Tuesday, November 11, 2008

I think the the following posts from todays trading session clearly illustrates my style.
- simply follow the charts and momentum
- trade the probabilities
- no CNBC news
- no VIX, fib lines or lots of moving averages
- don't know/ care where the DOW is
- no hoping, wishing or predicting what the stock and markets will do.

Trading is much easier when you can break it down into it's simplest form, charts and momentum. You can see that they are the only important items to consider. The rest is just plain garbage invented to fog your brain.
Don't get distracted, overloading yourself with too many indicators. When you see and can feel the momentum changing, don't feel the need to wait until you have 6, 8 or 10 different things telling you the moment is ripe. It'll be too late by then. Use your edge and trade the probability.

Look at my edge. It's not some super secret, undefinable mystery. Green candles mean a stock is rising. Red means they're dropping. Long candles means lots of momentum. Shorter candles mean less momo. Check out what the overall market conditions are doing. When I see a convergence I make my play. What's your edge?



Again a continuation from todays first and 2nd posts.
Notice S&P and QQQQ stopped downward trend. That was signal to sell EEV SRS which are inverse ETF's. and go short. These are probably not the best examples since they move contra the market but I prefer shorting so I like to trade these. Usually a small spread and large ID moves.






SRS + $ 9.75
















EEV + $ 5.20



This is a continuation of the post below. After a short move up , I sold SRS and EEV , taking profits and got back into the original trend.

This shows S&P and QQQQ momentum slowing , time to cover the shorts and go the other way







EEV + $ 5.50

















SRS + $ 9.70

Momentum acceleration points


One of my main trading techniques is watching for times when the markets seem to accelerate and I can get a jump on the trend.
I pay close attention to 5 minute charts of the QQQQ and S&P 500. Here is a snapshot from today. Green means markets are rising. * (This turned out to be the starting point of a 250 point DOW pop and drop)





At the same time here is the 5 minute chart from EEV;












and here is SRS








A few minutes later the market momentum is slowing and is offering up the money, so it's prudent to take it and trade them the other way until the signal says not to and go the other way again





SRS + $ 6.00












EEV + $ 4.00