Chart# 4 shows SKF end of day. Red line entry, green line is my exit, $18+ run
Wednesday, November 19, 2008
How I trade reversals
I changed my original post as the images did not line up with the text . See above for the revised post.
Monday, November 17, 2008
Fine tuning the machine
You've got the latest, greatest trading platform. You've got new flat screen monitors. You've got support, resistance, candlestick patterns down pat. You've got a trading plan that you think is easy to live with. Now you need to work on the most important market interface...your body/your brain.
A Ferrari won't last too long without proper oil in the engine or air in the tires. You as a trader won't last long if you are stressed, out of shape, weak minded, sluggish or off balance.
View trading as a tough arena that only the fittest will survive. Each trading day becomes an opportunity to hone your skills and develop yourself. How can anyone attempting to perform against seasoned pros in any type of contest have a hope of success if they don't prepare themselves in every way for the coming conflicts? They can't. Period. They will blow through their account and be left with angry recriminations that the market screwed them. The only thing that screwed them was themselves with a failure to adequately prepare.
You have to have an undiminished focus. You have to immerse yourself in the market. You have to trade your plan automatically.
If you find yourself with drifting thoughts at crucial times, you'll need to find a way to counter this. In todays fast paced world there are many distractions. Take some time out to slow down and think. Try this little exercise in concentration: close your eyes and think about what an apple hanging on tree looks like. Visualize the colours and texture of the skin and stem, the size, sheen, shape, curves, imperfections, any flowers on the bud. Can you think about only the apple for 10 seconds, 30 seconds, or a minute before some sports score or bill payment intrudes into your thoughts? If you’re got too much noise going on inside your head to think of a simple apple for a minute then perhaps wait until you are free of whatever distractions are affecting you before you get deeply involved in trading situations that can scar you for a long time.
A Ferrari won't last too long without proper oil in the engine or air in the tires. You as a trader won't last long if you are stressed, out of shape, weak minded, sluggish or off balance.
View trading as a tough arena that only the fittest will survive. Each trading day becomes an opportunity to hone your skills and develop yourself. How can anyone attempting to perform against seasoned pros in any type of contest have a hope of success if they don't prepare themselves in every way for the coming conflicts? They can't. Period. They will blow through their account and be left with angry recriminations that the market screwed them. The only thing that screwed them was themselves with a failure to adequately prepare.
You have to have an undiminished focus. You have to immerse yourself in the market. You have to trade your plan automatically.
If you find yourself with drifting thoughts at crucial times, you'll need to find a way to counter this. In todays fast paced world there are many distractions. Take some time out to slow down and think. Try this little exercise in concentration: close your eyes and think about what an apple hanging on tree looks like. Visualize the colours and texture of the skin and stem, the size, sheen, shape, curves, imperfections, any flowers on the bud. Can you think about only the apple for 10 seconds, 30 seconds, or a minute before some sports score or bill payment intrudes into your thoughts? If you’re got too much noise going on inside your head to think of a simple apple for a minute then perhaps wait until you are free of whatever distractions are affecting you before you get deeply involved in trading situations that can scar you for a long time.
Trading is a thinking person' marathon, hours long in duration and requires your precise attention. Try mediation. Simplify your life. Dump whatever garbage is in your life dragging you down if your goal is to become a successful trader.
Having an active life away from trading is vital as well. Challenge yourself to become better at what you do. Being in good physical condition will pay you back big dividends in all parts of your life. Being disciplined to maintain a healthy weight through exercise can become a transferable skill to being a disciplined trader. If you can’t stick to a simple plan of regular exercise how can you expect to be able to be really disciplined in other areas? Eating right and cutting out the junk food will help you become a better trader. I’m very active in mountain climbing, back country skiing, mountain biking. I’m 46 years old but my climbing and skiing partners are 20 years younger. They push the hell out of me.
I take fish oil supplements for my brain, drink “greens” to help my body, eat good food and get plenty of exercise. I am confident in myself and of my abilities.
If you don’t view all this behind the scenes work as important to being a successful trader, ask yourself this: do you think an average football fan who is out of shape, has no plan, no practiced skills, no confidence in their abilities, can go head to head against a pro player in the championship game for several hours? Probability says no.
Thursday, November 13, 2008
Keep your head on tight
Well I thought I'd be away longer than this , but today was such an awesome trading day, I have to comment.
Trading days like today come few and far between although there have been 2 or 3 already this fall. These are the type of days that are an open invitation to let as much cash fly into your account as you can handle.
The action never stopped so it was important to keep focused and put your brain into machine mode. Sorry I don't have any realtime charts to post as the action was too fast.
I played the inverse ETF's, EEV SKF SRS all day and was rewarded at first with some $5, $ 10, $14 runs long. Caught the top of the turn and rode them down, took profit, went long, took profit went short, long short until the last hour as per my usual style. Then the selling was ferocious and unrelenting until the close. I banked almost $22 runs in EEV, $26 in SKF, $29 in SRS shorts. I was in with everything I had.
Some people were reeling from the staggering moves of the market and I feel sorry for the traders who coudn't come to grips with what the market was doing. But this is your reason for being here, learning all this stuff, suffering through the flat market tedium. Times like these need to taken full advantage of. A lot of money was left behind by those traders who were onl;y staring at their screens.
I have a very strong belief that the market has the capacity to do ANYTHING. And it is best to condition your mind to accept this as a trading truth. Trying to predict levels, bounces, bottoms and tops is an exercise in futility. It can have no positive outcome for you, only distraction. It is out of your control. When you realize that ANYTHING can happen, then you open your mind up to all possibilities instead of rigid expectations based on folly. I was looking at the SRS daily chart instead from 10/28/08 and it had a $70 trading range. The way things were going I thought that could be a possibility for today as well. Turned out to be $50.
Am I brilliant just because I caught the tops and bottom of the moves? NO. But seeing, recognizing and acting on momentum change is what I am good at and focussing only on what the charts were doing paid big dividends today.
Keeping your head on during big moves, trading your normal plan and not letting the big dollar signs cloud judgement was the key today.
If you were one the focussed traders who made 2, 5 or 10 times what you normally do, it doesn't mean you are super , mega , brilliant though. It was only the market conditions giving you that. Contain your ego, trade humble tomorrow.
Trading days like today come few and far between although there have been 2 or 3 already this fall. These are the type of days that are an open invitation to let as much cash fly into your account as you can handle.
The action never stopped so it was important to keep focused and put your brain into machine mode. Sorry I don't have any realtime charts to post as the action was too fast.
I played the inverse ETF's, EEV SKF SRS all day and was rewarded at first with some $5, $ 10, $14 runs long. Caught the top of the turn and rode them down, took profit, went long, took profit went short, long short until the last hour as per my usual style. Then the selling was ferocious and unrelenting until the close. I banked almost $22 runs in EEV, $26 in SKF, $29 in SRS shorts. I was in with everything I had.
Some people were reeling from the staggering moves of the market and I feel sorry for the traders who coudn't come to grips with what the market was doing. But this is your reason for being here, learning all this stuff, suffering through the flat market tedium. Times like these need to taken full advantage of. A lot of money was left behind by those traders who were onl;y staring at their screens.
I have a very strong belief that the market has the capacity to do ANYTHING. And it is best to condition your mind to accept this as a trading truth. Trying to predict levels, bounces, bottoms and tops is an exercise in futility. It can have no positive outcome for you, only distraction. It is out of your control. When you realize that ANYTHING can happen, then you open your mind up to all possibilities instead of rigid expectations based on folly. I was looking at the SRS daily chart instead from 10/28/08 and it had a $70 trading range. The way things were going I thought that could be a possibility for today as well. Turned out to be $50.
Am I brilliant just because I caught the tops and bottom of the moves? NO. But seeing, recognizing and acting on momentum change is what I am good at and focussing only on what the charts were doing paid big dividends today.
Keeping your head on during big moves, trading your normal plan and not letting the big dollar signs cloud judgement was the key today.
If you were one the focussed traders who made 2, 5 or 10 times what you normally do, it doesn't mean you are super , mega , brilliant though. It was only the market conditions giving you that. Contain your ego, trade humble tomorrow.
Wednesday, November 12, 2008
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?
- 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?
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