Why Is The Obvious Not So Obvious?

Discussion in 'Risk Management' started by nysestocks, Jan 25, 2009.

  1. if u are using small charts to keep an eye on your selected stocks..then the consolidated line chart makes it a little easier on the eye..as u can see there is very little diff between a 2 day 1 min OHLC chart (left) and a 2 day 1 min consolidated line chart (right)

    [​IMG]

    as for a ruler..well yes..but not one with 30 cm on it:D
     
    #1691     Oct 2, 2011
  2. as u said XX..obvious..but only when actually tried and tested

    knowing that u do not know what will happen..what is the first thing u must do before u pick ur stock and place ur first trade?

    exact details required:D
     
    #1692     Oct 2, 2011
  3. xburbx

    xburbx

    as in a regular business, i dont know the future of the plans being put in place, but the plans are bets with a positive expectancy of positive returns.

    in direct response to your question, it would go as follow

    prior to placing a trade - determine how much i am willing to risk and how much i could make

    1. i would identify stocks based on specific criteria of liquidity and volatility
    2. i would look for important prices on high time frames.
    3. i would look for price structure in daily time frame around those prices leading into the next day
    4. once the market opens i would see where prices in those stocks are opening and then when a basic setup presents itself i would risk an amount of money i am willing to use.
    5. i am anticipating but not predicting the volatility to kick in at a certain time if it is going to in that day. if it doesnt by when i expect i dont trade the stock.
    6. then i set my stop and hold my trade according to how far it is expected to move. if my stop is hit, i take it
     
    #1693     Oct 2, 2011
  4. all good XX...but u must remember that those who start out do not have a clue what they are doing..and must therefore be very careful

    the first and most important thing is to get your MAX % risk per trade worked out

    so..lets forget all about the stupid books out there and look at what is required in order for someone to be able to learn what is required

    $100K trading capital

    MAX % Risk per trade= 1/8 of 1%..yes...i did say ONE EIGHT OF 1%

    1/8 = 0.00125

    100,000 x 0.00125 = $125

    so..lets say u want to trade YUM

    YUM = 49.41

    MAX Stop = $125

    Shares @ 20 cent stop = 600 rounded

    OR

    Shares @ 40 cent stop = 300 rounded

    OR

    Shares @ 60 cent stop = 200 rounded

    OR

    Shares @ 80 cent stop = 150 rounded

    OR

    Shares @ 100 cent stop = 125


    now..what is OBVIOUS from this simple bit of maths:)

    this so called R/R ratio is a wonderful thing..when right :D

    and..just so that the brain can get working..here is YUM YUM:D

    [​IMG]
     
    #1694     Oct 2, 2011
  5. Redneck

    Redneck


    Well Sir

    Truth be told – I don’t really read the book… it is read to me – like my grandparents did when I was but a child….

    I simply need to shut up and listen… And of course since I am listening intently, with an unadulterated mind, I get totally engrossed, totally absorbed even….

    I often times find myself inserted in the story and riding along, not as one of the characters, but as a mere shadow…

    And as we know – a shadow never moves independently of its creator….

    ====================================================================================

    Things I do before being read to;

    Perform a preflight check
    Relax
    Clear my mind
    Revert to a childlike state
    Open a new page of the book… sometimes a new chapter if a significant event recently occurred

    Then I simply enjoy the story as it unfolds before me…


    One other thing I do each evening prior to story time – is create/ modify (if necessary) the context in which the story will be told the next morning… I’ve found it makes for a much more profitable experience…

    More to come on that last sentence shortly - I hope you approve :)

    RN
     
    #1695     Oct 2, 2011
  6. Redneck

    Redneck

    Disclaimer

    I do not trade YUM

    Do not take what I’m about to post as any sort of recommendation – I’m simply trying to share some context so the ones interested can enjoy tomorrow's story time

    Also DO NOT take my post here as a slight to this thread…

    Step 1 is to get your mind right – this thread will help you in that endeavor – and anyone who has made any sort of remark to the contrary is truly an idiot

    Step 2 (making money) - is easy, once you successfully completed Step 1… But if you try circumventing Step 1 in any way you are screwing yourself….

    By posting this – I’m simply trying to give the ones really trying – an insight as to what it looks like once your mind is right… and how easy it is to make money…

    The rest of you (specifically the naysayers) can go to hell for all I care

    =======================================================================================

    YUM (the story to date/ and some context)

    Weekly / Daily is in a downtrend

    Monthly is in an uptrend, but price is essentially at the bottom of the monthly channel

    On additional note on the Monthly – at first it appears to also be in a down trend… BUT the Sept bar made a higher low, and higher high – when compared to the Aug bar, so technically it is an uptrend (a small but important detail)

    ================================================================
    $48.32 is significant support (on the daily, weekly, and monthly)

    Price closed Friday in a “Bart Head” (recall NRBs lead to WRBs… WRBs to NRBs… and NRBs make up Bart heads..., and of course boxes can be made from that)

    The bart head range is $49.91 to $49.27

    ================================================================

    I have absolutely no clue if price is going higher or lower next Monday/ next Week/ next Month/ or in the next 5 minutes


    What I do know (because I was told)…

    If price breaks to the up side of the bart head – $50.87 is a good short term target

    If price breaks to the down side of the bart head – $48.32 is a decent target – but I would anticipate it to bounce hard once hitting / getting near $48.32 – so you need to be damn quick exiting – if you’re short


    Also you should able to trade the bounce off $48.32 – if you get in quickly..

    But, and this is a huge but – if price hangs around $48.42 for any length of time (say a few bars) – it may not hold (but then it may also be the jockeyed about before shooting off long)

    However should it break $48.32, there is some significant down side… also price likely move down very fast as stops will be hit/ shorts will be piling in….
    =======================================================================

    Also I would expect either price to be “jockeyed” around before it moves up – in an effort to shake out the weaklings

    Or

    To shoot off like a rocket – in attempt to leave the weaklings behind

    Just need to stand by and be ready for either

    ========================================================================

    On another note

    If price gaps either way out of the bart head at the open – standing pat is best until you get an indication of its intention

    Remember Low risk/ High reward is the goal when trading… to get a low risk entry, patience is required until one presents itself

    ==============================================================================

    Stops for the above scenarios…

    Stops are the most important part to all this, or any trade… and I am not going to give them out...

    I feel that would be too much like me setting up the trades – that you could potentially take – and that is absolutely not my intention

    I don’t know your risk tolerances – either financially or emotionally…

    I can’t be there to ensure you pull the trigger if it becomes necessary to exit a loser

    So do not trade Yum tomorrow based on my post – I am nothing but a simple minded dumbass redneck - who knows nothing


    ==================================================================

    If pressed for an opinion I would say long is a more likely direction Monday – as I think $48.42 will hold – at least for now

    JUST realize my opinion sucks… and I change it quite often… I truly don’t know what is going to happen

    So it best I become a child and simply follow along while the story unfolds

    And of course identify low risk set ups…, and use stops


    =================================================================


    Now that I’ve created you some decent context…

    If you can revert to a child…, nuke your opinion…, and simply follow along with the story on Monday – there is a lesson to learn…

    Screw the money for now – there will be other opportunities I assure you

    =========================================================================

    I will not be trading this one – I hang out in another arena – but I will follow along and see if a story unfolds within the context I’ve created

    I also will not be posting additional remarks – unless what I’ve posted here is totally hosed – in which case I will gladly acknowledge my screw ups

    ========================================================================

    One final note

    The above context is not my opinion… I’m simply relaying the story price is telling me…

    Also if all you’ve gotten out of this is that some dumbass redneck trying to show off – then you’ve missed my intent completely…

    Please don’t focus on this trade…, focus instead on the story and simply allow it to unfold before your eyes…


    I sincerely hope this helps you along your journey to getting your mind right – that is the goal here after all

    You must have mental dexterity to trade successfully - above all else

    RN
     
    #1696     Oct 2, 2011
  7. who am i to say what is right..or what is wrong:D

    i vividly remember a very good story..that was made into a film..and the name of it is..

    The Never Ending Story:)

    in the story..a little boy..Bastian Bux..gets a present of a book..and when he starts to read it he is unable to close the book..in fact..he is so engrossed he lives out the story of the book

    the boy in the never ending story is called Atreyu..on his journeys Atreyu meets everything from a princess to a rock biter..to THE NOTHING..which consumes everything:D

    it is an amazing story..and i would recommend anyone who has an interest in learning to watch the film..in fact..there are a few versions..either one will do..as the message is the same

    since i first watched the story with my children..many years ago..the message is still as clear as the first day it was revealed..and..every so often i watch the film again..in fact i have all 3 of them..:D..and it still holds the attention..as if it was being watched for the first time

    sometimes it is good to go back to childhood things..especially those things that brought great joy and happiness..for..that is what life is all about..is it not:)

    http://en.wikipedia.org/wiki/The_NeverEnding_Story_(film)

    [​IMG]

    now it is becoming apparent why the name TFF was chosen for the group:D

    TO
     
    #1697     Oct 2, 2011
  8. J Ski

    J Ski

    Thank you sincerely for this thread.
    I am listening more.
    Still learning. I see better.
    Some are coming around,
    it is interesting to watch.
     
    #1698     Oct 2, 2011
  9. Redneck

    Redneck

    Please give them my Best - Always :)


    The Never Ending Story... I like that... and a must see no doubt... :D

    RN
     
    #1699     Oct 2, 2011
  10. very well explained RN..and u don't trade stocks:D

    i did have one closer look..but..as we know the look is just to prepare one for certain things that might happen..just in case..but if they do not materialize..then me move on to plan B..as u rightly said in ur message

    if YUM does gap down..then around the 48.80 might be a key level to watch..but these are very volatile times..with euro and all the crap..so..it is best to accept..as always..that anything can happen at any time..but..at the same time..it is no harm to have some key levels written down..as that is what everyone else is watching as well..and..bar some silly idiots making some silly statements..or doing some silly acts..normality will play out..where u have the mm's playing their little games..just like in..

    The Never Ending Story :D

    TO

    btw..in case anyone has not noticed..yum is very fond of gapping..not a stock for beginners to trade..and..always remember..never take advice from anyone when trading..for if u do..then u might just end up regretting it some day..

    keep ur risk small and let the odds play out..but u must have ur double zero..otherwise u are just pissing against the wind..and will never make money trading..so..prepare to do what is required in order to learn..and learning only comes from first hand experience..simple really..when u stop and think about it
     
    #1700     Oct 2, 2011