A valuable lesson in timing the market was demonstrated today. Let me set up the scene.
Markets on an uptrend for a good part of the day. Oils, mining, banks were all strong. Scroll down to my posts starting at 12:04 pm where I sold HES. It was previously a leader in the days up trend. All of a sudden it stopped rising even though some other oils were continuing. That was my signal to bail out and trade it the other way. It also alerted me to a changing sentiment of the overall market. I quickly sold and shorted , or covered and went long my other positions. This turned out to be the daily high. It's another example of thinking contra what the crowd is. Very advantageous fills and a jump start can be had at moments like this. Soon thereafter on one of the chat rooms I was lurking on the bullish comments were still coming fast so I posted its a good time to short with all the bulls around. The market dropped 200 points + in a short time. The GS short was a thing of beauty.
Without sounding like an ass, I sometimes factor in chat room sentiment and do the exact opposite.
The same information is available to all of us but it is the traders that actually recognize what the charts are telling you are the ones making money.
I don't hope and wish and I don't know what a stock will do in the future , but that move was telegraphed to all who were ready to listen, minutes in advance of the actual event.
Friday, October 31, 2008
My set up
To slow time down and make it my ally, I use only 5 minute and 15 minute charts to trade. I use 3 monitors. From left to right here is my set up.
On 3/4 of the left monitor is my 1 day , 5 minute chart. On the remaining space is my 1 day, 15 min. chart. All charts are set on a black background to alleviate eye strain. I use a 7 and 17 day exponential moving average(EMA) of the close on the 5 min chart to keep me in trend. I have the volume along the bottom. No grid lines no time lines. The 15 min is alone with only the candles nothing more. It is a clean and clear set up and uncluttered, information can be disseminated easily and quickly.
I believe that using 5 min charts for the majority of my decision making helps me smooth out time and slow it down. A shorter time period has the effect of too much information and movement and true trend is harder to see. I would say 80% of my decisions are based on what the 5 minute chart is telling me. However when the 15 minute chart talks you have to pay attention and listen. A great example are 15 minute dojis. Odds are it is a reversal that can be played profitably.
On the middle monitor I have tall but thin 5 min charts of the S&P and QQQQ showing an hour or so worth of data. Then comes two watch lists stacked on top of each other. The top one contain some stocks that I am familiar with or watching. The bottom one contains what I am presently trading. Then comes my order entry window with level 2 box showing bid/ask level and size and ticker.
Monitor #3 has a daily chart with 200 or more days displayed. Two hitting highs and hitting lows tickers are overlayed on this. One for the QQQQ stocks and one for DOW stocks. A positions and orders box is also overlayed on this.
My goal is to have enough information, but not too much, presented in a way that is clear and will compel me to make decisions based on what I see.
On 3/4 of the left monitor is my 1 day , 5 minute chart. On the remaining space is my 1 day, 15 min. chart. All charts are set on a black background to alleviate eye strain. I use a 7 and 17 day exponential moving average(EMA) of the close on the 5 min chart to keep me in trend. I have the volume along the bottom. No grid lines no time lines. The 15 min is alone with only the candles nothing more. It is a clean and clear set up and uncluttered, information can be disseminated easily and quickly.
I believe that using 5 min charts for the majority of my decision making helps me smooth out time and slow it down. A shorter time period has the effect of too much information and movement and true trend is harder to see. I would say 80% of my decisions are based on what the 5 minute chart is telling me. However when the 15 minute chart talks you have to pay attention and listen. A great example are 15 minute dojis. Odds are it is a reversal that can be played profitably.
On the middle monitor I have tall but thin 5 min charts of the S&P and QQQQ showing an hour or so worth of data. Then comes two watch lists stacked on top of each other. The top one contain some stocks that I am familiar with or watching. The bottom one contains what I am presently trading. Then comes my order entry window with level 2 box showing bid/ask level and size and ticker.
Monitor #3 has a daily chart with 200 or more days displayed. Two hitting highs and hitting lows tickers are overlayed on this. One for the QQQQ stocks and one for DOW stocks. A positions and orders box is also overlayed on this.
My goal is to have enough information, but not too much, presented in a way that is clear and will compel me to make decisions based on what I see.
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