'Trading is a process of observing the market's action until such a time you can find and form trading ideas and get involved.'**

Tuesday, January 31, 2012

The market went down today from the high open due to profit taking as well as negative consumers and housing reports.

A short sell in the open is the best trade to make a profit in today's market.

No way to make a long trade unless a position for a swing if you can spot a good entry at around 12:00 noon.

Expect a flat trading day come tomorrow?

Let's see!

"It cannot be said to often that in speculation and investment, success comes only to those who work for it. No one is going to hand you a lot of easy money. And if there was an easy money lying around, no one would be forcing it into your pocket." - TRADING OUTLET
A profit taking day today from the market and also the negative reports that came out regarding economic results for the housing and consumers.

The market is oversold considering the market rallied with low volume, most participants are already taking their long positions.

Expect a flat trading in the days ahead combine with extreme volatility.

Monday, January 30, 2012

The market made a u-turn (cup with a handle/inverted head and shoulder pattern?) today when it opened at the bottom.

A very good feedback coming from the participants.

Some profiteers made a killing early in the open but were not quite successful to finish them off (the longs).

The end result was that the close price almost able to beat the open price, not bad and there is still a positive conviction for this market.

Sunday, January 29, 2012

"To be an effective trader, we need to be passionate about what we are doing. In the world of trading, passion can be our lifetime to profitability." - TRADING OUTLET

Saturday, January 28, 2012

“To be a successful trader, you have to be able to admit mistakes. People who are very bright don’t make very many mistakes. In a sense, they generally are correct. In trading, however, the person who can easily admit to being wrong is the one who walks away a winner. Besides trading, there is probably no other profession where you have to admit you’re wrong. In trading, you can’t hide your failures. Your equity provides a daily reflection of your performance. The trader who tries to blame his losses on external events will never learn from his mistakes. For a trader, rationalization is a guaranteed road to ultimate failure.” – Victor Sperandeo

Mark Twain’s Guide to Living an Awesome Life: 7 Essential Tips

The man who doesn’t read good books has no advantage over the man who can’t read them.”


“Name the greatest of all inventors. Accident.”

“Clothes make the man. Naked people have little or no influence on society.”

Back in 2009 I wrote an article with some great quotes from Mark Twain – lecturer, satirist, humorist and author of classic books like The Adventures of Huckleberry Finn and The Adventures of Tom Sawyer – and it became a favorite for me and many readers.

A sequel to Mark Twain’s Top 9 Tips for Living a Kick-Ass Life has been in my ideas folder for some time. But today I have completed it.

I hope you’ll find the result, these 7 essential tips from Mark Twain inspiring and helpful.

1. The secret of getting ahead…

“The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.”

This is a very good tip and one of the best ones I have ever discovered and used to handle procrastination.

When you start to look too far into the future any task or project can seem close to impossible. And so you shut down because you become overwhelmed or fearful (of success or failure) and start surfing the internet aimlessly instead.

So instead, break that task into small and practical steps.

Then just focus on taking the first step today. That is all you need to focus on, nothing else. By taking the first step you change your mental state from resistant to “hey, I’m doing this, cool”. You put yourself in state where you become more positive and open, a state where you may not be enthusiastic about taking the next step after this first one but you are at least accepting it.

And so you can take the next step. And the next one after that.

Until you have arrived at your destination and completion.

2. Less talking, more doing

“Action speaks louder than words but not nearly as often”

“There are basically two types of people. People who accomplish things, and people who claim to have accomplished things. The first group is less crowded.”

It’s often easy to talk but developing the habit of being a person of action is quite a bit harder.

Being in the habit of breaking down your task into smaller pieces is one of the most effective things you can do to take more consistent action. Two other habits that work very well for me are to:

  • Start your day with a good morning routine. This is probably the most important factor for how much action I take during a day and how the day turns out in general. A good start often leads to a good day. A bad or indecisive start often leads to a pretty mediocre day.
    So create a morning routine with a good breakfast, perhaps a short work out or a short meditation and other things you find gets you off to a great start. Then add doing the most important task of your day at the end of that morning routine.
    Or if you, like me, may feel low in energy, unmotivated or have extra inner resistance to taking action on some mornings then start small and do something easy and simple.
  • Take one small action right away to get the ball rolling. What is one thing you can do to pretty much make sure that something will get stuck on your I’ll-do-that-when-I-have-the-time list for a long time? Read about something and get excited about it. And then do nothing about it or tell yourself that you will take action tomorrow.
    Instead, take one small action today, as soon after you have read about whatever you are excited about. Make a plan, book an appointment, do something concrete.

3. Be courageous in the face of fear

“Courage is resistance to fear, mastery of fear – not absence of fear.”

Being courageous can be difficult but if you want to live the life you want to live then sometimes you have look into the face of fear and get going/keep going anyway.

And although it is rarely easy to be courageous I have found a few ways to make it easier.

  • Ask yourself: what is the worst that could happen? Really think about. Don’t just think about it for a few seconds. Sit down with a pen and piece of paper, your laptop or cellphone. Write it all out and think about what the realistic worst-case scenario would be. Then write down a plan for how you can come back from such a scenario.
    This step brings clarity, defuses fuzzy fears and helps you realize that you can most often bounce back pretty quickly even if the worst-case scenario somehow becomes reality.
  • Share your fear with someone. By sharing your fear you can relieve inner pressure. By just keeping it on the inside it’s easy to build it up into this massive nightmare and extremely dangerous thing.
    By sharing and by getting some input from a levelheaded friend or family member he or she can help you to alleviate the fear and inner pressure. And you can gain a much healthier perspective on things again.
  • Accept the fear. It is a natural impulse to try to deny the fear when shows up in your life. Perhaps you try to not think about it, you try to push it away. I have found that in many cases it is actually better to just accept that fear is here right now (although it can be hard to sometimes convince your brain that this is a good option).
    By doing so you stop feeding more energy into the fear and you stop making it strong. After a few minutes of fully taking in this uncomfortable feeling and accepting it then it starts to lose steam. It just seems to float away – or at least becomes smaller – and you feel more open and centered.

4. A good compliment is a wonderful thing

“I can live for two months on a good compliment.”

Compliments are awesome. But make sure you make it a genuine one. Make sure you really mean it or it may have the opposite effect as your insincerity shines through. Find something a bit unexpected – like great taste in old soul music rather than looks – and something that is important to the other person and make a positive, appreciative comment about that.

5. Keep positive company

“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.”

I have mentioned this many times. But it bears repeating.

Spend more time with positive people, books, music, movies and websites. Spend your time in an environment that lifts you up. And spend less time or no time with the negative sources out there. Make a conscious choice and start to shape your environment instead of just going along and reading, listening to, watching what people in general or people around you may be in the habit of consuming.

6. Focus on what is truly important for YOU

“Many a small thing has been made large by the right kind of advertising.”

Like with your environment it is important to make a conscious choice to focus on what is most important in YOUR life. And not on the things that various companies may tell you are the most important things.

Like I mentioned little more than a week ago, a note with the 4 most important things in your life smartly placed where you will see it every day – in your workspace etc. – helps you to keep your mind consistently on your top priorities.

And if you want a couple of practical tips that will help you to declutter your ad/information intake then:

  • Ask yourself: is this useful? If for instance a TV-show or magazine isn’t bringing me anything useful – fun, fascination, useful tips etc. – then why am I spending my time on it? It’s kinda easy to just fall into a habit of doing stuff or consuming things without really having much of a reason for doing so.
  • Find out what you really like to do. That will probably be more interesting that surfing the internet or TV-channels randomly. And so these less exciting things just tend to fall away from your life as you find – or spend more time with – things that you really like to do, like for instance a new hobby.
  • Shut off the sound during commercials. And talk to the person beside you on the couch. Or read a couple of pages. Or record the TV-show or movie. Then skip through the commercials.

7. When emotions are exploding… wait.

“Time cools, time clarifies; no mood can be maintained quite unaltered through the course of hours.”

It’s easy to make bad decisions when you are full of negative emotions. And it is very easy to become riled up, angry or defensive when you, for instance, receive some criticism or when someone is attacking you verbally. This is not a good position to be in to fire away a reply if you don’t want to wind up making the situation worse.

And to lash back at this person or to not be the better person here can really hurt your self-esteem. It might feel good for a while to do so but it is a dirty high that comes with a hangover of feeling worse about yourself and subtle or not so subtle self-destructiveness.

But how do you control the impulse to attack, overreact or make a hasty decision?

  • Remind yourself of the potential consequences. I don’t want to hurt myself, my self-esteem or make bad decisions with negative consequences. By repeatedly reminding myself of these potential consequences thoughts about those consequences will also often pop up automatically when I receive criticism or when I am angry.
  • Count to at least 10 and take a few belly breaths. Then respond. This simple way of calming yourself down and regaining some perspective can save you a lot of trouble and help you avoid saying something you can’t take back. It’s a good approach to avoid creating unnecessary problems and to cool down just a bit and to feel more balanced before you reply or take action.
  • Accept how you feel. If you have a little more time than under a minute then take a look at tip #3 again and try to accept how you feel to lessen the big emotions more quickly.
  • If possible, wait until tomorrow or at least later today. By then the most negative feelings will most likely have lost their steam and you can see things with more clarity and cool. And take action in a better and smarter way.
Courtesy from The Positivity Blog.

Friday, January 27, 2012

5. Second job: Futures trader
Details: A recent survey conducted by TopStepTrader, an international scouting agency that recruits and trains futures traders, found that more than half of the workers surveyed conduct futures trading as a second job. "With the markets open 23-24 hours a day, there is a lot of flexibility and profitability in this career as a second alternative job," says Michael Patak, president and CEO of TopStepTrader.
Potential pay: According to TopStepTrader, part-time traders that trade lightly can earn an estimated $2,000 a month, while active part-time traders can average up to an estimated $4,000 a month.
A profit taking happened today in the market.

But the Nasdaq was not, it rallies mainly due to tech stocks positive sentiments like the AAPL (Apple).




Thursday, January 26, 2012

The market opened on a positive note but runs out of steam to propel the bullish traction from yesterday's Fed trading day.

I guess a profit taking is on the way till tomorrow.

But the bullish trend is still intact.



Wednesday, January 25, 2012

"To be successful in the markets, you have to make the initial conscious commitment to being the best you can be and to love every moment of what you are doing." - TRADING OUTLET
The market made a nice turn around from the negative open and finish on a high close.

A positive Fed trade mainly due to favorable actions coming from the Fed itself.

Bulls are roaring in pandemonium and the bears are in the dark.

As I mentioned earlier in my post, the chart below looks identical from the open yesterday.

Might finish same as yesterday, in between the open and the low of the day.

The market is descending as shown from the Globex overnight session.

Seems a repeat from yesterday's trading session.

Tuesday, January 24, 2012

"Any professional field requires commitment and willingness to go through successes and failures. The failures can be the greatest teachers. Study the failures to develop into a better trader. Perseverance will be the key to a successful trading career." - TRADING OUTLET
The market drops in the open and did not recover from its opening price.

It recovers a bit but stayed flat on his "belly" till the close.

A tough market to trade!



Exited at 12605 for a loss of 5 points...chart doesn't look convincing for a breakout...
Trade did not work out, got stopped out for a break even...will get it again at 12610 with stop at 12600...
Will put sell limit at 12641...let's see if it's going to work...
Moving the stop to break even at 12610...
Bought YM at 12610 with stop at 12590...

Monday, January 23, 2012

Trading Anatomy

Done with trading today, for the understanding in layman's term about trading will show a simple trading setup.

I will term this post as Trading Anatomy.

For starters, trading needs time or possibly years to make it but I will just show a simple setup how trading is being done the way I understand based from my own education.

Remember trading is solely based from your own way and there are may ways (thousands of them) to make a trade.

The important is how to make a trade profitably, anyway you want it...anyway you do it as long as you make money, that's all you cares.

It's simple but it's not easy!

Will show an etf instrument, the DIA, it's the etf for the Dow Jones that comprises the 30 main companies of the US (these are the big companies that moves the US economy like the GE, 3M, HP, MSFT and all those well known companies).

For starters, etf's are sure way to trade as compared with the individual stocks because etf's are group of companies stocks relative to their company structure.

But before you can trade of course you have to open an account but before you have to open an account you need  time to study the market.

It's like going to a school or a college to get a degree but will skip that portion.

What we are after for is the setup in trading, how to make a trade.

So in this chart I am showing, the market opens daily 9:30 am. Eastern Time (New York, I live in the East Coast that's why I have to wake up early, 6:30 am. PT.)



In the market you can make money whether the market is going up or going down so you cannot lose as long as you know what you are doing.

They call it the "short trade" if the market is going down, and the "long trade" if the market is going up.

In this chart we are going to short the market because it is going down (by just looking at it).

For a start, sell (short, top arrow) 10 shares at 127.25 (we'll cover the buy/sell stop from next post).

And exit the trade (buy back (cover), bottom arrow) at 126.50.

The difference of $0.75 cents per share, that's a profit of $7.50 for 10 shares (if you trade 100 shares that's $75.00 in just a few minutes/hours, how about 500 shares?) Enough to trade than to work per hour isn't it?

This is a short trade, we borrow from the broker to sell it to the unsuspecting trader (who doesn't know what he is doing, we tricked him), we call it sell high, sell lower, the difference is ours. See how these traders/investors make money from the public, that's why lots of people are mad with the Wall Streeters, their secret are now being exposed? That's not our business, ours is to make money anyway.

It's simple to trade but it's not easy, need years to learn or master it.

Easier said than done, but it's not impossible to do it. It's just a matter of persistence and having a goal.
Sell limit got hit for a gain of 27 points...
Putting sell limit at 12625...
Looking to exit at 12626 range...
Reversing the trade to short at 12652 with buy stop at 12665...
Bought YM at 12660 with stop at 12640...
The market YM is climbing up as shown from this Globex chart overnight session.

A steady less volatile trading might be the way.

Let's see in the regular open if it will continue.

Sunday, January 22, 2012

The market opens with a little drop from the Globex market.

Seems a steady market come tomorrows' regular trading.

Unless there is a unfavorable news that will affect the market, the trend will continue.


How to Succeed Against the Odds

Always look at the big picture in the economy and in your industry. What may be coming down the pike that will affect your industry? What indicators in economy could trickle down into what you’re doing? Take note of these possibilities and plan and prepare ahead.

 Make sure not get bogged down. It’s important to create efficiencies, processes, and systems to get and keep yourself out of the rut. Don’t ever be afraid to take a step back to do this. Things may pile up in the short term but if you find solutions and work on the problem by building efficiencies into your business you will have the time to dedicate to other, more critical initiatives. Entrepreneurs who get bogged down in the daily requirements of their business often believe that there isn’t a solution. There are always solutions ; the real problem is that you don’t want to take the time to fix the problem. Stop. Fix it. Execute the solution. There may be a little bit of pain at first but will provide for long term success.

 Don’t work on the day-to-day, month-to-month, or even year-to-year. If you want to be viable you can’t afford to think only of the short term. Have a long-term strategy and vision and build contingencies for the “what ifs”. Dedicate money in your budget toward initiatives that will work toward long term strategies. Pay attention to the big picture; don’t get blindsided.

 After any setback, always review the circumstances and look for lessons. Ask yourself, and your team, a series of questions to gain perspective. Learn from failures, fail your way into success. Ask questions like, What did we do right? What did we do wrong? How could we have done it differently? After you identify the critical components put the exercise away, learn from the experience, get over the challenge and move forward.

 Take calculated risks. Evaluate your decisions by looking at the cost vs. benefit. Make sure that your assumptions are grounded in reality and fact. Look at rewards and benefits; surround yourself with the right people to get the job done. Plan ahead and keep your risks in check mitigating them along the way. Don't get paralyzed in the analysis; be decisive. Do this and the probability of success goes up dramatically.

 Trust yourself and apply a strong work ethic. More than you realize is within your control when you believe in yourself and work hard. Trust is a big factor in the decision- making process, as is your willingness to take risk. It’s also important to surround yourself with people who are smarter than you; people you can trust.

 Create multiple revenue streams to build a strong revenue model. Look at larger, more successful companies in your industry. Evaluate how those organizations would succeed if and when anything changes in the economic environment. What fuels their growth? Study their revenue models and, if you find a stable one, improve upon it and build your own.

 Perform due diligence in hiring employees. Interview your candidates thoroughly, check references, spend time getting to know them on a personal level. Also ask your team for input. Before considering anyone for partnership, make sure they prove themselves and always have an out.

 Be cautious about partnerships. People often bring in partners because they don’t trust themselves to do it on their own. Once you bring in a partner you’ve created a marriage in a sense. Be careful because this is hard to undo. Protect yourself legally and never give away too much when your bring people on board. Also, be very careful about creating partnerships with family and close friends - these often do not work very well. Only introduce a partner into the picture if you have to and never conduct business on a handshake; avoid ambiguity in these business relationships; ambiguity will cause conflict down the road.

From Inc.com

Friday, January 20, 2012

TRADING OUTLET  QUOTE:

"Without passion, don't waste your time or your money because you will lose both.You must love to walk, talk, think, and study the market theory if you will develop as a successful trader. What you feed your mind, and how often, will mold your attitude of the market. But it all starts with passion, not greed."
The market (YM Dow) made a nice move upwards today as compared with the other market core index.

Nasdaq and the S&P were quite choppy, maybe because most traders trade these two instrument regularly.

Unlike the Dow (YM) which is not often traded by many.

That's why I prefer to trade the (YM) than the other two.





Understanding The Ticker Tape

You've seen them on business programs or financial news networks: a flashing series of baffling letters, arrows and numbers scrolling along the bottom of your TV screen. While many people simply block out the ticker tape, others use it to stay on top of market sentiment and track the activity of certain stocks. What exactly is that cryptic script reeling by? It obviously tells us something about stocks and the markets, but how does one understand the ticker tape and use it to his or her advantage?

Brief History
Firstly, a tick is any movement, up or down, however small, in the price of a security. Hence, a ticker tape automatically records each transaction that occurs on the exchange floor, including trading volume, onto a narrow strip of paper or tape.

The first ticker tape was developed in 1867, following the advent of the telegraph machine, which allowed for information to be printed in easy-to-read scripts. During the late 19th century, most brokers who traded at the New York Stock Exchange (NYSE) kept an office near it to ensure they were getting a steady supply of the tape and thus the most recent transaction figures of stocks. These latest quotes were delivered by messengers, or "pad shovers," who ran a circuit between the trading floor and brokers' offices. The shorter the distance between the trading floor and the brokerage, the more up-to-date the quotes were.

Ticker-tape machines introduced in 1930 and 1964 were twice as fast as their predecessors, but they still had about a 15 to 20 minute delay between the time of a transaction and the time it was recorded. It wasn't until 1996 that a real-time electronic ticker was launched. It is these up-to-the-minute transaction figures - namely price and volume - that we see today on TV news shows, financial wires and websites; while the actual tape has been done away with, it has retained the name.

Due to the nature of the markets, investors from all corners of the globe are trading a variety of stocks in different lots and blocks at any given time. Therefore what you see one minute on a ticker could change the next, particularly for those stocks with high trading volume, and it could be some time before you see your ticker symbol appear again with the latest trading activity.

Reading the Ticker Tape
Here's an example of a quote shown on a typical ticker tape:




Ticker Symbol
The Unique Characters used to identify the company.
Shares Traded
The volume for the trade being quoted. Abbreviations are K = 1,000, M = 1 million and B = 1 billion
Price Traded
The price per share for the articular trade (the last bid price).
Change Direction
Shows whether the stock is trading higher or lower than the previous day's closing price.
Change Amount
The difference in prie from the previous day's close.


Throughout the trading day, these quotes will continually scroll across the screen of financial channels or wires, showing current, or slightly delayed, data . In most cases the ticker will quote only stocks of one exchange, but it is common to see the numbers of two exchanges scrolling across the screen.
You can tell where a stock trades by looking at the number of letters in the stock symbol. If the symbol has three letters, the stock likely trades on the NYSE or American Stock Exchange (AMEX). A four-letter symbol indicates the stock likely trades on the Nasdaq. Some Nasdaq stocks have five letters, which usually means the stock is foreign. This is designated by an 'F' or 'Y' at the end of the stock symbol.

On many tickers, colors are also used to indicate how the stock is trading. Here is the color scheme most TV networks use:

<><><><><>Red<><><><><> indicates the stock is trading lower than the previous day's close.
Blue or white means the stock is unchanged from the previous closing price.


Green indicates the stock is trading higher than the previous day's close.

Before 2001, stocks were quoted as a fraction, but with the emergence of decimalization all stocks on the NYSE and Nasdaq trade as decimals. The advantage to investors and traders is that decimalization allows investors to enter orders to the penny (as opposed to fractions like 1/16).

Which Quotes Get Priority?
There are literally millions of trades executed on more than 10,000 different stocks each and every day. As you can imagine, it's impossible to report every single trade on the ticker tape. Quotes are selected according to several factors, including the stocks' volume, price change, how widely they are held and if there is significant news surrounding the companies.

For example, a stock that trades 10 million shares a day will appear more times on the ticker tape than a small stock that trades 50,000 shares a day. Or if a smaller company not usually featured on the ticker has some ground-breaking news, it will likely be added to the ticker. The only times the quotes are shown in predetermined order are before the trading day starts and after it has finished. At those times, the ticker simply displays the last quote for all stocks in alphabetical order.

The Bottom Line
Constantly watching a ticker tape is not the best way to stay informed about the markets, but many believe it can provide some insight. Tick indicators are used to easily identify those stocks whose last trade was either an uptick or a downtick. This is used as an indicator of market sentiment for determining the market's trend.

So next time you're watching TV or surfing a website with a ticker, you'll understand what all those numbers and symbols scrolling across your screen really mean. Just remember that it can be near impossible to see the exact price and volume at the precise moment it is being traded. Think of a ticker tape as providing you with a general picture of a stock's "current" activity.
Today's trading day is usually a profit taking day, but was surprised that the Dow is leading the pack of the three core market index.

The S&P is on a zigzag mode while the NASDAQ starts to descend from the high open.

Let's see if the Dow will follow through in today's market.





Thursday, January 19, 2012

Left my trading table after I set my sell limit and got stop out at 12545 for a gain of just mere 5 points...a choppy trading almost the whole trading day and the market got its bearing only at the close where it finish at 12580 range...more than enough to beat my sell limit at 12570 range...

Putting sell limit at 12571  and let the trade play itself...
Stop move to 12545...
Will try to exit at 12576 if possible...
Still in the trade...almost got stop out...

The market is consolidating tightly...looks like trying to get a thrust for a breakout...
Move the stop to 12535...
Trade is holding ground so far despite the shakeout...

Bought YM at 12540 with stop at 12525...
The market is on a roll since 2012 open its first trading day.

A good sign for the market and seems the participants sentiments turns now to positive.

The last two years was a struggle for the investors (long term) and traders (short term) were the ones loving the market.

In the market, you can be both, it's just about how you understand and implement what you know about the markets.

The chart below shows the daily trend, and the way I can implies seems the market will continue its trend the whole year?

That's a daily question unless the perception of the participants changes with regards to market environment.

But for traders, the focus is on a daily basis.


Wednesday, January 18, 2012

The market finish high today.

The bears are no longer in control?, only in the short term maybe.

Nasdaq and the S&P futures market were on a smooth ride upwards today except for the Dow (YM).

The Dow struggled today in mid-afternoon trading and barely get off from its back.


Shorted at first high of the open and just barely made a few points.

I guess the bulls conquered the bears at the first drop and the market recovers to beat the first high.

Exited the trade at 12475 for a gain of 19 points...
Putting buy limit at 12463...
Looks like the short trade is gaining ground...will move the stop to break even to make it safe at 12490...
Sold short YM at 12494 with stop buy at 12510...will try to be a contrarian today and see if it will work...sometimes we have to experiment the market...anyway it's all about probabilities...nothing is sure 100% in the market...its all about how to respond what the market provides...
The market (YM Futures) is on the sideways (or in a zigzag) move from the overnight session as shown from this chart in the Globex.

I guess a choppy trading might be the trend for today's session.

Let's see and watch the market how will conduct its behavior.

Trade or no trade, let's focus and study how the market reacts.

In that way we can have an idea where we can find opportunities in the future.

That's how is trading is all about, watching the market and sitting tight is the way to make money in the market - as how one famous great trader espouse.

And especially love (and learning how the market works) for the market is important whether making money or not - love what you do as they say.

Anyway, let's see how the market reacts in the regular open.


Tuesday, January 17, 2012

Trading is a Never-Ending Journey
Evan Lazarus
Jan 10, 2012, 12:59 PM
I have been a trader for about 14 years and in that time period I have seen many strategies fail because traders only have to have a couple losing trades in a row before they throw out the whole system and go back to trading on impulse. Once a trader gets into this situation, they tend to head in a downward spiral and quick. Our emotions tend to get people in at dead highs and then our emotions tend to get us out at the dead lows as we continually buy tops and sell bottoms out of impulse, panic and fear. It is this cycle that tends to happen over and over again. Additionally, this cycle WILL NEVER STOP.

The stock market (and all financial markets for that matter) naturally take advantage of and prey upon our human nature, especially when it comes to greed, hope and fear. The key is to remember that the biggest movements in the markets occur not when traders “feel like buying.” They occur because groups of traders (and machines programmed by humans) are all getting smoked at the same time and are forced out of a position. In reality, traders are not trading the stocks, futures or options. They are trading other traders. The very fine line that separates the profitable traders from the herd is that those that learn to be aware of the psychology and emotions behind the person taking the trade on the other side. The herd (or the average market participant) only understands their own side of the trade. The stronger minded traders (code for profitable trader) understands what’s happening on both sides and understands how to take advantage of human weakness, and therefore they are able to grind most others into the ground. In short, winners take money from losers. I know this may sound harsh but in a business or up, down or sideways, sometimes it just that basic.

Good skiers rarely worry about a route down a mountain. They just go, confident that they’ll react to changes in the trail as they come upon them. It’s the same thing in trading: Traders have to have the confidence in their technique. That’s the beauty of mustering the right mindset before a trader starts the day. This enables you to feel like a good skier, nice and relaxed for the next unexpected turn.
The market surge in the open and run out of gas and drops almost where it came from.

The real breakout happened in the overnight session.

The good thing is that the overall daily trend is still on the upside.

A short trade is the most probable today after the high of the day.

As I mentioned earlier in my post, a surge in the overnight session will have a hard time (if not impossible) looking for a long trade in the regular open.

Stop got hit for a loss of 15 points...I guess the market run out of steam...
Need to move stop to 12465...
I guess the trade will last for more hours...maybe till the close...
A pattern like this usually stays idle till the close.

A lot of shaking going on right now...stop is holding ground...
Bought YM at 12480 with stop at 12450...let's see how it goes...
The market (YM Futures) is advancing smoothly from this (chart) overnight session from the Globex.

It now advances by 100 points plus.

As always, the market make its big move in the overnight session.

Lucky for those from the overseas participants.

I guess it might not make a big move (anymore?) in the regular open, if it does, timing is important to place an entry.




Monday, January 16, 2012

UNDERSTANDING IRRATIONAL EXPECTATIONS

11 January 2012 by Cullen Roche

In this morning’s note David Rosenberg asked an interesting question – what are the bulls seeing? Recent economic data has been good, but it hasn’t been off the charts by any means. But the market seems to have this impervious floor underneath it again. We’ve seen this a lot over the last few years and I think the underlying cause is a relatively simplistic, but often overlooked effect that occurs in markets.

Markets are based largely on forward looking irrational expectations. They’re irrational because the summation of the decisions of the market’s participants are irrational. Human beings just aren’t built for life in the markets. We are built to survive. That’s why controlling your emotions is the #1 hurdle in the markets. Contrarians try to overcome this hurdle by taking the other side of the mainstream perspective, but being a contrarian is easier said than done. I always like to say that once you can eliminate your own brain from an investment strategy that you’ve won the investing war.

Fight or flight? Harvard physiologist Walter Cannon discovered the fight or flight response in 1915. This is an innate and very primitive reaction that occurs in humans when under stress. Interestingly, what happens in such a scenario is a near transformation of our thinking. Our thinking changes from a broad focus to a narrow focus. Fear takes over our mind. Everything is a potential threat to our survival. We are quick to respond and often inefficient to respond. And more often than not, it is easier to flight than fight. We don’t stay and fight the bear when it attacks (even though studies show that fighting or rather standing up to the bear is the more likely survival technique). We run. It’s innate. It’s a survive first mentality. And it’s often self destructive. In the markets, we are often slow to react. We will actually stay and fight the bear and then run when it’s too late (if you’ve been around long enough you’ve sold at the bottom – I know I have).

The key point to understand in a highly volatile environment such as the current one is that irrational expectations are constantly shaping our expectations of the future. They are based on an unknowable and unpredictable future, but we place the bets nevertheless. So we run from the bear for 10 minutes. Then we stop and look around, are comforted by the fact that we can’t see him (he can smell you though!) and we get complacent for 30 minutes. Then the bear reappears, we panic, run, rinse, wash, repeat. It’s an endless cycle in the markets that will never end (except some people get caught by the bear!). The key to understanding market movements is understanding this dynamic of irrational expectations.

Right now, the bear is nowhere in sight. But who knows where the next bear will come from? He could reappear in the form of the Euro crisis, earnings disappointments, or some other unforeseen event. But the key is understanding why the bulls are seeing what they’re seeing because in fact, it’s not what they’re seeing that has them buying, but what they’re NOT seeing….

Sunday, January 15, 2012

Think Less & Keep It Simple
Thursday, January 12, 2012 at 03:34 PM
Think Less & Keep It Simple
Every once in awhile I read something from another trader who I respect that I really wish I wrote myself. Here’s one such example:

“One of the most difficult things to get investors and traders to understand is that no matter how much they investigate an investment, they will probably do better if they did less. This is certainly counter-intuitive, but the way that our brains function almost guarantees that this will happen. This kind of failure also happens to those investors frequently regarded as the smartest. In essence, the more information that investors have, the more opportunity that they have to choose the misinformation that suits their emotional purposes.
Speculation is observation, pure and experiential. Thinking isn’t necessary and often just gets in the way. Yet everywhere we turn, we read and hear opinion after opinion and explanation on top of explanation which claim to connect the dots between economic cause and market effect. Most of the marketplace is long on rationale and explanation and short on methods.
A series of experiments to examine the mental processes of doctors who were diagnosing illnesses found little relationship between the thoroughness of data collection and accuracy of the resulting diagnosis. Another study was done with psychologists and patient information and diagnosis. Again, increasing knowledge yielded no better results but did significantly increase confidence, something which the smartest among us are most prone to have in abundance. Unfortunately, in the markets, only the humble survive.
The inference is clear and important. Experienced analysts have an imperfect understanding of what information they actually use in making judgments. They are unaware of the extent to which their judgments are determined by just a few dominant factors, rather than by the systematic integration of all of their available information. Analysts use much less available information than they think they do.
This underscores the value of using a simple method. I didn’t say easy – I said simple!” – Jeff Cooper
I could not have said that any better than Jeff. Well done!
* This report was originally posted at the members’ only site on July 20, 2011.

Saturday, January 14, 2012

The market will be closed come Monday due to official holiday.

Showing the daily chart for the YM Dow where the trend overall is moving upwards.

I can say that the perception for the market is now positive for the days to come?

I guess that's what the chart shows, the big drop the last two months already waned out.



The market drops early in the open and was not able to recover.

It closed halfway from its open price.

A negative sentiments coming from overseas markets.

But the overall trend is still in the positive territory.

Friday, January 13, 2012

Exited at 12320 for a gain of 20 points...
Putting sell limit to 12341...
Looking to exit at 12340 range...
Move the stop to break even at 12300 to make it safe...
Move the stop to 12280...

What Does Happiness Have To Do With Trading?


Friday, January 13th, 2012 at 9:56 am

Are you as happy as you’d like to be? Do you have moments of happiness every day?

The answers you give to those questions are very important, and please be honest with yourself, because it has been scientifically proven that if you are not happy today you will not be happy tomorrow, unless you take steps to change today. Happiness in not something that just comes to us today because of some external event. Happiness is something we create. Waiting for something to change in order for you to be happy is nothing more than waiting around to live your life.

What does happiness have to do with trading? – A lot more than you might think. Have you ever witnessed people buying an enormous amount of lottery tickets, or visiting a casino and have you witnessed the enormous number of people playing games in a very serious manner? Or buying large amounts of stock because a friend said it was going to the moon; it is going to make them rich?

What you are really witnessing are people chasing a dream, chasing a dream that really does not exist, except in really rare and often under unusual conditions. Many people think that if they only had lots of money they would be happy, that is why they spend so much money at casino’s or the racetrack, or very recklessly in the markets. They are chasing that elusive dream of money that will make them happy.

In fact as Jim Rohn states: “Money does not change anyone, money simply makes one more of what they already are!” If you are unhappy you will, with money, become an unhappy person with money. If you are miserable, you will become a miserable person with money. That is all! Oh, for sure, if you were to win the lottery, you will have new friends, and you will think the lottery indeed made you happy with your new friends. However, it will not be very long before you find out the truth, that these new friends are after only one thing, and it’s not your friendship. Once the money is gone they will be too. It’s all too sad, but it’s all to true. If money is to make you happy, you must be happy first.

Making sure you are happy and enjoying life may seem self-centered, but the simple fact is that happy people have better relationships, reach more of their goals, are better parents and leaders, and are usually healthier. Creating happiness is a great gift you can give your family and everyone around you. When you are in good spirits, life becomes a rewarding adventure and not just something to get through.

Being happy will give you a different perspective on life and on trading. You will be working towards your goals without the pressure of thinking that attaining your goals will finally make you happy. You will have a much better chance of attaining those goals if you are happy already. Be happy with what you have while you are working towards whatever it is that you want!
Bought YM at 12300 with stop at 12260...let's see if the sell off is gone...
The market drops hard as shown from this early open.

A profit taking is in charge.

Let's see when the sell off drys up.

Thursday, January 12, 2012

The market recovered late in the trading day.

It drops in the open and struggled for almost the whole trading to finally get its bearing.

A smooth ride from its recovery without any volatility.

Don't see any probable trade as of this time from the market movement...will pass for a while...
Just watching the market...shorters (bears) are having fun...bulls are on the run...the market turned to the bearish side...

The market went up in the overnight session and drops prior to the regular open.

Lucky for those in the overseas participants, they were able to catch the big move.

Shown is the 5-min chart for the YM Futures (the Dow) where it shows like it just buried his head in the cliff.

Wednesday, January 11, 2012

Find a Sound Strategy and Stick With It

Most traders hope to achieve big success in the stock market, but the fact is few do. Over time most investors realize only mediocre results at best. There are a few major reasons for this lack of success.

The first reason is obvious; most investors don’t have a winning plan or a good role model to begin with. They have not taken the time to study and understand what really works in the stock market, so they end up listening to someone else, usually someone who never had big success in the first place.

But, here’s the real problem: Most investors even if they had a winning plan wouldn’t follow it. Oh sure, maybe they would follow it for a while. But, eventually, if things don’t work out as expected, they give up on it.

99% of investors have unrealistic expectations; not with how much they can earn, but with how it will be achieved.

The stock market offers the opportunity for virtually unlimited reward, however, it's not easy. Therfore, you should go into trading with the attitude that it’s going to take a great deal of work over an extended period of time.

At some point, you WILL feel like quitting. At some point, you WILL feel like your strategy doesn’t work anymore. At some point, another strategy WILL entice you.

But, how could you get good at something if you quit and look for something else every time the going gets tough? No strategy works all the time. In order to be a flower that blooms in June, you can’t be a flower that blooms in May.

Have big long term goals, but realize that you must specialize if you want to be a master at something. Specialization means sacrifice.

There are always a myriad of ways to become successful and anyone of them could change your life, but you have to choose which one it will be.

Mark Minervini
The market was choppy today and a difficult trading if not impossible to make a trade.

The only viable trade I can see is the last hour session where there is a wedge/triangle formation at around 2:30 pm. ET.

Other than that, the market will chop you up into pieces.

Exited the trade at 12395 for a gain of 25 points...
Stop move to 12380...
Looking to sell at 12420...
A choppy trading day in the market...

Was out when i set my buy limit and the trade made a reversal for a lost of 20 points...short trade did not work out...will buy the market again at 12370 for a long trade with stop at 12350...
Will let the trade play by itself and will put a buy limit at 12320...
I guess a short trade is more appropriate...sold YM at 12350 with stop buy at 12370...
Suddenly the market turns to the downside...stop got hit just to offset the commission cost...gain two mere points...
Move the stop to 12370 to make it safe...
Bought YM at 12368 with stop at 12340 for a long trade...

Tuesday, January 10, 2012

The market made an early surge early in the open and bow down till the close.

Unless you can stay overnight and trade in the Globex, you cannot catch the big move.

Most often, big moves are happening in the overnight session.

Lucky for those in the Asian and European participants, they can easily swallow the real meat that the market offers.

Trade did not work out...lost 15 points...suddenly the tide turns to the other side...
Bought YM again at 12435 with stop at 12420...let's see how will it goes...

How To Be A Stock Trader In 2012

If one of your New Year's resolutions is to take control of your finances and put some of your savings to work, you might be considering using the stock market to do that. 2011 proved to be a tough year for even the best institutional investor and individual traders had an equally tough time navigating markets that saw a large amount of violent swings, both to the upside and the downside.

If you're planning to enter the markets as a new trader this year, here are a few tips to consider as you put your money to work.

Don't Trade for Real … Yet
Before you put your hard-earned money to work, spend some time trading fake money. Many brokerages and sites like Yahoo! Finance offer virtual or paper trading accounts that allow you to get a hands-on feel for how the markets work. Just like any new skill, you probably won't do very well with your first attempts. Use virtual funds to see if your investing decisions could potentially earn you money. Once you see that you're having success, put a small amount of real money to work. Continue to use your virtual account to test new strategies. Even the pros use virtual accounts to test the waters.

Learn How to Research
It's easy to make the mistake of relying on somebody else's research for investing decisions. There are two problems with this. First, somebody else's risk tolerance, investment objective and account size aren't the same as yours. The trade may be right for them, but not for you. Second, they may tell you when to get into the trade but they likely won't tell you when to get out.

There are plenty of good resources that teach you how to research before you buy. Read books, talk to other traders and read company balance sheets, listen to conference calls and work to gain a real understanding of the markets. You can learn to excel at any endeavor through experience and study. Becoming a great money manager requires the same commitment.

Say No to the Seminars
Every big city has an endless supply of weekend-long thousand dollar or more seminars that guarantee to make you the next great trader. Don't be fooled. They may have some good information, but if becoming a high-performing, profitable trader could happen over a weekend, everybody would do it. There are better ways to spend your money.

Don't Try to Win
We've learned that in order to get ahead in this world, we have to be better than our competition. That isn't true in investing. If you're new to the markets, you aren't going to beat the professionals. Even the professionals don't always beat other professionals. There are an exceedingly small amount of professional investors who have a consistent track record of beating others in the market. Aim to invest your money in products that tend to perform in line or slightly better than the market. Later, as you gain more investing experience, you can try your hand at some of the riskier trades.

Don't Make Money, Manage Risk
The professionals know that if you manage risk correctly, making money will naturally follow. Having a portfolio that includes a good supply of companies with a track record of success and that pay a healthy dividend, is good risk management. Only investing in products you truly understand, without looking to get rich quick, is the mark of a mature investor. You aren't going to strike it rich by capturing short-term gains, so don't take the unnecessary risk of trying.

The Bottom Line
2012 promises to be another year of tough-to-navigate markets for even the best traders. Don't try to score the big win. Instead, use 2012 to be conservative with your money as you learn the complicated art of trading stocks.
Exited the trade at 12460 for a gain of 30 points (60 points for 2 contracts)...
Two contracts for YM at average price of 12430...
Adding another contract at 12420...
Bought YM at 12440 with stop at 12400...
The market is advancing to a positive territory as shown from this Globex overnight session.



Monday, January 9, 2012

The market made an initial move upwards early in the open only to lose its steam afterwards.

Tries to comeback after that just to finish and beat the high of the day.

A tough market to deal with.



Showing the 5-min chart of the YM Futures as the basis of the real time trade that was posted (a little bit delayed as compared to real time chart)...the entry was at 12304 and the exit was at 12335...

Sell limit at 12335 got hit for a gain of 31 points...
Putting sell limit to 12335...
Moving the stop to 12305...
Bought YM at 12304 with stop at 12294...

When To Follow The Crowd And When To Go Against It


by: Bill Zimmer
Friday, January 6th, 2012 at 10:08 am

Don’t follow the crowd! You’ve been warned over and over, but few are that independent. Breaking away is harder than it looks. We are all familiar with the rebel, the person who breaks all the rules. At the other end of the spectrum, the ultra-conformist seems to follow the rules too blindly. Neither extreme is optimal for trading. It’s necessary to find the right balance. It takes a good deal of experience, soul-searching, and a concerted effort to act independently. It’s essential to develop this skill, especially in markets that seem to change from month to month.

We all have a natural tendency to follow the crowd. There is safety and comfort in numbers. As the human race developed, it learned that its survival depended on banding together and working as a group. We inherited this legacy, and it is shown in the security we feel when we follow the crowd. Without getting into individual differences or the extent to which one follows the crowd, some conform too much and others too little, most successful members of society have seen the virtues in following the crowd. Blind obedience to authority may not be beneficial, but compromise is, to be successful, to protect your self interests, and stay within the bounds of acceptable behavior. You must develop a clear and solid sense of personal values and to develop a clearly defined personal identity. You can then follow the crowd when appropriate, but effortlessly go your own way when it’s necessary to protect yourself.

Although you’ve been frequently warned about the pitfalls of following the crowd as a trader, acknowledge that it is adaptive at times. In the case of long term investing, for instance, it is wise to put your money in stocks that don’t have a great deal of volatility and by all indications, have solid fundamentals that will push the stock up on a fairly consistent basis for several years. If a large enough “crowd” believes strongly that the company will produce profits for months or years, it would be to your advantage to follow them, if you want a safe investment.

Following the crowd isn’t bad all the time, especially for those who don’t like risk. On the other hand, if you are a shorter-term trader trying to profit in markets that seem to change from week to week, as we are seeing these days, you must anticipate and profit from volatility and shorter-term trends. This requires an astute intuition about where the markets will go next. Anticipate how the movement of the masses can benefit you as a trader. The key to success is to decide when to follow the crowd and when to go against it. The crowd is usually right, until a turning point occurs.

When virtually everyone has taken the position that the market is headed up, let’s say, there are few traders left to buy and push the trend further. Soon, a countertrend initiates and moves the market down. The challenge is predicting when that turning point will occur, anticipating it, and developing a trading plan to capitalize on it. Now, this all sounds easy, but in practice, it is difficult to implement a trading strategy to capitalize, especially when they happen in the shorter-term, such as days or weeks. How can one predict the turning point? Some say it is almost impossible. All you can do is develop a sound method that works most of the time but also admit that it may fail. You must at least temporarily believe in your method, put money on the line, and work under the assumption that overall, luck will be in your favor should you make enough trades.

It seems like the markets these days are changing from week to week, with weak economic news lowering prices one day and unexpected profits in key sectors raising prices the next. Only the most independent minded and perceptive traders will make a killing. But one thing is certain, in the end, going your own way is the only sure path to profits.

Sunday, January 8, 2012

Wall Street gurus find prediction game gets harder

(Reuters) - With the new year comes a new round of bold predictions for financial markets.
Blackstone Vice Chairman Byron Wien, among Wall Street's best known prognosticators, on Tuesday unveiled his latest crop of 10 "surprises" for the coming year, such as oil prices plunging to $65 a barrel. BlackRock equity strategist Bob Doll foresees double-digit U.S. stock returns, though corporate earnings growth could lag expectations. And one well-known forecaster declared 2012 too hard to predict.

In the past -- before U.S. housing prices fell and kept falling for the first time since the Depression or the future of Euro zone was at risk -- educated guesses by these and other veteran market-watchers had a good chance of being right.

But these days, volatility is the norm and far-flung political events can send U.S. markets into a tailspin. Skeptics contend it is hard to predict what the world will look like tomorrow, let alone 12 months from now.

That led Birinyi Associates' Laszlo Birinyi, whose stock market forecasts were widely followed, to tell clients he would not be making predictions this year.

"There are too many variables which are beyond our comprehension," he wrote in a client newsletter.

Even Wien and Doll acknowledge this annual exercise has grown more difficult in recent years, as unpredictable events -- like an earthquake and tsunami in Japan, the near collapse of the euro zone and political upheaval in the Arab world -- throw Wall Street's best-known seers for a loop.

PIMCO's Bill Gross, the manager of the world's largest bond fund, kicked off 2012 saying the "new normal" of slow growth has given way to the "paranormal," an environment characterized by credit risk and "zero-bound" interest rates.

Forecasting has become "especially precarious," Doll wrote in his 2012 outlook note for clients.

Speaking to Reuters after a press briefing to review his 2012 outlook, Doll said it used to be simpler to choose between stocks or to recommend sectors of the economy, "but when it's the macro environment driving so many of these things, I do think it is more difficult."

Wien, who served as U.S. strategist at Morgan Stanley for 21 years before moving to Blackstone, and Doll, who was president of Merrill Lynch Investment Management before it merged into BlackRock, have made their annual predictions a widely anticipated event on Wall Street.

So have others, like Goldman Sachs Asset Management's James O'Neill and former Merrill Lynch strategist Richard Bernstein, who now runs a self-named investment management firm.

COIN TOSS?

But despite their experience and pedigrees, Wall Street gurus are wrong as often as they are right.

CXO Advisory Group LLC, a research firm that tracks more than 60 market "gurus," calculated the average forecaster is accurate only 48 percent of the time -- roughly the same odds as a coin toss.

"You might find them interesting for other reasons, but I wouldn't put much stock in their predictions," CXO Chief Executive Steve LeCompte said.

(To see some of the best and worst market gurus as graded by CXO, click on: link.reuters.com/buk85s)

The Federal Reserve Bank of Philadelphia's Livingston Survey, which summarizes economist forecasts, came within seven points of the year-end close of the S&P 500 once in the past six years -- essentially spot on.

But it has also been off by more than 60 points three times and, in 2008, when the banking system nearly collapsed, it was off by 147 points, or 9 percent, from the actual close.

Last year the survey predicted a close of 1298.5 points, which was 41 points, or 3 percent higher, than the actual close. The S&P 500 was flat for the year.

"I think forecasting has always been hard, but the market's volatility has made it a bit harder," said Tom Stark, who oversees the Philly Fed survey.

Wien last week told Reuters that over the years his forecasts have panned out about half the time. Lately, though, Wien has been wrong more often: in 2010, only two and a half of his 10 annual predictions came true.

He rightly said President Obama would endorse legislation favoring nuclear energy and that financial services regulatory reform would be softer on Wall Street than originally feared.

"Secular trends are much more fragile than they used to be, and that has made forecasting much more difficult," said Wien,

"Who would have predicted the Arab Spring? That took everyone by surprise," he said, referring to a wave of protests that toppled rulers in Africa and the Middle East last year.

Wien was five for 10 in his 2011 predictions, including four predictions that were "partially correct."

For example, he said the price of corn would reach $8.00, while wheat and soybeans would hit $10.00 and $16.00 respectively. Corn did hit the $8.00 mark during 2011, but soybeans and wheat fell short.

LATEST PREDICTIONS

Wien's predictions for 2012 include his view that U.S. company earnings will push the S&P 500 up 11 percent, Syria's Bashar al-Assad will lose power, and that the U.S. Congress will finally come together and tackle the deficit.

These forecasts are not a blueprint for investors, Wien said, but "are designed to get people thinking about some issues they might not be thinking about."

Doll predicts the European debt crisis will begin to ease, that the U.S. economy will muddle through and that U.S. Treasury rates will rebound.

Over the past 10 years, Doll said he has been right between 70 percent to 80 percent of the time. Among his seven right predictions in 2010, he said U.S. economic growth would exceed 3 percent.

For 2011, Doll predicted accelerating economic growth, double-digit stock growth, 3 million new jobs and a record high for corporate earnings. While fourth-quarter results are pending, the S&P 500 is on pace to set a new high in earnings.

But his S&P 500 forecast was too optimistic by 100 points, growth slowed in 2011 and by November only 1.45 million new jobs had been created.

Doll on Thursday said that his forecasts are intended to help organize the way investors assess the markets.

"I don't have a monopoly on right answers," he said. "Hopefully I have a perspective that can add some value to people as they think through what they need to do."

CXO Advisors, which gives Doll an above-average accuracy rating of 54 percent, says his predictions focus on broad trends but are light on specifics.

"It is relatively difficult to assess the accuracy of Mr. Doll's market projections because of conditionalities and vagueness," the firm said.

(Editing by Jennifer Merritt and Walden Siew)