 to 40 positions, you took a hit. Then we noticed that once you took a hit it would take a month to make it back not a day or two like in 99. I adjusted my trading and in 2001/2002 up until i resigned, I played less positions with moderate to light size. I noticed that i could scratch a trade faster, not taking a loss and that if the play worked i could always size up faster than i could get out in a lossing position. I also use to play huge overnight plays, all one side in 99 first half of 2000. The first up day, closing near or at highs of the day, I would load up long and take size overnight. Then, in the 99 market we would open limit up or up huge. Vica versa on the shorts. However, I adjusted my overnight plays after taking a few hits in 2001. I tended to go lighter. I notice that there was very little follow through like in 99/2000. We started to open either flat or slightly up/down, killing the overnight play. By early 2002 i started to hedge overnight. I would be long tech and short QQQ dollar for dollar. This didn't do much besides rack up commissions. So, I rarley took overnight positions up to the day I left. now this is all based on 3 second to 24 hour holding time, we were daytraders but i could also carry overnight into the next days close.
Also the last few months of this year, I went long/short and would gage which side was working, then take all one side. In light shares and limited stocks. There were A plus plays, like the dow ralling 100 points but say AOL and IBM could get up and going, I would short the shit out of the two. And hold for a period of a few hours, always adding on the squeezs. So, every dow stock is rallying but AOL and IBM, those were A+ plays. Vica versa for the longs. like WMT, the whole dow is getting hit but WMT or NOC is holding strong, i would size up long and add in dips. Same with sectors etc, yet you had to hold longer that I was use to in 99. Techs, semis, I watch the sox bounce under 500 and over 500. INTC always lead my decision in the semis...however you had those one or two that would trade on their own...
Hi folks... I've been meaning to get back over here, but have been busy. Two comments have lead me back. The first was the comment that one person trades things he doesn't mind owning, because it allows him to "marry" his stocks. This could be a dangerous approach. You shouldn't be attached to any stock you own. I dug up a clip from an earlier Master Interview addressing this. It's from Bill Luprien who has over 40 years trading, of which 17 were spent as a specialist on the floor of the Pacific Stock Exchange. Additionally, Bill was CEO of Instinet early on, building it up to its purchase by Reuters. One trick that Iâve learned in this business is donât get emotional. Donât fall in love with a stock, or be overly negative about a stock. Force yourself to continue to trade it however you feel...I have a saying that I think is helpful Itâs what I call Lock jaw. This is one of my biggest frustrations in trying to teach others because they get lockjaw and fixate on their position. My saying is, I donât own stocks, I just rent them. My reason for saying that is think of how you feel about a house. When you own a house you feel different about it then when you rent... Well same thing is true when you buy a stock, unfortunately most people think they own them. I donât get emotional, I donât fall in love with them. I try to think of stocks as if itâs my money market account. In other words, when you put money into a money market account, you donât think about the commercial paper, or the T Bills. Itâs just a place to park your money before you take it out. Youâre going to write checks against it or credit cards or whatever. Stocks are just a place to park some money for a while. Sometimes itâs ten minutes, sometimes itâs an hour, and sometimes itâs five hours. Maybe itâs five years, but I try not to get to where they mean anything to me other than a number. Not sure if that helps, but I thought it was apropos. The other comment... Don't know how much capital you have to spare, but I'm sure you can up the share size/trade and it won't make much impact on trading... I find dangerous. If you're putting more of you capital into one trade you're increasing your risk, even if you use tight stops. Capital/share size percentages matter. It matters from how it increases your risk to how you handle it emotionally. Will you handle it the same way? Be as aggressive? Tight? How is that larger share size going to affect your trigger mechanisms? We have a guy in our forum on Wednesday's in June who says a big, big foible of people is the unwillingness to trade small. Here's a trader who manages millions, yet he'll trade 50 shares to get a feel for where the market goes. If you're interested on his take, go: http://www.innerworth.com/special/quanbeck.asp Mike Quanbeck will be joining us in the Exchange, our message boards community on Wednesday, June 19th and 26th from Noon to 1pm Chicago time. His first Master Interview with Innerworth, one of our higher rated interviews-which normally requires a subscription to view, is available for free off this page. Please join us.
Uh oh. A philosophy major who is a trader. There are a number of those. A Ph. D. even. Yikes. Almost as scary as those physics majors/ traders.
Uh oh. A philosophy major who is a trader. There are a number of those. A Ph. D. even. Yikes. Almost as scary as those physics majors/ traders. Umm, as opposed to what major? Tell you what, it's fascinating to read up on traders and what they feel makes them successful. Many pure mathematicians make horrible traders... because they think the solution relies on pure numerology. Some savvy business people can't handle the ups and downs of the market. And there are plenty of psychologists (relationship counselors) who can preach the right course to take and might be fine to see... but have a hard time with their own discipline. But the focus on philosophy or one's own self, makes perfect sense in trading. Most of our Master Interview subjects feel it's the whole ball of wax-to their success in trading.
Business majors memorize MBA speak. Economics majors memorize mumbo jumbo. Science majors memorize formulas. Math majors memorize theorems. Engineering majors memorize instruction manuals. Philosophy majors learn how to think.
My experience is the best in all of the above learn how to think. quoting Plato is not thinking anymore than memorizing Fas 105. But understanding and extrapolation are what causes progress.