Mrs. BlueCollar's nephew Shane Cordeau of Ketchum, Idaho, is a member of the US Ski Team (freestyle moguls) and skied last Thursday at Steamboat for a spot on the US Olympic team. Unfortunately, he didn't get the last slot for the trip to Vancouver but he skied well and needless to say, we are proud of him! Shane is only 23 years old and if he can stay healthy, has a bright future ahead. We had a chance to see his run on NBC sports on Saturday and the color commentator singled him out as the "dark horse" to win, though it did not come to pass. Speaking with his parents on Christmas day, Mrs. Bluecollar learned that he had broken his pole(s) sometime prior to his run and had been given replacements that were the wrong size. At his level of competition, this slight deviation made a world of difference and affected his performance. He is now focusing his training on World Cup and the 2014 Winter Olympics in Sochi, Russia. Shane is the son of Mrs. BlueCollar's older brother, former 4-time world champion mogul skier Joey Cordeau and outstanding competitive mogul skier Barb Cordeau. Shane's older sister Christine Cordeau is one of the finest all-around mogul skiers in the country. They are truly the "First Family" of United States competitive skiing. Check out the following:
http://www.youtube.com/watch?v=TbG2YU4NoY4&feature=related
http://www.youtube.com/watch?v=FBFiw3qneiw&feature=related
See his intense crash at the US Nationals 2009:
http://www.youtube.com/watch?v=mm4mkuld8Sc&feature=related
And finally:
Sunday, December 27, 2009
Wednesday, December 16, 2009
December 16th
I had a chance to get back into the markets to papertrade for an hour or so this morning. I have a lot of dayjob to do here though so I'm closing it down at 12:30pm. A large volume of day job projects have landed on me and the next two weeks are fully booked including the week-ends. So, there is not a great likelihood that i will do much in the markets until after the new year has arrived. I'll try to sneak in if I'm here between appointments but much of my work starting on Friday will take me away for full days... then, of course, there's the Christmas and New Years Day holidays.
Add to that the construction project we are doing over our garage! I've budgeted 6 months to complete it and it will likely take the full amount as I will be doing a large chunk of the work myself, with the exception of the plumbing, insulation, and drywall. So, running a business, home construction, then the regular home duties and an occasional night out will fill my months ahead. The big picture is that once we can get the apartment finished and establish a tenant, it may offer a bit of financial freedom to allow me to pursue my dream of training to be a full-time trader. The final piece of the plan will be to sell my business. My goal is to sell by end of 2010. Not just to pursue trading. I am weary of it after nineteen and a half years and need a different path. I do hope that the path is trading for a living, just as I note in the header to my blog. I'm certainly proceeding with that goal in mind.
Saturday, December 12, 2009
Friday December 11th
Didn't get to post last night because of day-job requirements. In fact, I just finished some Saturday day-job stuff and am putting up my one paper-trade from yesterday; a trade I took while I was here between work appointments. I only had about twenty minutes to look in on the markets and this trade was pushing the time envelope so I covered it even. Too bad, the chart shows my instincts were correct and it would have been a winner had I been able to stick around the office a few more minutes. No worries... it's just one more in a long line of practice trades which will eventually lead to my goal.
Thursday, December 10, 2009
Wednesday, December 9, 2009
December 9th - EOD
One more papertrade when I got into the market late. Busy out plowing, shoveling my own and my neighbors driveways/walkways while they are away in the Carribean.
December 9th- Morning trades
Paper-Trading:
I was able to catch the open as work appointments were cancelled because of the furious snow here in Southern Maine. I am out of the markets now as I must still venture out for other committments then return to take care of non-market responsibilities. I'll try to have a look in on the markets at the close if possible.
Good trading to all!
Tuesday, December 8, 2009
December 8th End of Day
Made a couple more paper-trades, this time in GG when I had a chance to sneak into the market later in the day.
Note the "What's Familiar" notations on the chart... the Yellow Lines which point to candle's closing at the high or low of the 5-min timeframe and dojis or near dojis, all of which tend to have a high correlation to reversals. Also note the high volume spikes as signs of reversal/ tops & bottoms (thin white lines from the volume bars up to the corresponding candle.)
December 8th
This morning's open where I closed out a short from EOD yesterday.
Risky to hold overnight but I had a good feeling, given the recent up/down action. A break upward would have killed this trade in a huge way. I'd never hold real money overnight in a 3x ETF... Never!
Monday, December 7, 2009
Market Maker vs. Small Trader
In his recent reply (December 4th) to my question about why he favors the QQQQ as an indicator, Scott of Fear and Greed Day Trader makes a point of mentioning Market Makers...
"The QQQQ doji told me of the greater probability of the overall markets dropping again. That little AAPL pop up was just a gift to short it at a higher price. Thank you market makers. 15 minutes later the bulls are crying in pain as the markets pile drive them to surrender, not coincidently at the 44.38 level on the QQQQ by the way. I cover with over a $6.50 gain when it ran out of steam."
So, while researching the blogs I like, this post I found at Dr. Brett Steenbarger's site (December 6th) caught my eye... It is a lengthy essay but I encourage you to take the time to read it. You can find it and other resources at his site: www.traderfeed.blogspot.com.
"Sunday, December 06, 2009
Lessons for Developing Traders: More on What Moves Markets
In the first post in this series, I offered a perspective on what moves markets that I wish I had learned during my early years trading. In this follow up post, I will offer a second insight that I wish I had learned in those formative years: what moves markets over short time frames.
While large institutions move money across global regions and asset classes, creating large trending moves, the factors that move markets over a time span of minutes to hours are quite different. Understanding how market participants are segmented by the time frame of their participation is crucial to interpreting market movement.
Here's a crude analogy: Suppose you are standing in the ocean and someone asks you what makes the water move around you. You would be right to mention the moon and its effects on tides and patterns of waves. Of course, you might also be right to mention winds and local climate conditions, particularly if a storm were brewing. Then, too, you could take a look at the kids splashing in the water all around you and notice that they were contributing quite a bit to the water's movement around you.
Markets are like the ocean: there are longer-term forces that affect supply and demand, and there are also more immediate, local forces. It is the interplay of these forces that creates the movement we observe. If we look immediately around us--a few feet in each direction--the tides might account for little of the movement relative to the splashing of all the people surrounding us. If we look across the broad expanse of ocean, all we'll see are the waves and the effect of the winds and tides.
The short-term trader is like the person surrounded by splashing swimmers: the turbulence in the immediate environment is created by liquidity providers, also known as market makers. They are the ones who offer shares or futures contract for sale and who put out bids to buy. Their goal is to profit from immediate movements around the latest bid and offer price, including the spread between bid and offer.
What I wish I had understood better early in my career is that, while institutions (and global flows of capital) dominate markets over long time frames (the tides); it is the liquidity providers that dominate trade from minute to minute (the splashing). While fundamentals win out over a period of years, the short-term movements of markets are determined by the sentiment--the buying and selling biases--of market makers.
In the past, the market makers were traders on the floors of the exchanges. Then, they increasingly became proprietary traders in electronic markets. Most recently, they have become computer programs, executing sophisticated algorithms to exploit imbalances in the order book.
When I first came to Chicago to work full time with prop traders, I was astounded that few of the traders made active use of charts and technical tools for decision support. Yes, they looked at charts for broad reference, but the bulk of their attention went to depth-of-market (DOM) displays that constantly updated the number of contracts being offered and bid and various price levels. It was the flow of bids and offers in and out of the book--order flow--that showed the traders whether buyers or sellers were coming into the market.
For instance, if the prop traders saw bids firming up and a couple of large offers come out of the book, they would quickly buy and then work an offer a bit above the market. When the offer was lifted, they would have a one or two-tick winning trade. All day long, those ticks added up, particularly given the leverage available to the prop firms. There were situations where traders would trade all day like that, barely ever looking at a chart, and barely even knowing the specific price of the index they were trading. All they were seeing were bids and offers above and below the market and trading those.
As liquidity providers became bigger and bigger, they controlled more size close to the market. They could hold large bids, for example, at several price levels below the market's current price. All it would take is a simultaneous pulling of those bids and firming of offers above the market to drive the price down tick after tick after tick. That, of course, would scare out other traders; it might also entice some sellers into the market, thinking that a fresh downtrend had begun. Little did they realize that the liquidity providers were working large bids even further down the ladder, picking up contracts at very good prices. As they firmed up those bids, no further sellers materialized, and the market would bounce right back toward where it had begun. Splash, splash.
What I didn't realize as a new trader was how to think like a price maker, rather than a price taker. To succeed at short-term trading, you have to think like a market maker, not a retail customer buying bids and selling offers. That means understanding order flow, not just the movement of price on a chart. In recent times, that also means understanding how algorithmic programs can move markets up and down, without necessarily changing the underlying fundamentals of markets.
Indeed, when market makers move prices artificially high in a falling market or artificially low in a rising one, unusual opportunities are created for fleet-footed, perceptive traders. Opportunity exists in the crevices between those participants at different time frames: a lesson crucial for developing traders."
Two seasoned professionals commenting on the presence of market makers and their influence on the market. And the first quote I noted above is not the first time that Scott Farnham has mentioned them at FNG.
Understanding the role of market makers will give us all great insight into what and how the markets move. As I pay closer attention, I have and still am learning the large role that these relatively small group human beings (through their direct action or through their computer programs) have on the movement of price.
That price movement is NOT the whole market speaking but rather highly influenced by a limited number of "controllers" underscores how important it is to understand the human element to trading. As Dr. Steenbarger notes above, looking at the market from the point of view of the Price Maker is more valuable than looking at it from the point of view of the Price Taker.
Good luck to all this week!
"The QQQQ doji told me of the greater probability of the overall markets dropping again. That little AAPL pop up was just a gift to short it at a higher price. Thank you market makers. 15 minutes later the bulls are crying in pain as the markets pile drive them to surrender, not coincidently at the 44.38 level on the QQQQ by the way. I cover with over a $6.50 gain when it ran out of steam."
So, while researching the blogs I like, this post I found at Dr. Brett Steenbarger's site (December 6th) caught my eye... It is a lengthy essay but I encourage you to take the time to read it. You can find it and other resources at his site: www.traderfeed.blogspot.com.
"Sunday, December 06, 2009
Lessons for Developing Traders: More on What Moves Markets
In the first post in this series, I offered a perspective on what moves markets that I wish I had learned during my early years trading. In this follow up post, I will offer a second insight that I wish I had learned in those formative years: what moves markets over short time frames.
While large institutions move money across global regions and asset classes, creating large trending moves, the factors that move markets over a time span of minutes to hours are quite different. Understanding how market participants are segmented by the time frame of their participation is crucial to interpreting market movement.
Here's a crude analogy: Suppose you are standing in the ocean and someone asks you what makes the water move around you. You would be right to mention the moon and its effects on tides and patterns of waves. Of course, you might also be right to mention winds and local climate conditions, particularly if a storm were brewing. Then, too, you could take a look at the kids splashing in the water all around you and notice that they were contributing quite a bit to the water's movement around you.
Markets are like the ocean: there are longer-term forces that affect supply and demand, and there are also more immediate, local forces. It is the interplay of these forces that creates the movement we observe. If we look immediately around us--a few feet in each direction--the tides might account for little of the movement relative to the splashing of all the people surrounding us. If we look across the broad expanse of ocean, all we'll see are the waves and the effect of the winds and tides.
The short-term trader is like the person surrounded by splashing swimmers: the turbulence in the immediate environment is created by liquidity providers, also known as market makers. They are the ones who offer shares or futures contract for sale and who put out bids to buy. Their goal is to profit from immediate movements around the latest bid and offer price, including the spread between bid and offer.
What I wish I had understood better early in my career is that, while institutions (and global flows of capital) dominate markets over long time frames (the tides); it is the liquidity providers that dominate trade from minute to minute (the splashing). While fundamentals win out over a period of years, the short-term movements of markets are determined by the sentiment--the buying and selling biases--of market makers.
In the past, the market makers were traders on the floors of the exchanges. Then, they increasingly became proprietary traders in electronic markets. Most recently, they have become computer programs, executing sophisticated algorithms to exploit imbalances in the order book.
When I first came to Chicago to work full time with prop traders, I was astounded that few of the traders made active use of charts and technical tools for decision support. Yes, they looked at charts for broad reference, but the bulk of their attention went to depth-of-market (DOM) displays that constantly updated the number of contracts being offered and bid and various price levels. It was the flow of bids and offers in and out of the book--order flow--that showed the traders whether buyers or sellers were coming into the market.
For instance, if the prop traders saw bids firming up and a couple of large offers come out of the book, they would quickly buy and then work an offer a bit above the market. When the offer was lifted, they would have a one or two-tick winning trade. All day long, those ticks added up, particularly given the leverage available to the prop firms. There were situations where traders would trade all day like that, barely ever looking at a chart, and barely even knowing the specific price of the index they were trading. All they were seeing were bids and offers above and below the market and trading those.
As liquidity providers became bigger and bigger, they controlled more size close to the market. They could hold large bids, for example, at several price levels below the market's current price. All it would take is a simultaneous pulling of those bids and firming of offers above the market to drive the price down tick after tick after tick. That, of course, would scare out other traders; it might also entice some sellers into the market, thinking that a fresh downtrend had begun. Little did they realize that the liquidity providers were working large bids even further down the ladder, picking up contracts at very good prices. As they firmed up those bids, no further sellers materialized, and the market would bounce right back toward where it had begun. Splash, splash.
What I didn't realize as a new trader was how to think like a price maker, rather than a price taker. To succeed at short-term trading, you have to think like a market maker, not a retail customer buying bids and selling offers. That means understanding order flow, not just the movement of price on a chart. In recent times, that also means understanding how algorithmic programs can move markets up and down, without necessarily changing the underlying fundamentals of markets.
Indeed, when market makers move prices artificially high in a falling market or artificially low in a rising one, unusual opportunities are created for fleet-footed, perceptive traders. Opportunity exists in the crevices between those participants at different time frames: a lesson crucial for developing traders."
Two seasoned professionals commenting on the presence of market makers and their influence on the market. And the first quote I noted above is not the first time that Scott Farnham has mentioned them at FNG.
Understanding the role of market makers will give us all great insight into what and how the markets move. As I pay closer attention, I have and still am learning the large role that these relatively small group human beings (through their direct action or through their computer programs) have on the movement of price.
That price movement is NOT the whole market speaking but rather highly influenced by a limited number of "controllers" underscores how important it is to understand the human element to trading. As Dr. Steenbarger notes above, looking at the market from the point of view of the Price Maker is more valuable than looking at it from the point of view of the Price Taker.
Good luck to all this week!
Friday, December 4, 2009
December 4th Opening half-hour
I have no outside dayjob appointments today (as yet) so I had a chnace to sit in on the markets at the open. I took two paper-trades with a $170 gain each. With such a big move at the open, TNA was a great trader; at the top of my list in daily move since the open. My inclination since I began learning this craft has been on playing for reversals of big moves. Today, I tried to play toward momentum, favoring buying in the direction of the primary move of the day. It seemed uncomfortable to me to be buying pullbacks instead of selling tops. It worked out ok for the high-volume rush this morning... of course everything is easier on big momo days. Last spring and summer I would think nothing of sitting here all day practicing but since the late summer I've learned that such moves are foolish. I can't act as though trading pays the bills and pays for others to do my long list of home projects. It clearly doesn't. So, today I am focusing on some day-job admin work and finishing up a cabinet trim project in my kitchen. The week-end is mostly free for the continuation of my project work so I should make great headway over the next three days. Someday, I hope to devote more time to training to be a self-employed stock trader... But for now, it is a part-time indulgence! I might try to get back to the market while I have my lunch a couple hours from now and perhaps at the close.
---------------------------------------------------
Update @ 4:30 pm:
I did not get a chance to get back into the markets so the two papertrades from this morning are the only ones for the day. Too bad... I had CNBC on as I worked on my cabinet project and it seemed to be a wild day... cannot wait to study some charts later to see the action that took place.
Hope all had a profitable day- financially or educationally!
Thursday, December 3, 2009
December 3rd
At about 
20 minutes before the close,
I got a moment to sign in to paper-trade. I made four trades and ended up with gains of only $60 paperbucks.
Still, it's better than losing. Looks like it would have been a great day to have been trading...
20 minutes before the close,I got a moment to sign in to paper-trade. I made four trades and ended up with gains of only $60 paperbucks.
Still, it's better than losing. Looks like it would have been a great day to have been trading...
Tuesday, December 1, 2009
November 30th & December 1st
I took SKF short on a paper-trade yesterday before my day-job duties. I was out and couldn't cover so I covered before going to day-job this morning. Here are the trades. I'll try to get into the market later this afternoon if I can. Doubtful though, as day-job is quite busy...
I had a good feeling about my entry on SKF but rest-assured, this type of trade is not my ideal one. I prefer to get out EOD and not leave trades unattended. Nice gain but too risky for real-money.Wednesday, November 25, 2009
November 25th
My first foray into the markets this week. Day job and fall projects are keeping me busy and away from the markets more than I'd like.
Still, my enthusiasm hasn't dampened and I still know that trading is my future. When... I'm not sure.
I did a little of the "What's Familiar" on the chart of FAS. Doji's and near-dojis, close of 5-min candles at their high or low: all familiar signs of reversal.
A good Thanksgiving to all... and for those who are not from the United States, I wish the spirit of our Thanksgiving to you. I know that I have much to be thankful for.
Friday, November 20, 2009
Thursday, November 19, 2009
Nov 16th - Nov 19th
I haven't had much time this week to pay attention to the markets but I had some paper-trades since Monday on FAS that have paid some paper-bucks. I logged in today just to cover my FAS from a short last night at the close. I missed the low of the day but I can't stay to watch the close today.
Good trading to everyone, real or paper!
Thursday, November 12, 2009
November 12th - No trades today
Very busy day-job today so no trades... not even near a computer to have a look.
Wednesday, November 11, 2009
November 11th-Veterans Day paper-trades
Most of the day I was away for day-job but I had a chance for a few paper-trades. Up $170 on 5 for 5 winners.
Veterans Day
It is Veterans Day. Take the time today to thank a veteran of the Armed Services for their service and honor them for their sacrifice. Without them, this great experiment called the United States of America would never have been possible nor would it have survived.
I salute my late father, Henry Patrick, United States Navy, SF2, 1944-1946.
Tuesday, November 10, 2009
November 10th
I was out on appointments until 12:45 but had a chance to liquidate some FAZ from last night. Then out for more day-job appt's and back about 3:30pm. It was then that I found Monsanto just past the peak of the day. Wow, what a beast! I had some fun scalping it EOD.
Monday, November 9, 2009
November 9th
In the market briefly, I made a quick trade from my live account and scalped a $25 gain out of SKF. Out too early though, I missed another possible 16 cents before the 10:05-10:25 pullback was complete. Too bad, because the 10:20 am candle was one which ended at the high for the 5-min timeframe; a sign of impending reversal. That would have been a great exit point, only 5 cents from the eventual top. Further, a short there would have given me an entry within 5 cents of the highest point for the rest of the day! The first close above the 7 EMA would have been at 1:20 pm at 24.73. This ideal trade would have yielded a gain of 30 cents ($150). The first close above the 17 EMA was at 3:30 pm at $24.50. This perfect trade would have yielded a gain of 53 cents ($265) and would have taken the most of the days move in SKF.
Lots of hopeful thinking! But, I laid the foundation for these two great trades. It just takes forward thinking and an adherence to the rules I've learned from FNG and Robert Deel's book. It's encouraging to think about what might be someday...!
Best to all of you!
Thursday, November 5, 2009
November 5th
Scalped a few paper-trade bucks out of SKF ($140) before going back to day-job stuff. I'd stay next to the computer the rest of the day if I could!
Tuesday, November 3, 2009
November 3rd
For a while, I tuned in to the markets and scalped about $100 in paper-trade bucks.
It is time for reflection though, as I am starting to fall back to a bad habit that I thought I had eliminated. I am still compelled to average a better price by adding to losing trades instead of stopping them out and starting fresh. That stops now.
I'm done today... I cannot take the whole day to watch the charts, as much as I'd like to do it!
Monday, November 2, 2009
November 2nd
I had a chance to break into the markets today for a short time before going on to regular daily duties. The first chart is my live account, first time since August(?) that I have traded it. Picked up about $50 before I shifted over to the papertrade account (see chart 2). I traded SKF and ended up with a paper gain of $170.
Today was not a day to play my "What's Familiar" game. Many false reversal signals out of SKF with regard to dojis, near dojis, and 5-minute candle closes at the top or bottom of the candle. It was that kind of day...
Friday, October 30, 2009
October 30th
I took just a few minutes in between day-job duties to scalp $80 papertrade bucks out of SKF, going long because of the 11:00 doji. I'm shutting down the trading now to focus on other things but a little practice every day in the market helps to keep me sharp and tuned in to my ultimate goal.
I do hope you all had a good trading day; monetary gain or knowledge (or both).
Thursday, October 29, 2009
I saw this, liked it, & reprinted it here...
As I surf the financial/trading blogs which interest me, I occasionally read something which catches my interest enough that I want to reproduce it here. Often, it is something which I have adopted and found helpful, or applies to an area of my personal deficiency with regard to trading.
I found this at onlythemomo.blogspot.com , MarketMonkey's Tuesday, October 20th blog post. These are two quotes from Dr. Alexander Elder.
"Do you have a statistically proven edge? If so, why would you get angry/upset about any influence luck has had on any series of trades?"
and,
"Fear of pulling the trigger is warranted when you don't have an edge...fear of NOT pulling the trigger is necessary when you have one"
These caught my eye because I recognize that I have no statistcally proven edge. No edge: In my opinion, that is the reason why I cannot advance to the next step. I take a trade and I have no calculated idea of what will happen. I haven't documented/ formulated the probabilities of success of my ideas about trading entries and exits. It is true that one does not have to quantify an idea for it to work. But, it seems that in my case where I don't have the time to "hang-out" and get the "feel" for trading that it would make sense to measure the odds of success. Over the next few months, I intend to keep track of some things and see how they prove out.
I found this at onlythemomo.blogspot.com , MarketMonkey's Tuesday, October 20th blog post. These are two quotes from Dr. Alexander Elder.
"Do you have a statistically proven edge? If so, why would you get angry/upset about any influence luck has had on any series of trades?"
and,
"Fear of pulling the trigger is warranted when you don't have an edge...fear of NOT pulling the trigger is necessary when you have one"
These caught my eye because I recognize that I have no statistcally proven edge. No edge: In my opinion, that is the reason why I cannot advance to the next step. I take a trade and I have no calculated idea of what will happen. I haven't documented/ formulated the probabilities of success of my ideas about trading entries and exits. It is true that one does not have to quantify an idea for it to work. But, it seems that in my case where I don't have the time to "hang-out" and get the "feel" for trading that it would make sense to measure the odds of success. Over the next few months, I intend to keep track of some things and see how they prove out.
Wednesday, October 28, 2009
October 28th
While putting together a big bid for a customer, I had time to watch the market for part of the day. I liked SKF so I stuck with it. Paper traded/Scalped $250 out of it for the day.
The yellow lines indicate some of the What's Familiar ideas I've outlined before; reversals based on candles that end at the high or low extreme, dojis, and near-dojis. Also volume spikes and their corresponding candle price reversals (see white lines from the volume chart up to the candle).
Tuesday, October 27, 2009
What's Familiar ?
What's familiar with SKF & MOS ?
The vertical white lines drop down to high-volume surges (compared to that which came before). The horizontal white lines associated with the white vertical lines mark the extreme point of price in that 5-min candle for those volume surges.
The yellow lines highlight reversals corresponding to dojis, near doji's (a tight open-close price range as compared to noticably broader high-low price range), or a close at the high or low of the 5-min candle. There are some false positives which I did not highlight, and that is why one uses stops. I'll leave them to you to find. Often, the reversal is not immediate but occurs within the allowable stop-zone and wouldn't trigger a stop if the doji, near-doji, or close at the extreme of the 5-minute interval were used as an entry signal. Ideally, you'd like to use them as an exit signal... :-). Check out your favorite high-ADR stock/ETF and make your own yellow lines at points of direction change. Once a trader can begin to peg reversals of trend with decent probability, the market is her/his oyster. I hope to be there one day myself!
Good luck to all!
-BCT
October 26th
I got into the market with about 18 minutes remaining and went to SKF because it seemed to have been pretty active today.
I scalped a quick eight cents with two trades after watching it for a few minutes. Four months ago, I would have spent the entire day signed into the markets because I was here at the desk. Now, I sign in when I believe I reasonably can, given my day-job. I value trading more this way and salivate more over the thought of becoming a full-time trader. Not to mention, I am left with the positive feeling that I am not abdicating my primary responsibilities, that I am doing what I must in addition to what I want.
Wednesday, October 21, 2009
October 21st
It felt great to get back to the markets to paper-trade today. It has been a couple weeks, it seems. I actually carved out about 3.5 hours to watch it.
I made some good trades and some which were not as good but ended up working out for me. Nothing to write home about because I see the glaring errors in my technique. Still, I think I did ok considering the very few times I have been able to practice in the past two months. I will continue to study, practice when I can, read the blogs (especially FNG), and look forward to the day when I can make my living at day-trading.
My best to you all. Hope you find your days profitable in all ways!
Tuesday, October 13, 2009
October 13th
Ha, into the markets very late again today after finishing with my day-job duties. ENER came up on the charts because I was watching it yesterday so I stuck with it and had a chance to scalp another ten paper-trade bucks out of it. So, two days in a row, and twenty bucks in paper-trade gains. Better than a sharp stick in the eye, I guess!
Monday, October 12, 2009
What's Familiar- October 13th
It's been awhile so I thought I'd do this again...
What's familiar? Look at the chart on the right... each of the yellow lines point to a doji, near-doji, or a candle which ends at the high/low for the 5-minute candle period. Each is a common sign of reversal of direction. And, in fact, each example for ENER does predict reversal; some small, some larger and playable.
Also, note the white line that runs from a high-volume spike in the volume area at the bottom of the chart up to the corresponding candle. There are four noted. Each candle high represents the top or darn close to the top of the trend within which it resides. An exit at the close of said candle would yield a gain if a trader was already in the stock from the consolidation break; 38 cents, 62 cents, 33 cents, and 21 cents respectively. The mystery is always the right entry, as you all know. It just sounds so easy when I write it but is so difficult in practice.
October 13th
Finally, another chance to sit in front of the market, if for only 20 minutes at EOD.
I scalped a ten-spot out of ENER, which had flattened out by the time I got to watch it.
I say it every time I post these days, but I'll say it again... I sure miss spending time in the markets. Wish I could throw away my wristwatch and cellphone, Scott! Ha! Gotta earn it first, I guess!
Best to all as you toil away!
Monday, October 5, 2009
October 5th
Seems like forever since I was able to sit in front of a live market.
After so much time I actually get a bit apprehensive; nervous energy flowing through me as I sign in. My results since the beginning of August have been mixed at best and ambivalence would be the best word for it.
Today though, I decided to try to ride the crazy train once I signed in around 3:20 pm: FAS, the 3x financial bull. It was consolidating after its big run from 2:20 to 2:25-ish and had hit a near doji at 3:20pm. I waited until the start of the 3:25 candle then went short, sensing that the market and FAS were going to break support and drop. Well, it didn't! It went the opposite and jumped while doing it. Man, it sure is hard to anticipate these moves. Afterward, they seem so easy to see why they happen. In this case, the near-doji was an indicator of reversal, as it often is. Why didn't I play it that way? I just had a hunch it would drop... I was guessing instead of reading the candles and playing the probabilities as I've outlined them for myself here many times. I stuck with the trade and was rewarded three candles later with the drop I had sensed was coming. However, I had let the stock go well beyond an acceptable stop... in fact, it went to HOD before reversing. Definitely a no-no. My gut told me there was weakness, but common sense still should have prevailed. Anyway, it is just practice... I've been out of the markets for most of a month and I jumped in on one of the most volatile big-cap runners out there. Today was just to get the feel back. Much is still crazy here in my real-life so my time will be limited for much of this month too. I'll try to get in as often as I can and post as much as possible. As I've mentioned before, I ignored my work so much over the past 8-9 months that I must get back on track by putting it first and stop treating stock trading as if it pays the bills. I believe it will one day but not in the forseeable future. I don't yet have the time required to properly learn it.
Mine is the life of a real person with responsibilities and daily matters to attend to, just like many of you. If anything, this blog is about all of us and the struggles we face every day to try to learn this frustrating and fickle craft.
Good trading to everyone this week!
Tuesday, September 29, 2009
September 29th
It felt pretty great to get back into the markets, if even for 45 minutes this afternoon. I haven't had much time to give to my stock market studies through the month of September. I truly do miss it... mainly because I know that trading is my future. I just have no idea when this will take place. There's a lot of swirling chaos around me which is detracting from my trading education; it eats up my day hours. That's the way life works sometime... I still study charts and blogs in the early mornings and in the early evenings. Mornings are best because I am an early riser and I'm fresh in my thinking.
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HESS was pretty squirrely at the days end so I was looking to scalp a little from it. I took $64 paper-trade bucks out of it with a 3 for 4 win rate. I know that scalping is not my goal, but for now it gives me gains and may be my ticket "into the game." Being able to scrape out some gains from the market is my starting point if I want to leave my old work life behind.
Right now, I am trying to build/prepare my small business for eventual sale. I don't have a buyer but I am focused on putting it where it needs to be to attract a buyer. If and when it does sell, I am going to try trading full-time. It's a big risk for me and Mrs. Bluecollar but it will have to be done eventually. My trading progress and my ability to position my business for sale are the determining factors in this life change. It could take years, who knows. But one thing is clear to me, it will happen eventually.
Tuesday, September 22, 2009
September 22nd
Up $49 paper trading today, when I could take a moment to look at the screen. No chance at undisturbed focus today. There was just too much going on. These days, just 15 minutes of concentration on the markets is hard to generate. My training is suffering because of day-job concerns and real-life. A perfect world would allow me to trade in peace so I could learn this. Sadly, I am not grasping this trading art quickly enough to stay on this track. As time goes forward, I must dedicate less time to trading. I have to focus instead on my business, the object of my neglect since I started trying to trade.
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Started slow today but finished with some strength. Best trade was pegging the 3:00 pm peak in FAS and letting it ride down some. I got out too soon but I'm glad at the choice I made to short there. At the same time, I was playing ERX the same way, which actually yielded more gain than the FAS.
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Started slow today but finished with some strength. Best trade was pegging the 3:00 pm peak in FAS and letting it ride down some. I got out too soon but I'm glad at the choice I made to short there. At the same time, I was playing ERX the same way, which actually yielded more gain than the FAS.
Monday, September 21, 2009
Sept 20th
A quick scalp of MOS around 10:00 am. This was a good result and a nicely (lucky) timed exit considering the little pop which followed and the fact that this exit marked the low of the day.
While I did sense that momentum had stalled at my exit point, I say "lucky" because the trend was well under way when I shorted into it just after signing into the markets. I hadn't allowed myself a chance to study what was going on. I saw momentum and the red indices so in I went! So certain was I that it would continue its drop that I allowed the trade to climb on the next two candles after my entry. I was too certain and not strict enough on my stop. Two things to work on: stop loss discipline (as always) and assessing my situation before jumping into the stock. In hindsight, the best entries on a trade, considering when I signed in, would have been to wait and get in long where I had exited. Or, wait until the 11:05am candle after the stock had consolidated into a near-doji then broke free; climbing up on a volume rush. In this case, the higher lows in the consolidation preceeding the breakout would have been a clue to direction of the eventual move.
Thursday, September 17, 2009
Sept 17th
I scalped a couple winners out of X around noon when I had a chance to sign in to the markets for 30 minutes or so.
No thoughts of trend trading today, I'm just trying to put together some winners, small though they are. Positive numbers are good for the psyche!
I'm trying the dulcet tones of Scott Farnham's trading mantra and it seemed to keep me focused while looking for some scalping chances today. I had it set to replay and it kept my mind in the game.
Today is my 44th birthday so these two winners are a present to myself. No losers today for the first time in recent paper-trading memory, and felt great to have them.
I took both scalps off the high-volume, large red candles at 12:00 and 12:10. The 12:25 candle would have been a nice gainer had I held. Chances are I would have stopped it out though as it dropped 16 cents below my entry.
I'm probably just imagining it, but I actually had a sense that the second trade was going to be a nice reversal. The doji into which I sold and the following red candle with the wide price range but a tight open-to-close price were familiar signs of high-probability direction change.
Thanks to Ynvai and Charlie for their recent posts. I got some "pick me up" from them. Good trading to you both!
Monday, September 14, 2009
Tough paper-trading days ...
Friday was a tough day... I found myself playing for a break of consolidation in US Steel (X) and getting on the wrong side of that eventual nice move. I was mostly studying the reasons for my mistakes as opposed to trying to trade for gains. Right now, I am focusing on entries, entries, entries. For this reason, I let the trade go. I later just exited in order to take advantage of what I thought would be a nice pullback in the primary trend (no way was I going to average in by adding to the loser). Then, the pullback was slight, my small unrealized gain on the pullback disappeared, and the stock went back to trend, against my reversal play. Just terrible decision-making. I was frustrated with my misreads.
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Today, I got a couple right and a couple wrong in the morning session and was about $50 ahead in paper gains when I found FAS and decided to try it out. I started by trying to play for a break out at 12:40 but it immediately went down at the point of entry and dropped. I stopped it out late, so sure that I was right that I let it test beyond the outer edges of the stop area. When it came back to me I took the stop-loss. I then went on to get a quick winner by reversing direction. I was still ahead by about $20 after those two FAS trades. Then, I took a break and watched FAS climb during the 1:20pm - 1:35 pm time frame. Off that nice rise, I went short after the high-volume spike. In short at 76.55, I saw it drop down as low as 76.41 leaving me up about $130 in unrealized gains. I thought it would break down from there and I held as it rose some during this consolidation phase. I was trying to read the familiar signals, looking for doji's, near-doji's, etc. At the 2:05 candle, I recognized a turning point was approaching. I held short, expecting the fade to continue and looking for the big break downward. Not to be, though. It popped at the 2:10 candle but not enough to stop me out (15 cents, not very much on a stock which moves as much as this one). Then, it started to fade for two candles of low volume and it touched my entry price at the doji-like candle at 2:20pm. I held short, trying to read the raw data feed and knowing that this was going to explode one way or the other. It was holding just above the 7 EMA... then it blasted up! Wrong way for me. I was actually reading an email when it took off and I noticed the move late. What a move; a $1.15 breakout candle. I shook my head in disgust, rode the pullback down in the next two candles and looked for it to tank after such a bullish move. Nothing doing! It then just kept going. I exited with a big loss after the following large green candle. The stock again pulled back two candles so I took it short again but waited until it retreated to the 7EMA. Bad decision to play reversal again. It blasted off leaving me with another loss when I exited. I stopped trading there, and good thing I did... it repeated, pulling back two red candles then taking off.
Why did I not go with the trend at any time throughout this whole rise of $3.44 over one hour and twenty minutes? It's a rhetorical question. I don't know the answer. It was exactly what I did on Friday for the large loss; playing against trend. This is my pattern, it seems. I have always tried to play for reversals since I started to learn day-trading in January.
Trading for trend is my goal and it is what I was trying to do just before the big breakout of consolidation against me in FAS earlier. But, instead of taking a quick loss and reversing direction in line with the trend, I kept looking for the reversal. And I don't think it was because of fear of cutting a loser short and taking the loss. I truly believed and expected it to break down in my favor! I kept thinking that, as it rose and rose!
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In any event, it is paper-trading and meant to be practice. But, at this point after doing it about 9 months, I really should be doing better than this. ( to my favor, I have been only trying to trade this style for less than 2 months.)
I really believe I am gaining a lot of knowledge about reading the tape and trying to trade momentum moves in succession. However, I am frustrated that I have lots of knowledge about what I am trying to do but no ability to actually do it.
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I am now taking a break from the blog for a while. And, very likely a break from trading. It is costing me a great deal to do it in the manner I am trying. I am not playing safe, trying to pick out the very best entry spots and capitalizing on them. I am trying to trade the tape. And, I am getting nowhere, it seems. The cost? Projects around the house are piling up and business is suffering because my competition is not taking lots of time to learn to trade!
I spent about 16 hours over this past weekend studying the charts and the raw data feeds for them. I was studying the charts at Fear & Greed. All of it was no help to me today. And, I didn't get a thing done on Sat & Sunday that actually has an immediate impact on my life.
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I can't see my trading nirvana from here. It is worlds away, it seems.
So, I'm gone for awhile. I sure wish it was for the same reason that Scott Farnham went away... :-)
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Today, I got a couple right and a couple wrong in the morning session and was about $50 ahead in paper gains when I found FAS and decided to try it out. I started by trying to play for a break out at 12:40 but it immediately went down at the point of entry and dropped. I stopped it out late, so sure that I was right that I let it test beyond the outer edges of the stop area. When it came back to me I took the stop-loss. I then went on to get a quick winner by reversing direction. I was still ahead by about $20 after those two FAS trades. Then, I took a break and watched FAS climb during the 1:20pm - 1:35 pm time frame. Off that nice rise, I went short after the high-volume spike. In short at 76.55, I saw it drop down as low as 76.41 leaving me up about $130 in unrealized gains. I thought it would break down from there and I held as it rose some during this consolidation phase. I was trying to read the familiar signals, looking for doji's, near-doji's, etc. At the 2:05 candle, I recognized a turning point was approaching. I held short, expecting the fade to continue and looking for the big break downward. Not to be, though. It popped at the 2:10 candle but not enough to stop me out (15 cents, not very much on a stock which moves as much as this one). Then, it started to fade for two candles of low volume and it touched my entry price at the doji-like candle at 2:20pm. I held short, trying to read the raw data feed and knowing that this was going to explode one way or the other. It was holding just above the 7 EMA... then it blasted up! Wrong way for me. I was actually reading an email when it took off and I noticed the move late. What a move; a $1.15 breakout candle. I shook my head in disgust, rode the pullback down in the next two candles and looked for it to tank after such a bullish move. Nothing doing! It then just kept going. I exited with a big loss after the following large green candle. The stock again pulled back two candles so I took it short again but waited until it retreated to the 7EMA. Bad decision to play reversal again. It blasted off leaving me with another loss when I exited. I stopped trading there, and good thing I did... it repeated, pulling back two red candles then taking off.
Why did I not go with the trend at any time throughout this whole rise of $3.44 over one hour and twenty minutes? It's a rhetorical question. I don't know the answer. It was exactly what I did on Friday for the large loss; playing against trend. This is my pattern, it seems. I have always tried to play for reversals since I started to learn day-trading in January.
Trading for trend is my goal and it is what I was trying to do just before the big breakout of consolidation against me in FAS earlier. But, instead of taking a quick loss and reversing direction in line with the trend, I kept looking for the reversal. And I don't think it was because of fear of cutting a loser short and taking the loss. I truly believed and expected it to break down in my favor! I kept thinking that, as it rose and rose!
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In any event, it is paper-trading and meant to be practice. But, at this point after doing it about 9 months, I really should be doing better than this. ( to my favor, I have been only trying to trade this style for less than 2 months.)
I really believe I am gaining a lot of knowledge about reading the tape and trying to trade momentum moves in succession. However, I am frustrated that I have lots of knowledge about what I am trying to do but no ability to actually do it.
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I am now taking a break from the blog for a while. And, very likely a break from trading. It is costing me a great deal to do it in the manner I am trying. I am not playing safe, trying to pick out the very best entry spots and capitalizing on them. I am trying to trade the tape. And, I am getting nowhere, it seems. The cost? Projects around the house are piling up and business is suffering because my competition is not taking lots of time to learn to trade!
I spent about 16 hours over this past weekend studying the charts and the raw data feeds for them. I was studying the charts at Fear & Greed. All of it was no help to me today. And, I didn't get a thing done on Sat & Sunday that actually has an immediate impact on my life.
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I can't see my trading nirvana from here. It is worlds away, it seems.
So, I'm gone for awhile. I sure wish it was for the same reason that Scott Farnham went away... :-)
Thursday, September 10, 2009
Sept 10th
Struggled at first with my paper-trading... I just wasn't sharp and up to the job. Slow to react on the two big stop losses I took, $210 and $214 respectively. But I was allowing extra room for a stock that moves as much as AIG. Those were my only losses of note... the third loss was $10; essentially a breakeven.
I got rolling as the day progressed; I really tried to focus on those familiar signals. I wasn't staying in trend though; I still find myself over-trading and not playing for the longer trends of the day. I'm trying too hard to "Read the Tape" and play each of the successive moves. This not only is WAY above my skill level but is also poor trading policy in general. Scalping is not what I aspire to. Gotta work on that.
Went 5 for 5 to finish the day, which pulled me "back to black" from the three losses.
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I threw in some of the What's Familiar... the yellow lines on the chart area for dojis, etc. The short thick horiz lines for the trend extremes with thin vertical lines dropping to the volume spike below. Yellow lines in the volume area which correspond to very low-volume candles which precede a decent move. It's so easy to see these things when the day is over. Harder to trade them as they happen. I guess if it were easy, everyone would be doing it.
What's Familiar- SPY Sept 9th
I'm off to a day-job project but thought I'd put this up for my future reference.
Yellow lines for dojis or candles with tight open/close price in relation to their high/low range. Each was a precursor to a significant event.
Short white horizontal lines at the price extreme for the move coupled with vertical lines to the volume spike, as indicators of reversal.
Note that the volume spike indicator of reversal is sometimes tied to the candles marked by my yellow lines.
Close examination will also show that not all of these candle types produce a reversal. Therein lies the danger... and a reason for a stop.
Wednesday, September 9, 2009
Sept 9th
Done early. Paper-traded AIG today and had some early success. I just watched it mid-day to eod, trying to "predict" the next moves. I'm a bit "wet behind the ears" for that, it seems. However, I love to see those familiar signals and seeing what the stock does when they show themselves... dojis, hammers, high-volume spike reversals, etc.
Bike Trip Photos
1. Mrs Blue Collar at Cape Enrage Beach, New Brunswick, Canada.
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2. From the porch of our cottage, Campobello Island, Canada. Watched finback and humpback whales surface all morning, right where the photo was taken.
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3. Acadia National Park, Maine.
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4. The obligatory "tourist" photo. Just over the Confederation Bridge, Price Edward Island, Canada.
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5. The warning sign at Cape Enrage Beach, just before the last leg of the trip up to Cape Enrage Lighthouse. And they meant it... for those not familiar, 20 k/hr is 12 miles per hour. A loose-gravel switchback on steep terrain was no place for a high-torque Harley, gear, and passengers weighing over a half-ton. But, risk breeds reward. Cape Enrage lighthouse was simply awesome!
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6. This scene of old boats caught Mrs Bluecollar's eye when the tide was way out. She captured it when the tide came back in. Campobello Island, Canada.
What's Familiar? - Sept 8th
I use "What's Familiar?" as a way to remind me of the common behaviors of stocks and how I hope to someday use them to trade many of the movements profitably, perhaps even in succession.
Two charts of AIG from yesterday, the one on the left is unmarked for comparison:
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The yellow lines indicate dojis, near dojis, or candles where the open to close price range is tight in comparison to the high to low price range. Each is a precursor to a move in the opposite direction. Are all playable? Perhaps, if you are very sharp with entries and exits. The smallest of the moves off this indicator is 25 cents (measured from the close price of the indicator candle to the far point of the move it telegraphs). Some are small moves as part of the larger overall trend and may not be candidates for trading; the 9:50 and 9:55 am candles, for example.
The one magenta line at 3:10 pm is a false signal, of sorts. It did predict a move to the upside but it was a fake-out and likely would have resulted in a stop-out.
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The white "triangle" lines indicate the high and low points of a playable move where one end of the candle met the 17 EMA and retreated. Only one, the 2:20pm to 2:30 pm, did so on the top side of the moving average, reflecting the overall bearishness of AIG on the day.
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The short horizontal white lines and the thin vertical line below it indicate reversals off high volume spikes relative to the time of day in which they happen. Note that many of these correspond to the doji areas (yellow lines). I now notice one which I didn't mark on the chart: see the 11:05 am candle and the volume below it. It is immediately followed by a reversal doji-like candle marked by the yellow line.
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Patterns, patterns patterns...
Tuesday, September 8, 2009
Sept 8th
11 days since my last trade. I got into the market at 3:15 pm so trend wasn't on my mind. I didn't just "jump in," but rather watched and tried to pick a safe spot for a trade rather than push the envelope. I got that chance in AIG at the 3:20 candle, playing the reversal off the high volume, big price move down as the 2:30pm to 3:20pm trend finished with a "bang." I jumped out of my paper-trade too early but I was here just to scalp anyway, still acclimating myself to the new trading ideas from the Robert Deel book.
Still, it was a positive paper-trade...
Over the next few weeks I look forward to paying more attention to the 7 and 17 EMA's and how price trends interact with them.
Eleven days away from the market seems even longer because I was on a motorcycle in very rural settings; without cable tv or internet for the days the market was open. It seems like a very, very long break and it was a good one. I feel a little rusty so I'll take it slow this week when I can break away from the day-job.
Monday, August 31, 2009
What's Familiar
In the What's Familiar theme I have been on for a week or so, I present FSLR from last Friday, Aug 21st.-
The chart on the left is clean for comparison. The chart on the right shows some common signals I am looking for to further my understanding of high-ADR stock behavior. The bold white horizontal lines are the reversal points of the major trends of the day.
First, I look for the big momo candles which end at the high or low of the candle as an indicator of reversal. The white arrows are two examples of this... further, each reversal was accompanied by a gap-up.
Second, precursors to break up or break down: The magenta colored lines with a white "X" (also the two white lines pointing to 11:05&11:10; I forgot to change the color to magenta) in the chart indicate a doji, a hammer, or a wide price range candle with a relatively small open/close range.
Third, my old favorite, the high volume spike and my new favorite, the low-volume indicator. These are marked by the thin white lines dropping down to the corresponding volume level (some of which are marked in the volume area by the white "X".
As I look at the chart now, I see more of these signals which I did not mark.
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I'm closing this down and not trading today. The weather is fine and I am going to wax the Harley! Then, it is "Downeast" Maine and hopefully Canada!
Best to you all for a good week!
Sunday, August 30, 2009
Excerpts from Deel's book, Part II
...continued from prior post
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"Extrememly volatile stocks will have a massive sell-off once or twice during the trading day. This intraday sell-off can become an excellent point at which to short the stock, making this strong downward move a bullish trend you will want to take advantage of. When this trend begins to correct, a climax selling reversal can be played by taking a profit on your short position and, at the right moment, going long (buying the stock). "
He then goes on to illustrate the point with a figure/diagram.
This is exactly what Scott Farnham does every day with remarkable genius. He plays each move of high-ADR stocks and ETF 's in succession.
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I think there are some great tips in this book and it would be helpful to the day-trader as well as the swing-trader in training. Especially if you favor the momentum-based trading style found at Fear & Greed Day Trader blog.
And for the price of a foot-long lunch combo at Subway(plus shipping), how can you go wrong!
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"Extrememly volatile stocks will have a massive sell-off once or twice during the trading day. This intraday sell-off can become an excellent point at which to short the stock, making this strong downward move a bullish trend you will want to take advantage of. When this trend begins to correct, a climax selling reversal can be played by taking a profit on your short position and, at the right moment, going long (buying the stock). "
He then goes on to illustrate the point with a figure/diagram.
This is exactly what Scott Farnham does every day with remarkable genius. He plays each move of high-ADR stocks and ETF 's in succession.
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I think there are some great tips in this book and it would be helpful to the day-trader as well as the swing-trader in training. Especially if you favor the momentum-based trading style found at Fear & Greed Day Trader blog.
And for the price of a foot-long lunch combo at Subway(plus shipping), how can you go wrong!
Excerpts from The Strategic Day Trader, by Robert Deel
I posted a few weeks ago that I had ordered "The Strategic Day Trader" by Robert Deel, from Amazon. From it, I have found some useful nuggets and found, in some part, the basis of Scott Farnham's method of trading. Published in 2000, much of it is dated; written before decimalization, for instance. However, it was well worth the $6 plus shipping that I paid. I have been re-reading my highlighted portions daily and thought these few from Chapter 4 - "A picture is worth a thousand words," might be interesting to some:
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"An analysis of price movement will show that stocks and markets move in distinctive, identifiable trends. These trends exist in multiple time frames of minutes, hours, weeks, months, even years. The existence of these trends is what high-probability, profitability traders and aggressive investors are seeking to identify."
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"Great traders identify trend and stay with it until it reverses. They do not abandon trend after it moves up 1/16 or 1/8 of a point. In day trading, for example, trends usually sustain themselves over various time intervals.... During this trend, there could be downward movement in one or two of the price bars, [he uses bar charts, not candlesticks] but the trend will usually keep moving upward or downward until the trend reverses. Because the trend is usually of a longer duration, you have the potential to capture substantial capital in one trade."
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"Never be fooled into thinking by taking more trades you will make more money. I prefer to take three to five high-probability trades over twenty scalping trades on every occasion. If you think about it, this is just common sense. When it comes to day trading, it has been my experience that logic and common sense are abandoned for emotional trading driven by fear and greed. "
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"If you look at an individual price bar for a given day, you see the high, low, and open for that day. Most people just see these bits of information and go no further. But as with the magnet, there is an invisible force that surrounds each daily price bar. That invisible force is intraday volatility. Volatility shapes the bar's high-low range, dictates the trend, and influences the other price bars. Each bar has to some degree an influence on the future price movement the next day. Because of this, you need to ascertain the intraday price movement of the previous day. In some cases you might want to observe the intraday movement of the previous five days. This will give you a feel for what traders are doing. For example, you may find intraday support and resistence levels that carry over into the next day."
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more on next post...
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"An analysis of price movement will show that stocks and markets move in distinctive, identifiable trends. These trends exist in multiple time frames of minutes, hours, weeks, months, even years. The existence of these trends is what high-probability, profitability traders and aggressive investors are seeking to identify."
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"Great traders identify trend and stay with it until it reverses. They do not abandon trend after it moves up 1/16 or 1/8 of a point. In day trading, for example, trends usually sustain themselves over various time intervals.... During this trend, there could be downward movement in one or two of the price bars, [he uses bar charts, not candlesticks] but the trend will usually keep moving upward or downward until the trend reverses. Because the trend is usually of a longer duration, you have the potential to capture substantial capital in one trade."
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"Never be fooled into thinking by taking more trades you will make more money. I prefer to take three to five high-probability trades over twenty scalping trades on every occasion. If you think about it, this is just common sense. When it comes to day trading, it has been my experience that logic and common sense are abandoned for emotional trading driven by fear and greed. "
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"If you look at an individual price bar for a given day, you see the high, low, and open for that day. Most people just see these bits of information and go no further. But as with the magnet, there is an invisible force that surrounds each daily price bar. That invisible force is intraday volatility. Volatility shapes the bar's high-low range, dictates the trend, and influences the other price bars. Each bar has to some degree an influence on the future price movement the next day. Because of this, you need to ascertain the intraday price movement of the previous day. In some cases you might want to observe the intraday movement of the previous five days. This will give you a feel for what traders are doing. For example, you may find intraday support and resistence levels that carry over into the next day."
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more on next post...
Saturday, August 29, 2009
Cost of an education...
As a dollars and cents kind of guy who proudly admits to gripping a nickel so hard the buffalo screams (umm, I mean frugal), I have often tried to calculate the costs of educating myself as a trader. I've heard that the education of a trader can be dearly expensive, alluding to those who have blown out their accounts trying to learn this art.
I met with a friend today who saves all his magazines for me to read. It's been a while so there were over two dozen. I quickly discarded the rubbish: Newsweek, Entertainment Weekly, Money, and Kiplingers, to name a few. But among them were my regular favorites: This Old House, Food Channel magazine, Business Week, The New Yorker, Boston Magazine, and Forbes. And in the August 24th issue of Forbes was the annual ranking of Best Colleges.
Because I have a bachelors degree, I often refer to my stock market training as my self-directed masters degree. As such, the costs of masters degrees was particularly interesting to me. For MBAs at the top ten ranked MBA programs out of the list of 50 best programs, out-of-state tuition and fees averaged $96,800. The ten lowest priced programs averaged $48,200. There's no doubt that these are not representative of all MBA programs available. State schools with in-state rates would be cheaper; the University of Southern Maine charges about $21,000 for the 60 credit-hour program. No matter how you slice it, a masters degree is a big financial committment.
What has trading cost me thus far? Down $3800 over 8 months (actually a one day loss), "tuition" is running me about $475 per month on average. If one assumes that a masters is often earned in about 24 months, my "self-directed" masters will cost me $11,400 if I continue on this track.
Yes, I know this is not a carefully considered and well-researched essay. My clumsy point is this: As expensive as trading can be to learn, it still may be the best deal out there. And the best deal of all? We are in charge of the tuition rates we pay.
I met with a friend today who saves all his magazines for me to read. It's been a while so there were over two dozen. I quickly discarded the rubbish: Newsweek, Entertainment Weekly, Money, and Kiplingers, to name a few. But among them were my regular favorites: This Old House, Food Channel magazine, Business Week, The New Yorker, Boston Magazine, and Forbes. And in the August 24th issue of Forbes was the annual ranking of Best Colleges.
Because I have a bachelors degree, I often refer to my stock market training as my self-directed masters degree. As such, the costs of masters degrees was particularly interesting to me. For MBAs at the top ten ranked MBA programs out of the list of 50 best programs, out-of-state tuition and fees averaged $96,800. The ten lowest priced programs averaged $48,200. There's no doubt that these are not representative of all MBA programs available. State schools with in-state rates would be cheaper; the University of Southern Maine charges about $21,000 for the 60 credit-hour program. No matter how you slice it, a masters degree is a big financial committment.
What has trading cost me thus far? Down $3800 over 8 months (actually a one day loss), "tuition" is running me about $475 per month on average. If one assumes that a masters is often earned in about 24 months, my "self-directed" masters will cost me $11,400 if I continue on this track.
Yes, I know this is not a carefully considered and well-researched essay. My clumsy point is this: As expensive as trading can be to learn, it still may be the best deal out there. And the best deal of all? We are in charge of the tuition rates we pay.
Friday, August 28, 2009
August 28th - A bit later...
Here's where it is now. I've been watching it (as well as eating lunch) instead of trading it.
It just closed above the 7 EMA at the 12:35 pm candle at $48.98. An exit on my trade here would have given me a gain of $4830.
However, this is a delayed/late exit. The ideal exit signal would have been at the close of the 12:15pm candle, corresponding to the high volume spike and long tail/wick on the candle. An exit here at $46.60 would have yielded $7,210 in gains. A nice trade...
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I'm outta here. We're going for a bike ride. Only for the afternoon, though. Bad weather coming in for the week-end so no overnights until next week.
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Good trading to all. May your endeavors be educationally and financially profitable!
August 28th - Mid-Day
I had been waiting for about 30 minutes for a move in AIG. I always consider the filling of an opening gap.
The stock is still sinking even after this screen shot so I really missed most of the trade. But I am happy about pegging the breakdown. I looked for the string of closes below the 7 EMA then took it short just before the drop. What I have to learn now is patience... to hold my winners... the stock is at $48.11 right now and if I had held, I'd be up $5700 on this trade so far, instead of only up $554. I sold at what I thought would be a resistence level set by the 9:40 & 9:45 am candles. The stock has not threatened a break of the 7 EMA, the sell signal I am considering adopting.
Ok, looks like a potential reversal candle is forming at 11:55pm... we'll see how it goes.
Thursday, August 27, 2009
Upcoming...
Starting tomorrow at noon, I am on vacation until after Labor Day. If the weather is sunny, Mrs. BlueCollar and I are planning a motorcycle trip to the Canadian Maritimes (Nova Scotia). So if, if, if we can get the weather, the blog will also be on vacation. If the weather fails us and we can't ride, I'll probably be spending some time with the markets.
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Last year, we did a bike trip to Ottawa for Canada Day (great fireworks) and then through Montreal to Quebec for the 400th anniversary of the city. Standing on bleachers under the Chateau Frontenac, it was the best fireworks show I've ever seen, by far. Not to mention, saw Van Halen's final tour-date at the Plains of Abraham before walking down to the fireworks. Finished the trip by getting back to Maine for our USA Independence Day festivities. There's nothing like the freedom and calming effect of riding. It mellows even my Type-A personality...
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If anyone ever gets the chance, I highly recommend Nova Scotia as a destination. Some of the nicest people you will ever meet. For example, when we were there last in August 2001 with two other couples on bikes, we decided to walk to dinner based on our motel clerk's distance estimate. It turned out to be a long walk... a couple miles each way, and after dark. We met a local couple having their anniversary dinner and I'll be darned if they didn't offer us a ride back! It took two trips and one spouse had to stay at the restaurant while the other drove complete strangers around Yarmouth, Nova Scotia. And they were so gracious about it... wouldn't think of taking a dime for their troubles. Can't imagine that happening anywhere else.
Not to mention some great scenery and the largest tides in the world in the Bay of Fundy. A tide of over 70 feet was recorded in 1869. Now you can amaze your friends with great tide trivia. Don't say you never got anything useful here...ha!
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Last year, we did a bike trip to Ottawa for Canada Day (great fireworks) and then through Montreal to Quebec for the 400th anniversary of the city. Standing on bleachers under the Chateau Frontenac, it was the best fireworks show I've ever seen, by far. Not to mention, saw Van Halen's final tour-date at the Plains of Abraham before walking down to the fireworks. Finished the trip by getting back to Maine for our USA Independence Day festivities. There's nothing like the freedom and calming effect of riding. It mellows even my Type-A personality...
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If anyone ever gets the chance, I highly recommend Nova Scotia as a destination. Some of the nicest people you will ever meet. For example, when we were there last in August 2001 with two other couples on bikes, we decided to walk to dinner based on our motel clerk's distance estimate. It turned out to be a long walk... a couple miles each way, and after dark. We met a local couple having their anniversary dinner and I'll be darned if they didn't offer us a ride back! It took two trips and one spouse had to stay at the restaurant while the other drove complete strangers around Yarmouth, Nova Scotia. And they were so gracious about it... wouldn't think of taking a dime for their troubles. Can't imagine that happening anywhere else.
Not to mention some great scenery and the largest tides in the world in the Bay of Fundy. A tide of over 70 feet was recorded in 1869. Now you can amaze your friends with great tide trivia. Don't say you never got anything useful here...ha!
August 27th
Whoa. I was overmatched by AIG today because of the speed. I haven't tried playing something with that much volatility since early spring. For me, a couple lessons from today. First of all, if I had kept my 
three biggest losses to the stop limit of $400, I would have been down only two dollars today. However, I did escape with gains from a couple trades which I had let go over the stop. So, this is a bit of a distortion too.
I was mesmerized by the speed and unaccustomed to stops as large as was needed on this fast mover. I finally settled on $400 because I remember that amount being in the neighborhood of where FNG had his last fall during the big price movements. I really had no clue as to where to place them without that benchmark.
Second lesson of today was that I was focused on the unrealized gains column on my trading platform and not on the charts. I finally removed the gains and losses data and still found myself searching for it. It's gone for good from my paper-trade account now. I need to focus on price and volume, not gain/loss.
Third lesson was that I was suckered into trying to trade consolidation areas and not waiting for familiar set-ups.
Finally, I did not follow the plan I have been trying to create... I got a good entry long: $47.78 at
2:15 after the 2:10 candle closed above the 7 EMA and price started to rise above both EMA's. But, I got distracted and impatient after about 5 minutes and bolted with a $50 gain. That was a bad move because it was a nice entry into a 30 minute trend of continuous green candles which could have yielded up to $1.97 per share in gains ($1,970 on the 1000 shares). During this run, price did not close below the 7 EMA and only once in the next candle after entry did it drop below my entry price (by only 2 cents). So, the trade was never in jeopardy of stopping out. I just didn't follow my plan. The speed of the movement got into my head.
As a result of bailing on this solid trade, I was trading too much... multi-trading when I should have been managing one trending trade. My losses during this trend timeframe: $-1,521.
So, hypothetically: The true cost of discarding this one trade: Missed gains of up to $1,970 added to the losses of $1,521... the net swing in my returns today was up to $3,491.
Other observations:
I know I mentioned it before, but Speed Kills.
Secondly, I am still in the initial stages of formulating a trading plan; only since last week-end, really. I'm toying with using the 7 & 17 EMA's in it but it needs a lot of thought. For instance, had I stayed in that trend mentioned above, using an exit signal of the "First Close Below 7 EMA" would have been at $48.74, during the large drop at 3:20pm. Ouch! That late an exit would have taken away a huge chunk of the potential gains (although it would have given a prfitable trade). Clearly, other signals have to be considered. Using the High-Volume spike I have relied on in the past as a signal, it would have led to an exit during the 2:35 pm candle. Definitely more profitable than the previously mentioned 7 EMA Cross signal. Although profitable, the High-Volume signal seems premature. I just don't know yet. Eventually, I hope to be able to read momentum and base decisions on it primarily, discarding pre-determined entry/exit points. I really am impatient with myself and need to allot the time to learn this.
This is still really new but has been a necessity for a long time. I never have had a plan, a framework, for trading and certainly never had any semblance of an exit strategy. Mostly, I have operated based on one primary signal; the high-volume reversal of direction.
All of this is a work in progress but I am excited by the possibilities. I just wish I had more time for the research...
three biggest losses to the stop limit of $400, I would have been down only two dollars today. However, I did escape with gains from a couple trades which I had let go over the stop. So, this is a bit of a distortion too.I was mesmerized by the speed and unaccustomed to stops as large as was needed on this fast mover. I finally settled on $400 because I remember that amount being in the neighborhood of where FNG had his last fall during the big price movements. I really had no clue as to where to place them without that benchmark.
Second lesson of today was that I was focused on the unrealized gains column on my trading platform and not on the charts. I finally removed the gains and losses data and still found myself searching for it. It's gone for good from my paper-trade account now. I need to focus on price and volume, not gain/loss.
Third lesson was that I was suckered into trying to trade consolidation areas and not waiting for familiar set-ups.
Finally, I did not follow the plan I have been trying to create... I got a good entry long: $47.78 at
2:15 after the 2:10 candle closed above the 7 EMA and price started to rise above both EMA's. But, I got distracted and impatient after about 5 minutes and bolted with a $50 gain. That was a bad move because it was a nice entry into a 30 minute trend of continuous green candles which could have yielded up to $1.97 per share in gains ($1,970 on the 1000 shares). During this run, price did not close below the 7 EMA and only once in the next candle after entry did it drop below my entry price (by only 2 cents). So, the trade was never in jeopardy of stopping out. I just didn't follow my plan. The speed of the movement got into my head.
As a result of bailing on this solid trade, I was trading too much... multi-trading when I should have been managing one trending trade. My losses during this trend timeframe: $-1,521.
So, hypothetically: The true cost of discarding this one trade: Missed gains of up to $1,970 added to the losses of $1,521... the net swing in my returns today was up to $3,491.
Other observations:
I know I mentioned it before, but Speed Kills.
Secondly, I am still in the initial stages of formulating a trading plan; only since last week-end, really. I'm toying with using the 7 & 17 EMA's in it but it needs a lot of thought. For instance, had I stayed in that trend mentioned above, using an exit signal of the "First Close Below 7 EMA" would have been at $48.74, during the large drop at 3:20pm. Ouch! That late an exit would have taken away a huge chunk of the potential gains (although it would have given a prfitable trade). Clearly, other signals have to be considered. Using the High-Volume spike I have relied on in the past as a signal, it would have led to an exit during the 2:35 pm candle. Definitely more profitable than the previously mentioned 7 EMA Cross signal. Although profitable, the High-Volume signal seems premature. I just don't know yet. Eventually, I hope to be able to read momentum and base decisions on it primarily, discarding pre-determined entry/exit points. I really am impatient with myself and need to allot the time to learn this.
This is still really new but has been a necessity for a long time. I never have had a plan, a framework, for trading and certainly never had any semblance of an exit strategy. Mostly, I have operated based on one primary signal; the high-volume reversal of direction.
All of this is a work in progress but I am excited by the possibilities. I just wish I had more time for the research...
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