saw it, liked it.

I saw this on Dr. Brett's blog post from yesterday, January 7th, http://traderfeed.blogspot.com/ and liked it. If you are a trader in training, I continue to recommend his site to you. It is one I visit daily...

Trading Risk: Time is Size
The recent post addressed the issue of adding to trades following adverse movement. Here is a trading faux pas that has cost me in the past: I don't add size to a trade that's in the red, but I have added *time*.

In other words, a trade will move a bit my way, then a bit against me, then back to scratch: back and forth for a while. Often this occurs in slow markets.

Normally, my trade ideas include an estimate of time: I should see the market move my way within a matter of minutes from my entry. If that doesn't happen and I stay in the trade, it's been a pretty good predictor of a losing trade.

One reason for that is that adding time is like adding size: it increases the variability of returns. If I turn a short-term trade into an intraday swing trade or an intraday swing into an overnight hold, I've effectively added to the size of the trade. Instead of adding risk on a promising trade, I'm adding it to one that has fallen short of promise.

Equally important, every trade idea with a target and time frame is assuming a particular level of market volatility. If the trade has not moved much in the allotted time frame, it means that the estimate of volatility may be off, which in turn suggests that market participation has declined. Again, this is hardly a good reason to add risk.

Some of my worst trades occurred when short-term trades turned into miniature investments. You don't have to add size to a losing trade to add risk; in the market time *is* risk.

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.

Family Skiing News - US Olympic Trials

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: