In choppy markets, there are still stocks that are trending or at least not so choppy. The trick is to find them.
The hitting new highs/lows list can still be put to good use to find the opportunities. WHat I am looking for are completely unsexy stocks, no hype, no tech, nobodys favourites, never a lot of attention paid to them. Shown here are some I found today.
But before I get to that I thought I'd post something that may or may not be useful to you, you can't confirm and maybe I'm just talking out of my ass about. However the last few months typically before volatility hits the markets the Nasdaq test code symbol ZWZZT shows up on my hitting new highs/lows indicator. I'm not saying it is a reliable indicator, far from it, but I use its appearance as signal to get ready. It's almost as if the exchange is making certain their data feed is working 100% before the waves of volume start. Like they know something from the advanced order flow maybe. Historical charts of it in any time frame are meaningless so its only the symbol showing up that piques my interest. Take from it what you will.
In any event here the the charts from above:
First chart is SHW short
Second is SHW cover
Third is BTU short
BTU cover
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15 comments:
Thanks for sharing that Scott.
I got nibbled to death today (and yesterday for that matter), and I am trying to figure out how to avoid this. My largest collect was a 45 tick (out of 70 possible) run on DNDN. Largest loser was 19 ticks, but I had a lot of smaller ones. A few times my stops got in the way - but that is a hard game, 80% of the time the stop being breached was a good exit. Seems like I am doing that bit right, Just no fear/greed action today.
I think I need to be much more judicious in my entries. In a momo market, 1, 2, or 5 ticks don't seem to matter. Missing it in this market means a bigger stop and less profitable exit room.
Trying to keep my sanity here - you have any to spare? Do you ever start a day scalping, and as the day indicates otherwise, move away?
Looking for nothing but entries with good support tomorrow. Rawr.
DTF- IF you find you are constantly wrong, step back and stop for a while. Take a walk. Consider your strengths and weaknesses. Think about what your edge looks and feels like.
Sometimes the market is not good to trade for the most part. Feel free not to trade. It's better than getting financially and emotionally beat up.
I have noticed that same mysterious "z" symbol appearing in my Day Hi/Lo stream also. Glad someone else sees it too...was thinking I was losing it!
i was expecting to see the SY trade over here. both daytrading fool and i thought of your trading style when we saw that stock. it is funny, i see some stocks and i say "i bet scott is trading that". i need to get to the point where i am not afraid of those moves. although today, i had already hit my down limit for the day.
i've been reading "trading to win" and it seems like you wrote 90% of the book. it speaks out finding edge, getting centered, visualizing... i am trying hard to apply all the ideas. i know i just need to let go and trade. i need to see the market for what it is saying, and not interpret the way i want to.
getting closer...
Thanks for the advice Scott.
I have been going back over some of your charts from 2009. Your ability to read the market makes it seem like the whole market is responding to your move: you go short and a stock drops, you go long and a stock turns around and goes up. Heh.
I haven't found any posts on your blog re. loss - as in end of day seeing a draw on your working capital. Do you still experience days where you just find your self needing to take a break, or a day where you pull the plug?
And on a side note - my SY trades(s) were definitely hindered by me reading the gain/loss ticker. I have it up to help track multiple. Do you stick with the candles on those big moves? I have never been in that type of a run before and the last couple of days left me eager to keep gains. $10 up and $10 down. 80% of that would have been freakin awesome.
DTF- I can't predict the markets but I know that most of the time I am not too far behind the money that is moving whatever stock I'm trading. It may appear that the market moves to my command but the reality is that I am only listening to what the market is telling me it is going to do. I'm pretty tuned in. I obey it's commands. I have no power over the market and am not dumb enough to think it will listen to me.
I have losing trades. Lots of them. Every day. But I don't have losing days because I have total confidence in my system and myself to carry it out and exploit the opportunities that come my way. A while ago I had about 8 or so losing trades in a row. I would say unusual to have that many in a row but the law of averages are at work constantly and I have no control over factors that affect them as they relate to the opportunities that I see. Following my system kept the dollar amount of that losing streak small. 8 losing trades in a day is nothing if sprinkled through the hours so it is also nothing if they come one behind the other. It didn't mean I lost my edge. It was just probabilities at work.
With the following provisos, hide your P&L, as strange as it sounds you shouldn't be making decisions on how much money is at stake. A trade is going to be either a stop out or a profit.
1. Set a stop. Accept this loss. This will stop you from becoming emotional.The premise for the trade was proven wrong. Next!
2. Let the markets/stock tell you when to take a profit. Is momo slowing? Or would it be crazy not to take profits here?
Worrying about the money is a sure fire way to lose it. Concentrating on sticking to your well thought out plan and mastering it's implementation will be time well spent.
That last post was perfect, Scott. Simple clarity.
Insightful and helpful - you know, all the usual =)
I notice that you don't talk a lot about candlestick patterns or setups - I seem to recall one entry where you said something about having to look up some of the pattern names in order to reference them in your post. And then proceeded to say you don't need to know them in order to be successful at trading.
Would you say that it is more about how the 5 minute candle unfolds that tells you what is going on in everyone else's head? Or is it more about looking at the immediate past and expecting the stock to behave similarly? Or maybe immersing yourself in the market, concentrating on what you are doing, trusting your judgment/read and going for it?
Take SHW on your latest post for example. It was trending up all morning. What prompted you to short at 14:05? I can see at least two place on the trend up where the setup looks similar - keeping things simple and looking at the direction of the stock, 11:10 and 12:30-ish. I suppose entering the short at those times and keeping your usual stops would not have cost you that much and getting it right at the end of the day more than made up for it, especially if you would have added to your winning position. And there was plenty of bounce on the way down, your stop was well placed. My entry would have been a little bit later, bringing my stop down, and I would have been bumped.
Thanks for taking the time for all of this. Freakin awesome.
Just wanted to drop you a note to tell you how much I've enjoyed reading your blog. I also believe in keeping things to the essence and believe that it is counter productive to make trading complicated.
I recently started trading 5 months ago and I'm on the brink of profitability. Believe it or not, your blog and your success keep me going when I have tough days. Thanks.
Eric
www.ericchung.com
Today I had a losing day. I am looking at the market and I realize the biggest factor affecting my performance today was fear. The market had plenty of momo this morning. But after Monday and Tuesday of this week, and getting stopped out of almost every new high/low, I lacked the confidence to enter when I should. Money was there on the table and I didn't trust the plan.
Being a new trader is tough. I find myself in this strange/curious/frightening place of developing an edge, and confirming to myself that I have an edge. That I have what it takes. My confidence is easily assailed: time after time today I was up 20 ticks, only to watch it come back and stop as I waited for it to develop. Watching a candle retrace and change colors does wonders for my emotional health.
All that being said - I wanted to tap into your experience: would you recommend someone like me spend more time re-hashing the day's 5 minute charts (where/what I did wrong), or forget the historicals and paper trade until I know/feel I have an edge?
What a difference a week makes lol.
DTF - I's vital that you preserve your cash, so I think you should stop trading and start paper trading to retest your system and trading plan. There is no sense in continuing to take real losses if you have a sense that you are lost right now.
Plus the markets are a bit choppy at the moment so maybe it is better to wait until there is real momo one direction or the other.
Another reason is to keep whatever confidence you still have. If you continue to loss, the typical human response would be to beat yourself up and have all sorts of counter productive trading thoughts.
alright scott, i got a new question for you. today, although i wasn't able to capitalize on what i was seeing (i will get there), i felt that i read the market correctly and i could see what would happen before it occurred. to me, it was like watching the matrix and seeing 0's and 1's for the past year, and then today, actually seeing past the 0's and 1's to see the "agents". for that, i thank you. i know it was only a day, but it is a glimpse to what could be. it makes me believe i can actually do this.
my question is, do you think i was able to see the market correctly without preconceptions or was the market acting favorably to my trading plan. (does that make any sense) maybe it is a question only i can answer.
my thought is, i trade tomorrow and everything i did today doesn't work. is it because i am again only seeing what i want to see (reverting to my old ways), or is it the trading environment isn't suitable to my style on that day.
thanks
Scott, countless thanks for sharing your experience. I feel I am fairly proficient at tuning into the market and what it is saying. That said, I sometimes see opportunities prior to the 10:30 "start time". How do you handle this or do you not even engage the market until 10:30? For example the VXX on Tuesday the 18th was screaming buy on the 10-10:25 pullback to 26, so I held off for the 10:30 mark and it started running without me. How exactly do you handle the mechanical start of your day? Do trade if your market sense is stronger than some of the rules, or is that recipe for disaster?
JOshua- I don't know what you are feeling but if you keep at this game long enough you will develop ticker sense. It is just a function of seeing patterns 1000's of times and putting all the information together. SOmetimes the markets make us look very smart and sometimes very stupid though. Sometimes you have to work hard for $300. Another time $30,000 can be made in a matter of minutes.
Thats what makes this game so fascinating to me - you never know what is around the corner.
Matt- I not even awake when the market opens. I wake up 1/2 hour later, do visualizations, go over my trading plan have a little snack and some juice, maybe walk around the block. I sit down 1 hour after the open and start trading. The occasional time when the have done something extraordinary the day before I will start a little earlier tho.
scott, thanks for the reply. my feelings probably stem from a lack of confidence. it's just one day everything works, and then next day, it doesn't. i don't know if i am not as focused, or if the market isn't favorable to my trading plan that day. i agree, it all comes down to face time with the markets. then i would know if the market was trading "my way" or if i am not as focused that day. i have been reminding myself lately "you never know whats around the corner". a few times, i have just gambled my money late in the morning, put on a trade with more risk than i am used to because i was emotional and wanted to get my money back. then i wind up at my down limit for the day and in the afternoon, there are great opportunities that i wasn't able to trade because i gambled in the morning.
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