It was an eventful year, 2010. So much was changing that wasn't brought to this blog. I foreshadowed my goals that lead to these changes in my post on January 5, 2010. Reprinted here...
Tuesday, January 5, 2010
2010 - What's In Store...
Here's the new year, here's the new decade. But, it seems it is more of the recent same for me. My time in front of the markets is reduced compared to where it was late winter, spring and the early summer of 2009. What I discovered was that the old adage is true: you cannot serve two masters. My two masters are the stock market and my small business. By dividing my time pretty evenly between the two for much of 2009, I was doing both a disservice. Now, I have thrown a major home construction project into the mix! For the next few months, the stock market will be the lesser of these three priorities. However, for the long-term, it is my first priority. As I have blogged before, the construction project is an apartment which will generate income. And starting February 1st, I am actively seeking a buyer for my business, which I hope will sell by years end. The sale of the business will produce revenue and time necessary to follow my path to trading the markets full-time. Construction and business sale... these are the short-term foci of attention here at bluecollartrader central. "Winners Finish Strong" is a phrase I've heard and like. That is my intent... to finish my business strongly enough to be happy with the outcome. This is not to say that I will be ignoring the stock market... not a chance. I will continue to practice and blog my results, to follow the blogs I like, to read and re-read books on the subject, and keep track of the general condition of the economy through the news and CNBC.
I believe I reached the point last year where I could not advance in my abilities unless I was trading full-time. I have a pretty good grasp of technical analysis and a basic understanding of momentum analysis. What I lack is perspective and relevance. Both of these require experience... face-time in front of the computer studying the intra-day movement of stocks; continual attention. But, I cannot apply this required amount of effort this year to practice trading. It would not be in keeping with "Winners Finish Strong;" as I defined it above. At age 44, I have the entire second half of my life to trade stocks. I can sacrifice another 6 to 12 months in service to my business and other matters which in the longer term, will free me financially to pursue my goal of earning my living as a self-employed stock trader. I expect that what you'll see in 2010 here at http://www.bluecollartrader.blogspot.com/ is close to what you saw between August 2009 and the present and less like what you saw from February 2009 through July 2009.
My best to you all for a stunningly prosperous 2010!
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Goal Oriented and Finishing Strong, Assisted by Common Sense & Life Experience
I am happy to announce that my two primary goals noted above were realized in 2010; the completion of an income generating apartment and the sale of my small business. The former was completed at the end of June, and the latter effective December 30.
Throughout last year, I acted as designer, general contractor, and primary tradesman on the 1400 square foot construction project that included the completion of a 750 square foot apartment. The project was much more than the income unit. Also included was another 700 square feet of living space added to our personal home in the form of a guest suite; large bedroom with private stairway, and full bath. Beyond the new construction area, the project also involved the installation of an additional 800 sq feet of hardwood flooring and nearly 50% of the trimwork on the already occupied second floor of our home. These items were intentionally neglected for the first 6 years of our occupancy until our mortgage debt level got to a point where we felt comfortable enough to proceed. In fact, this responsible management of personal mortgage debt was the overriding determinant of when we would do the entire project to begin with! It is more coincidence than design that my interest in trading and the sale of my business occured at the same time.
And, the work continues still... Without a "day-job" anymore, I am using much of my time to complete the trimwork/finish carpentry which remains. It is finicky, slow work for someone who doesn't do it as a primary trade. And some is entirely custom, like hand making 1/2 moon window casing for two windows and designing and building from scratch a bathroom vanity that will work with the design limitations in the new guest bathroom.
My goal is to complete it all by end of February. With the exception of the initial basic framing, the drywall installation, connecting the heat to our boiler, and much of the painting by Mrs Bluecollar and her brother, I have done all the work myself. I am many things, and of them, I am well served by my frugality! And frugality provides great reward, both for financial gain and for the self-discipline it requires. Profligate spending simply does not nourish the best parts of our spirit, it fosters waste and over-indulges the ego.
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I had initially intended to pursue the business sale earlier in the year but found that the timing was not good, considering the construction project that was in full swing and just how active the business was as compared to 2009. After the tenant was secured in the new apartment, I put out the word in my industry that I was "for sale." A buyer, one of my competitors, immediately expressed interest and we negotiated throughout the Autumn months. And finally, the paperwork was signed on December 30th. I insisted we not wait until January 2011, in order that I could meet my written goal from the January 5, 2010 blog post reprinted above. I fully intended to do as I said I would.
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I now have time on my side to learn to trade for a living. While I still am finishing the remnants of the construction project over the next two weeks, I will also be practice trading when I can. Ironically, ever since the sale of my business, I have actually spent less time paper-trading a live market than before when I had day-job committments! Assisting in the transition with the buyer of my business, the last of my construction project, and the computer virus issue noted in earlier posts has eaten up much of my time since the first of the year. However, I have spent more time with chart study in the early mornings and evenings than before... and I still dream of candlesticks at night; something that hasn't changed since January 2009 when I set my career goal as being a self-employed market trader.
I am resolute in my pursuit of this goal. However, Mrs. Bluecollar & I are not wealthy people and do not have an endless pool of money on which to live while I pursue my goal. At a well-defined point, the money will run out if I do not begin to successfully trade live.
There is real financial risk in this, and it is always in the back of my mind as I go about my daily tasks. The future is uncertain and I do not have a clearly defined backup plan in place if trading does not work for me. This is all without a safety net. And I wouldn't have it any other way.
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Once February ends and I can sit with the markets full-time, I will begin to put up more posts on this blog. I look forward to the new year, 2011. I sense I am at a turning point in life, and the nervous excitement is driving me on.
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I wish a prosperous 2011 for us all.
Tuesday, February 15, 2011
February 15th
I was reading my old posts from January 2010 and came across my reprint of a post from Dr. Brett's site, http://www.traderfeedblogspot.com/
I found it insightful then and still do. Go to the actual post to see the charts he refers to in the text.
Here it is again...
Sunday, October 08, 2006
Who Controls the Markets?
In my posts, I have frequently emphasized that large market participants dominate the equity index markets and control its movement. My trade-by-trade analysis suggests that the largest 3-4% of trades (those over 100-200 contracts each in ES) account for well over half of the total volume in that market. Because volume correlates very highly with price volatility, the presence or absence of large traders in the marketplace is an important determinant of opportunity for the intraday trader.
Above we have a demonstration of how size controls the markets. The chart represents the S&P emini futures (blue line) over the past month. The red line is a cumulation of the ES price changes over the month that included only those one-minute periods that traded on twice (or more) the average volume expected for that time of day. In other words, the red line is price change solely attributable to time periods in which size has hit the market. These high volume occasions accounted for only about 11% of the minutes in the trading day.
The two lines correlate almost perfectly: .96. Essentially all of the movement in the ES can be accounted for by the small number of periods in which large participants have entered the market. When large locals and institutions are not in the market, the market--for all practical purposes--goes nowhere.
Many market indicators and technical analysis formulations treat each time period during the day as equivalent. An alternative--and promising--strategy is to separate signal from noise by analyzing only those time periods in which large participants are present.
My data suggest that fully half of all ES trades are one and two lots that only account for 3% of total market volume. In a very real sense, over half of everything that occurs in the equity indices doesn't matter. The key is focusing on the trades--and traders--who do move the markets.
I found it insightful then and still do. Go to the actual post to see the charts he refers to in the text.
Here it is again...
Sunday, October 08, 2006
Who Controls the Markets?
In my posts, I have frequently emphasized that large market participants dominate the equity index markets and control its movement. My trade-by-trade analysis suggests that the largest 3-4% of trades (those over 100-200 contracts each in ES) account for well over half of the total volume in that market. Because volume correlates very highly with price volatility, the presence or absence of large traders in the marketplace is an important determinant of opportunity for the intraday trader.
Above we have a demonstration of how size controls the markets. The chart represents the S&P emini futures (blue line) over the past month. The red line is a cumulation of the ES price changes over the month that included only those one-minute periods that traded on twice (or more) the average volume expected for that time of day. In other words, the red line is price change solely attributable to time periods in which size has hit the market. These high volume occasions accounted for only about 11% of the minutes in the trading day.
The two lines correlate almost perfectly: .96. Essentially all of the movement in the ES can be accounted for by the small number of periods in which large participants have entered the market. When large locals and institutions are not in the market, the market--for all practical purposes--goes nowhere.
Many market indicators and technical analysis formulations treat each time period during the day as equivalent. An alternative--and promising--strategy is to separate signal from noise by analyzing only those time periods in which large participants are present.
My data suggest that fully half of all ES trades are one and two lots that only account for 3% of total market volume. In a very real sense, over half of everything that occurs in the equity indices doesn't matter. The key is focusing on the trades--and traders--who do move the markets.
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