The way I can see, seems Facebook is now a "buy". Looks like it reached already the consolidation price. As "Booyah" Cramer always say...buy...buy...buy...
Thursday, May 31, 2012
Thursday's Trade Setup
The market drops in the open due to unfavorable jobs report.
For today's trade on this 1-min. chart, the market consolidates from the S2 (support) line.
Notice the crossover MA's, and they are flat, a sign that something a reversal is on the way.
The best entry is from the support line, lower arrow.
And the exit is before the S1.
For today's trade on this 1-min. chart, the market consolidates from the S2 (support) line.
Notice the crossover MA's, and they are flat, a sign that something a reversal is on the way.
The best entry is from the support line, lower arrow.
And the exit is before the S1.
Wednesday, May 30, 2012
Analyzing How To Make Trade In A Choppy Market
Today's market marred by lots of chops and the only possible trade I can spot is the one I encircled.
But spotting it takes a lot of deep market reading and patience in watching the market.
By analyzing today's market, I can spot a quick trade "in-between" this choppy sideways move.
Notice I made a three horizontal lines showing the maximum low and high of the trading day.
And when it breaks the mid-range (lower arrow), we can enter a long trade with stop just below or in-between the two lower horizontal lines.
The exit is at the upper arrow by just projecting the equal distance from the middle line.
By watching the market keenly and analyzing the market from technical view, you can still spot a simple trade in a choppy market, like this one.
But spotting it takes a lot of deep market reading and patience in watching the market.
By analyzing today's market, I can spot a quick trade "in-between" this choppy sideways move.
Notice I made a three horizontal lines showing the maximum low and high of the trading day.
And when it breaks the mid-range (lower arrow), we can enter a long trade with stop just below or in-between the two lower horizontal lines.
The exit is at the upper arrow by just projecting the equal distance from the middle line.
By watching the market keenly and analyzing the market from technical view, you can still spot a simple trade in a choppy market, like this one.
What The %&*$#@ Is This Chart
Shown is the 5-min. chart from yesterday's market and today's on going market action.
By just the look of it, it's hard to imagine where the market is headed for.
It's hard to figure it out what the market is doing right now.
This is the time not to do anything and just watch the market do its thing.
By just the look of it, it's hard to imagine where the market is headed for.
It's hard to figure it out what the market is doing right now.
This is the time not to do anything and just watch the market do its thing.
Tuesday, May 29, 2012
Tuesday's Market Action
The market gap up in the open only to reverse its move before noon.
To trade today's market is to buy in the open gap and sell before noon time when it starts to drop from the 10EMA.
The second trade is to short thereafter (the MA/EMA crossover) and cover from the R1.
To trade today's market is to buy in the open gap and sell before noon time when it starts to drop from the 10EMA.
The second trade is to short thereafter (the MA/EMA crossover) and cover from the R1.
Sunday, May 27, 2012
Count down 3, 2, 1 to be a trader!
3) Focus on the psychology and mental skills that are necessary to succeed in the market. Learn to read the market charts in terms of the psychology of the other traders.
2) Learn about risk control in depth. What this really means, options available to you, how you can marry it up with your financial objectives in the market place etc.
1) Only when you have the above dialled in should you investigate ways of putting trades on in the most advantageous positions to generate the returns you are looking for.
I think if people were to count down 3, 2, 1 there would be many more successful traders.
3) Focus on the psychology and mental skills that are necessary to succeed in the market. Learn to read the market charts in terms of the psychology of the other traders.
2) Learn about risk control in depth. What this really means, options available to you, how you can marry it up with your financial objectives in the market place etc.
1) Only when you have the above dialled in should you investigate ways of putting trades on in the most advantageous positions to generate the returns you are looking for.
I think if people were to count down 3, 2, 1 there would be many more successful traders.
What It Takes to Trade for a Living
What it takes to be a great trader.
No matter how simple, powerful, and proven a great trading system is, there are always going to be times when your fortitude is tested. There are always going to be times when the market chews you up and spits you out.
At such times, you have to make a decision regarding just how determined you truly are to succeed at trading. You have to ask yourself, “How much can I take and keep moving forward?” You have to look in the mirror and ask, “Do I want to quit?”
And that’s the way it should be! If it was always easy, everyone would be doing it.
It’s no secret that MOST of the greatest traders throughout history hit rock bottom before they became millionaires and billionaires. Everyone from Nicolas Darvas to Richard Dennis to Paul Tudor Jones have had moments where their accounts dwindled to the brink of despair and these traders had to ask themselves, “Can I go on or should I throw in the towel and move on to something else?”
Trading, like life, is all about perseverance. How driven are you? How focused are you? What are you willing to go through in order to succeed?
Throughout the summer, the market has been frustrating to Darvas traders (and all trend traders) due to its choppiness. Right when the market has shown signs of an uptrend, it has quickly reversed and humbled many traders.
This is nothing new, of course. Trend traders have been dealing with these choppy periods for more than 100 years and the data continues to show that, in the long run, the frustration endured during choppy markets is well worth it due to the huge rewards achieved during a trending market.
Of course, knowing this fact doesn’t always make it easier when you’re dealing with a roller-coaster market and getting stopped out of “by the book” trades.
But this is where we separate the successes from the failures. Most people will let their frustration get the best of them. They’ll throw in the towel and conclude that trading is just too difficult of a path to wealth.
But a few traders will persevere.
People like Nicolas Darvas, who endured nearly seven years of devastating setbacks when first trying to conquer Wall Street, will continue the game because they’re determined to win it. They won’t give up because they’ve seen how other traders traded their way to millions and, in some cases, billions. They’ll conclude, “If they can do it, why not me?”
That is the mentality it takes to achieve anything great in life.
When the going gets tough and the market gets rocky, I think it’s a good idea to reevaluate your goals.
Why do you want to be a trader? Why are you determined to win at this game?
Here’s a quick list on why I love trading and why I choose the world of trading as a profession. Perhaps you’ll agree with me on several of these points.
- The stock market is the ultimate vehicle for freedom and independence. ANYONE who works hard enough and smart enough can achieve financial and personal freedom in the stock market.
- The stock market is a place where no one can tell you that you can’t buy this or aren’t allowed to buy that; everyone has complete freedom to exercise their choices and take their shot at conquering the market.
- ANYONE with a brokerage account and a little cash can play their hand at the stock market and achieve unlimited success from virtually anywhere in the world. It doesn’t matter who you know, what color your skin is, what language you speak, what kind of education you have, what kind of financial background you have, what kind of neighborhood you grew up in, or what kind of family history you have. None of that matters! The stock market gives everyone the same opportunity to make their fortune and have their dreams come true.
- In the stock market, there’s no one way to make your fortune. Warren Buffett can make a fortune holding stocks for decades. Nicolas Darvas can make a fortune holding stocks for months. Buzzy Schwartz can make a fortune holding stocks for minutes. The stock market offers fantastic opportunity for speculators of all types to make their fortune.
- The stock market is a libertarian oasis. It is the great frontier on the grandest scale imaginable. It is an ongoing competition for the pursuit of dreams and total freedom. Everyone has an equal shot at making billions in the stock market. And there is nothing but willpower and perseverance standing in the way of anyone’s potential to do so.
- Trading offers the ultimate independence. YOU are the only one responsible for your success or failure. Every decision you make is solely up to you.
- Not only are all decisions up to you, but your potential success is unlimited. There is no cap whatsoever on how far you can go and how high you can climb!
- As a trader, you live a completely independent lifestyle. You can go anywhere, anytime, and live anywhere you want. You are in no way restricted by anything. As long as you have computer access, you’re good to go!
- And finally, trading is also the ultimate never-ending learning process. The hunt for the next great trade never ends! The more you read, research, and study, the better trader you will become. Trading rewards continuous intelligence expansion.
Anything I’ve left off? Anything you disagree with?
Every trader needs to ponder these questions to determine if they really have what it takes to make it as a trader.
Saturday, May 26, 2012
14 Rules for Being YOU
Be yourself. Trying to be anyone else is a waste of the person you are. Embrace that individual inside you that has ideas, strengths and beauty like no one else. Be the person you know yourself to be – the best version of you – on your terms. And above all, be true to YOU – if you cannot put your heart in it, take yourself out of it.
Starting today…
Get your priorities straight. – Twenty years from now it won’t really matter what shoes you wore today, how your hair looked, or what brand of jeans you bought. What will matter is how you loved, what you learned and how you applied this knowledge.
Take full responsibility for your goals. – If you really want good things in your life to happen, you have to make them happen yourself. You can’t sit around and hope that somebody else will help you; you have to make your own future and not think that your destiny is tied to the actions and choices of others.
Know your worth. – When someone treats you like you’re just one of many options, help them narrow their choice by removing yourself from the equation. Sometimes you have to try not to care, no matter how much you do. Because sometimes you can mean almost nothing to someone who means so much to you. It’s not pride – it’s self-respect. Don’t expect to see positive changes in your life if you surround yourself with negative people. Don’t give part-time people a full-time position in your life. Know your value and what you have to offer, and never settle for anything less than what you deserve.
Choose the right perspective. – Perspective is everything. When faced with long check-out lines, traffic jams, or waiting an hour past your appointment time, you have two choices: You can get frustrated and enraged, or you can view it as life’s way of giving you a guilt-free breather from rushing, and spend that time daydreaming, conversing, or watching the clouds. The first choice will raise your blood pressure. The second choice will raise your consciousness.
Don’t let your old problems punish your dreams. – Learn to let go of things you can’t control. The next time you’re tempted to rant about a situation that you think ended unfairly, remind yourself of this: You’ll never kill off your anger by beating the story to death. So close your mouth, unclench your fists, and redirect your thoughts. When left untended, the anger will slowly wither, and you’ll be left to live in peace as you grow toward a better future.
Choose the things that truly matter. – Some things just don’t matter much – like the kind of car you drive. How big of a deal is that in the grand scheme of life? Not a big at all. But lifting a person’s heart? Now, that matters. The whole problem with most people is, they KNOW what matters, but they don’t CHOOSE it. They get distracted. They don’t put first things first. The hardest and smartest way to live is choosing what truly matters, and pursuing it passionately. Read The 7 Habits of Highly Effective People.
Love YOU. – Let someone love you just the way you are – as flawed as you might be, as unattractive as you sometimes feel, and as unaccomplished as you think you are. Yes, let someone love you despite all of this; and let that someone be YOU.
Accept your strengths and weaknesses. – Be confident being YOU. We often waste too much time comparing ourselves to others, and wishing to be something we’re not. Everybody has their own strengths and weaknesses, and it is only when we accept everything we are, and aren’t, that we are able to become who we are capable of being.
Stand up for YOU. – You were born to be real, not to be perfect. You’re here to be YOU, not to be what someone else wants you to be. Stand up for yourself, look them in the eye, and say, “Don’t judge me until you know me, don’t underestimate me until you challenge me, and don’t talk about me until you’ve talked to me.”
Learn from others, and move on when you must. – You can’t expect to change people. Either you accept who they are, or you start living your life without them. And just because something ends, doesn’t mean it never should have been. You lived, you learned, you grew, and you moved on. Some people come into your life as blessings; others come into your life as lessons.
Be honest in your relationships. – Don’t cheat! If you’re not happy, be honest, and move on if you must. When you’re truly in love, being faithful isn’t a sacrifice, it’s a joy.
Get comfortable with being uncomfortable. – Life as we know it can change in a blink of an eye. Unlikely friendships can blossom, important careers can be tossed aside and a long lost hope can be rekindled. It might feel a little uncomfortable at times, but know that life begins at the end of your comfort zone. So if you’re feeling uncomfortable right now, know that the change taking place in your life is not an ending, but a new beginning. Read The Power of Full Engagement.
Be who you were born to be. – Don’t get to the end of your life and find that you lived only the length of it; live the width of it as well. When it comes to living as a passionate, inspired human being, the only challenge greater than learning to walk a mile in someone else’s shoes, is learning to walk a lifetime comfortably in your own. Follow your heart, and take your brain with you. When you are truly comfortable in your own skin, not everyone will like you, but you won’t care about it one bit.
Never give up on YOU. – This is your life; shape it, or someone else will. Strength shows not only in the ability to hold on, but in the ability to start over when you must. It is never too late to become what you might have been. Keep learning, adapting, and growing. You may not be there yet, but you are closer than you were yesterday.
Starting today…
Take full responsibility for your goals. – If you really want good things in your life to happen, you have to make them happen yourself. You can’t sit around and hope that somebody else will help you; you have to make your own future and not think that your destiny is tied to the actions and choices of others.
Know your worth. – When someone treats you like you’re just one of many options, help them narrow their choice by removing yourself from the equation. Sometimes you have to try not to care, no matter how much you do. Because sometimes you can mean almost nothing to someone who means so much to you. It’s not pride – it’s self-respect. Don’t expect to see positive changes in your life if you surround yourself with negative people. Don’t give part-time people a full-time position in your life. Know your value and what you have to offer, and never settle for anything less than what you deserve.
Choose the right perspective. – Perspective is everything. When faced with long check-out lines, traffic jams, or waiting an hour past your appointment time, you have two choices: You can get frustrated and enraged, or you can view it as life’s way of giving you a guilt-free breather from rushing, and spend that time daydreaming, conversing, or watching the clouds. The first choice will raise your blood pressure. The second choice will raise your consciousness.
Don’t let your old problems punish your dreams. – Learn to let go of things you can’t control. The next time you’re tempted to rant about a situation that you think ended unfairly, remind yourself of this: You’ll never kill off your anger by beating the story to death. So close your mouth, unclench your fists, and redirect your thoughts. When left untended, the anger will slowly wither, and you’ll be left to live in peace as you grow toward a better future.
Choose the things that truly matter. – Some things just don’t matter much – like the kind of car you drive. How big of a deal is that in the grand scheme of life? Not a big at all. But lifting a person’s heart? Now, that matters. The whole problem with most people is, they KNOW what matters, but they don’t CHOOSE it. They get distracted. They don’t put first things first. The hardest and smartest way to live is choosing what truly matters, and pursuing it passionately. Read The 7 Habits of Highly Effective People.
Love YOU. – Let someone love you just the way you are – as flawed as you might be, as unattractive as you sometimes feel, and as unaccomplished as you think you are. Yes, let someone love you despite all of this; and let that someone be YOU.
Accept your strengths and weaknesses. – Be confident being YOU. We often waste too much time comparing ourselves to others, and wishing to be something we’re not. Everybody has their own strengths and weaknesses, and it is only when we accept everything we are, and aren’t, that we are able to become who we are capable of being.
Stand up for YOU. – You were born to be real, not to be perfect. You’re here to be YOU, not to be what someone else wants you to be. Stand up for yourself, look them in the eye, and say, “Don’t judge me until you know me, don’t underestimate me until you challenge me, and don’t talk about me until you’ve talked to me.”
Learn from others, and move on when you must. – You can’t expect to change people. Either you accept who they are, or you start living your life without them. And just because something ends, doesn’t mean it never should have been. You lived, you learned, you grew, and you moved on. Some people come into your life as blessings; others come into your life as lessons.
Be honest in your relationships. – Don’t cheat! If you’re not happy, be honest, and move on if you must. When you’re truly in love, being faithful isn’t a sacrifice, it’s a joy.
Get comfortable with being uncomfortable. – Life as we know it can change in a blink of an eye. Unlikely friendships can blossom, important careers can be tossed aside and a long lost hope can be rekindled. It might feel a little uncomfortable at times, but know that life begins at the end of your comfort zone. So if you’re feeling uncomfortable right now, know that the change taking place in your life is not an ending, but a new beginning. Read The Power of Full Engagement.
Be who you were born to be. – Don’t get to the end of your life and find that you lived only the length of it; live the width of it as well. When it comes to living as a passionate, inspired human being, the only challenge greater than learning to walk a mile in someone else’s shoes, is learning to walk a lifetime comfortably in your own. Follow your heart, and take your brain with you. When you are truly comfortable in your own skin, not everyone will like you, but you won’t care about it one bit.
Never give up on YOU. – This is your life; shape it, or someone else will. Strength shows not only in the ability to hold on, but in the ability to start over when you must. It is never too late to become what you might have been. Keep learning, adapting, and growing. You may not be there yet, but you are closer than you were yesterday.
Friday, May 25, 2012
Friday's Zigzag Market
Shown is the 5-min. chart from the Nasdaq (etf QQQ) index wherein it moves on a choppy sideways.
In this kind of choppy market, you can't spot any good location to put on a trade, either long or short.
This is where you don't do anything and just stay on the sidelines.
In this kind of choppy market, you can't spot any good location to put on a trade, either long or short.
This is where you don't do anything and just stay on the sidelines.
Thursday, May 24, 2012
Thursday's Ugly Market
The market (QQQ, Nasdaq) did not do any good today except to give up what was gain yesterday.
A choppy downward trend to say the least.
Though the Dow and the S&P did some little convincing move, the Nasdaq made an "ugly" move.
A choppy downward trend to say the least.
Though the Dow and the S&P did some little convincing move, the Nasdaq made an "ugly" move.
Wednesday, May 23, 2012
Wednesday's Trade Setup
The market made a reversal from its downward trend from the open till noon time.
The best entry for a long trade is at around 1:00 pm. ET. as pointed from the arrow.
Takes a lot of patience in waiting for the setup to get triggered.
The best entry for a long trade is at around 1:00 pm. ET. as pointed from the arrow.
Takes a lot of patience in waiting for the setup to get triggered.
Monday, May 21, 2012
The Market After The Close
The market was cooperative today.
All you have to do is buy in the open and sell in the close.
Easy money err...trading in today's market.
Sometimes the market gives you easy money, all you have to do is take it with an open arms.
Though the market doesn't give opportunity daily, but when it offers, it will be a big reward.
Like today's market, all you have to do is observe (monitor) the market daily.
All you have to do is buy in the open and sell in the close.
Easy money err...trading in today's market.
Sometimes the market gives you easy money, all you have to do is take it with an open arms.
Though the market doesn't give opportunity daily, but when it offers, it will be a big reward.
Like today's market, all you have to do is observe (monitor) the market daily.
Wow... The Market Is On Fire!
Looks like the market can't do no wrong today.
The bears are running for cover, they're nowhere to go.
For the bulls, enjoy the ride!
The bears are running for cover, they're nowhere to go.
For the bulls, enjoy the ride!
Facebook looks like running out of "face" or "out of love"?
Shown is the 5-min chart of the much "overhype"? IPO, the FB.
What can you say with this?
Well, Zuckerberg is enjoying his after effect wedding, and his stock is falling (out of love).
What can you say with this?
Well, Zuckerberg is enjoying his after effect wedding, and his stock is falling (out of love).
Monday's Trade Setup for NQ (QQQ)
The market bounce after lingering (from sickbed) for almost two weeks.
Shown is the 1-min chart from the Nasdaq QQQ where the best entry is from the pullback (arrow) after the open.
And let it ride, adjust the trailing till run out of gas.
Enjoy the uptrend, possibly till the close!
Shown is the 1-min chart from the Nasdaq QQQ where the best entry is from the pullback (arrow) after the open.
And let it ride, adjust the trailing till run out of gas.
Enjoy the uptrend, possibly till the close!
Sunday, May 20, 2012
Friday's Trade Setup For Russell 2000
Friday's market was a profit taking day.
Facebook IPO did not help the market to rise.
Shown are two short trade from the Russell 2000 (TF in Futures, IWN for etf).
By just inspection, one can put two short trades.
The first trade can be shorted from the yellow line (the previous close) and the cover is at the red line (support). You must be quick to cover at S1 because that's where most traders are watching. Notice the big red bar that bounced from the red line?, it's a sign that it is going to reverse.
The second short trade is below the yellow line and the descending cross over of the 20MA and the 10EMA. Cover at the close is the most appropriate area. The second short entry can be justified clearly because of the downtrend third lower highs of the day. Besides, it's below the previous close plus the MA/EMA's crossovers.
Facebook IPO did not help the market to rise.
Shown are two short trade from the Russell 2000 (TF in Futures, IWN for etf).
By just inspection, one can put two short trades.
The first trade can be shorted from the yellow line (the previous close) and the cover is at the red line (support). You must be quick to cover at S1 because that's where most traders are watching. Notice the big red bar that bounced from the red line?, it's a sign that it is going to reverse.
The second short trade is below the yellow line and the descending cross over of the 20MA and the 10EMA. Cover at the close is the most appropriate area. The second short entry can be justified clearly because of the downtrend third lower highs of the day. Besides, it's below the previous close plus the MA/EMA's crossovers.
Friday, May 18, 2012
The Hype Is On FB
Shown is the 5-min. concluding chart of the much awaited hype in the stock market.
Facebook (FB) debuted today from the Nasdaq amid some glitches.
It recorded the highest number of shares ever traded.
Facebook (FB) debuted today from the Nasdaq amid some glitches.
It recorded the highest number of shares ever traded.
Facebook Trade Setup
Facebook (FB) IPO started today in the Nasdaq.
To trade or to buy shares with the hype, wait for a while when the market settles.
Shown is the 5-min. chart wherein the best entry is at the lower arrow.
The best price to enter is at $38.40.
I suspect it will go up in the days (or weeks) to come then it will fizzle for the participants will take some profit.
The best bet for the long term investors is to wait for a week or so to get involved with this hype.
Personally, I won't get involve with the hype as a long term investor, but to trade it is the best way to get involve.
To trade or to buy shares with the hype, wait for a while when the market settles.
Shown is the 5-min. chart wherein the best entry is at the lower arrow.
The best price to enter is at $38.40.
I suspect it will go up in the days (or weeks) to come then it will fizzle for the participants will take some profit.
The best bet for the long term investors is to wait for a week or so to get involved with this hype.
Personally, I won't get involve with the hype as a long term investor, but to trade it is the best way to get involve.
Thursday, May 17, 2012
Thursday's Trade Setup
The market continues to deteriorate as shown from this 10-min chart.
It's been on the downward trend for quite a week or so.
The trade for the day is to sell short in the open.
Then go out from your trading cave, head to a driving range to practice your swing.
Take your lunch at CMG, then go to BKS to read some latest trading books.
Come back to your trading cave before the market close to cover your short trade.
Then go the nearest RICK (if there is one in your place, or just in the Hooters) to enjoy your profit.
That's how traders live by!
It's been on the downward trend for quite a week or so.
The trade for the day is to sell short in the open.
Then go out from your trading cave, head to a driving range to practice your swing.
Take your lunch at CMG, then go to BKS to read some latest trading books.
Come back to your trading cave before the market close to cover your short trade.
Then go the nearest RICK (if there is one in your place, or just in the Hooters) to enjoy your profit.
That's how traders live by!
Tuesday, May 15, 2012
Tuesday's Trade Setup
The market zigzag today and can't find any probable trade almost the whole trading day.
Except in the last couple of hours before closing wherein it shows a clear short trade.
Soorting the market as shown form the top arrow and covering the position into the close is the only trade I can spot from today's market.
It's a pretty hard market today, considering the participants are at a loss if the take a long or short position.
Let's wait for the FB's IPO, maybe the market will surge.
Except in the last couple of hours before closing wherein it shows a clear short trade.
Soorting the market as shown form the top arrow and covering the position into the close is the only trade I can spot from today's market.
It's a pretty hard market today, considering the participants are at a loss if the take a long or short position.
Let's wait for the FB's IPO, maybe the market will surge.
Saturday, May 12, 2012
Friday's Market At The Close
The market surge (NQ) in the open only to bow down in the close.
It runs out of steam when it reach the top at around 11:00 am. ET.
I guess that's the usual move especially it's Friday, the profit taking day.
It's been lagging for almost the whole trading week, suddenly this Friday it burst like a gunfire in the open.
The best entry here for a long trade is above the red line with that small candle.
The exit should be at the top level with that big red bar around 11:45 am. ET.
That's where the lunch time occurs in the Wall Street.
Better to take the profit before lunch time, otherwise you will end up getting your lunch at MCD.
It runs out of steam when it reach the top at around 11:00 am. ET.
I guess that's the usual move especially it's Friday, the profit taking day.
It's been lagging for almost the whole trading week, suddenly this Friday it burst like a gunfire in the open.
The best entry here for a long trade is above the red line with that small candle.
The exit should be at the top level with that big red bar around 11:45 am. ET.
That's where the lunch time occurs in the Wall Street.
Better to take the profit before lunch time, otherwise you will end up getting your lunch at MCD.
Friday, May 11, 2012
Friday's Trade Setup
The market made a surprising/stunning move today.
It rises from the deep hole for it was sinking the last weeks.
Today's jumper move/trade was an opportunity to buy in the open.
Shown is the 5-min. chart with the entry for a long trade.
It rises from the deep hole for it was sinking the last weeks.
Today's jumper move/trade was an opportunity to buy in the open.
Shown is the 5-min. chart with the entry for a long trade.
Thursday, May 10, 2012
The Choppy Market
The market did not do any good move today and all it got to do was to move sideways.
This is the kind of environment that should stay on the sidelines and just watch the market do its zigzagging.
This is where you can exercise the discipline, not to trade.
You cannot trade the market all the time unless you scalped it that takes a lot of guts to play the market.
Seems the market will take a lot of time to get its traction, it is on the consolidation mode.
But the strange thing is that, it is on the downward trend.
I suspect it might drop further unless big money will buy the market.
The participants are gauging each other, trying to psyche each others motives.
We'll keep on watching who's going to prevail.
This is the kind of environment that should stay on the sidelines and just watch the market do its zigzagging.
This is where you can exercise the discipline, not to trade.
You cannot trade the market all the time unless you scalped it that takes a lot of guts to play the market.
Seems the market will take a lot of time to get its traction, it is on the consolidation mode.
But the strange thing is that, it is on the downward trend.
I suspect it might drop further unless big money will buy the market.
The participants are gauging each other, trying to psyche each others motives.
We'll keep on watching who's going to prevail.
Wednesday, May 9, 2012
Intelligence Is Overrated: What You Really Need to Succeed
Albert Einstein’s was estimated at 160, Madonna’s is 140, and John F. Kennedy’s
was only 119, but as it turns out, your IQ score pales in comparison with your
EQ, MQ, and BQ scores when it comes to predicting your success and professional
achievement.
IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.
Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.
With this in mind, instead of exclusively focusing on your conventional intelligence quotient, you should make an investment in strengthening your EQ (Emotional Intelligence), MQ (Moral Intelligence), and BQ (Body Intelligence). These concepts may be elusive and difficult to measure, but their significance is far greater than IQ.
Emotional Intelligence
EQ is the most well known of the three, and in brief it is about: being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, self-motivation, and building relationships.
Top Tip for Improvement: First, become aware of your inner dialogue. It helps to keep a journal of what thoughts fill your mind during the day. Stress can be a huge killer of emotional intelligence, so you also need to develop healthy coping techniques that can effectively and quickly reduce stress in a volatile situation.
Moral Intelligence
MQ directly follows EQ as it deals with your integrity, responsibility, sympathy, and forgiveness. The way you treat yourself is the way other people will treat you. Keeping commitments, maintaining your integrity, and being honest are crucial to moral intelligence.
Top Tip for Improvement: Make fewer excuses and take responsibility for your actions. Avoid little white lies. Show sympathy and communicate respect to others. Practice acceptance and show tolerance of other people’s shortcomings. Forgiveness is not just about how we relate to others; it’s also how you relate to and feel about yourself.
Body Intelligence
Lastly, there is your BQ, or body intelligence, which reflects what you know about your body, how you feel about it, and take care of it. Your body is constantly telling you things; are you listening to the signals or ignoring them? Are you eating energy-giving or energy-draining foods on a daily basis? Are you getting enough rest? Do you exercise and take care of your body? It may seem like these matters are unrelated to business performance, but your body intelligence absolutely affects your work because it largely determines your feelings, thoughts, self-confidence, state of mind, and energy level.
Top Tip For Improvement: At least once a day, listen to the messages your body is sending you about your health. Actively monitor these signals instead of going on autopilot. Good nutrition, regular exercise, and adequate rest are all key aspects of having a high BQ. Monitoring your weight, practicing moderation with alcohol, and making sure you have down time can dramatically benefit the functioning of your brain and the way you perform at work.
What You Really Need To Succeed
It doesn’t matter if you did not receive the best academic training from a top university. A person with less education who has fully developed their EQ, MQ, and BQ can be far more successful than a person with an impressive education who falls short in these other categories.
Yes, it is certainly good to be an intelligent, rational thinker and have a high IQ; this is an important asset. But you must realize that it is not enough. Your IQ will help you personally, but EQ, MQ, and BQ will benefit everyone around you as well. If you can master the complexities of these unique and often under-rated forms of intelligence, research tells us you will achieve greater success and be regarded as more professionally competent and capable.
IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.
Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.
With this in mind, instead of exclusively focusing on your conventional intelligence quotient, you should make an investment in strengthening your EQ (Emotional Intelligence), MQ (Moral Intelligence), and BQ (Body Intelligence). These concepts may be elusive and difficult to measure, but their significance is far greater than IQ.
Emotional Intelligence
EQ is the most well known of the three, and in brief it is about: being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, self-motivation, and building relationships.
Top Tip for Improvement: First, become aware of your inner dialogue. It helps to keep a journal of what thoughts fill your mind during the day. Stress can be a huge killer of emotional intelligence, so you also need to develop healthy coping techniques that can effectively and quickly reduce stress in a volatile situation.
Moral Intelligence
MQ directly follows EQ as it deals with your integrity, responsibility, sympathy, and forgiveness. The way you treat yourself is the way other people will treat you. Keeping commitments, maintaining your integrity, and being honest are crucial to moral intelligence.
Top Tip for Improvement: Make fewer excuses and take responsibility for your actions. Avoid little white lies. Show sympathy and communicate respect to others. Practice acceptance and show tolerance of other people’s shortcomings. Forgiveness is not just about how we relate to others; it’s also how you relate to and feel about yourself.
Body Intelligence
Lastly, there is your BQ, or body intelligence, which reflects what you know about your body, how you feel about it, and take care of it. Your body is constantly telling you things; are you listening to the signals or ignoring them? Are you eating energy-giving or energy-draining foods on a daily basis? Are you getting enough rest? Do you exercise and take care of your body? It may seem like these matters are unrelated to business performance, but your body intelligence absolutely affects your work because it largely determines your feelings, thoughts, self-confidence, state of mind, and energy level.
Top Tip For Improvement: At least once a day, listen to the messages your body is sending you about your health. Actively monitor these signals instead of going on autopilot. Good nutrition, regular exercise, and adequate rest are all key aspects of having a high BQ. Monitoring your weight, practicing moderation with alcohol, and making sure you have down time can dramatically benefit the functioning of your brain and the way you perform at work.
What You Really Need To Succeed
It doesn’t matter if you did not receive the best academic training from a top university. A person with less education who has fully developed their EQ, MQ, and BQ can be far more successful than a person with an impressive education who falls short in these other categories.
Yes, it is certainly good to be an intelligent, rational thinker and have a high IQ; this is an important asset. But you must realize that it is not enough. Your IQ will help you personally, but EQ, MQ, and BQ will benefit everyone around you as well. If you can master the complexities of these unique and often under-rated forms of intelligence, research tells us you will achieve greater success and be regarded as more professionally competent and capable.
Wednesday Trade Setup
The market gap down in the open but recover before noon time.
As if it formed a cup with a handle pattern.
To enter a long trade, the arrow as shown in the circle area is the best location to put the entry.
As if it formed a cup with a handle pattern.
To enter a long trade, the arrow as shown in the circle area is the best location to put the entry.
Tuesday, May 8, 2012
Tuesday Trade Setup
The market recovered in the midday trading when it drops in the open.
It formed a wide "w" pattern, a sign that it might recover from its slumped.
Being patient in the market waiting for the opportunities to pop pays a big part.
Like this one from the QQQ etf's which is the equivalent of the NQ Futures.
The best entry for a long trade is at the lower arrow and can be exited from the pivot point.
It formed a wide "w" pattern, a sign that it might recover from its slumped.
Being patient in the market waiting for the opportunities to pop pays a big part.
Like this one from the QQQ etf's which is the equivalent of the NQ Futures.
The best entry for a long trade is at the lower arrow and can be exited from the pivot point.
Monday, May 7, 2012
Monday's Trading
The market barely made a move today for it's Monday, a day participants starts to gauge each others throat where the markets headed.
It consolidates on a choppy range, but the bulls somewhat looking for an upper hand.
Other than the news coming from overseas, the market is just waiting for any favorable news to make its move.
Don't see any probable setups from the QQQ (NQ) today, other than to scalp the overall market index.
Let's see for the coming days if there will be a jumper trade, but it usually happened in the overnight session.
Unless you watch the market like a hawk in the wee hours of the Globex session, you cannot catch the real meat.
After that, the regular open is the real hard battle where the pros always makes the action to profit.
It consolidates on a choppy range, but the bulls somewhat looking for an upper hand.
Other than the news coming from overseas, the market is just waiting for any favorable news to make its move.
Don't see any probable setups from the QQQ (NQ) today, other than to scalp the overall market index.
Let's see for the coming days if there will be a jumper trade, but it usually happened in the overnight session.
Unless you watch the market like a hawk in the wee hours of the Globex session, you cannot catch the real meat.
After that, the regular open is the real hard battle where the pros always makes the action to profit.
Saturday, May 5, 2012
Friday's Trade Setup
The market continues to go down and most participants are taking profit.
Looks like the Wall Street passage, "sell in May and go away" is now on-going?
I guess that's what the chart shows (below).
In this no-brainer trade, sell in the open and cover in the close is the typical Wall Street modus operandi.
Friday's market activities is all about distribution.
The bulls are all on the run and the bears are celebrating in total pandemonium.
I suspect it will be the bears that will control the market in the days to come.
Unless the bulls can take more print money from Uncle Sam to buy the market, it might struggle further.
Let's see how the long term investors reaction.
As for traders, let's take all the opportunities that the market offers on a daily basis.
Looks like the Wall Street passage, "sell in May and go away" is now on-going?
I guess that's what the chart shows (below).
In this no-brainer trade, sell in the open and cover in the close is the typical Wall Street modus operandi.
Friday's market activities is all about distribution.
The bulls are all on the run and the bears are celebrating in total pandemonium.
I suspect it will be the bears that will control the market in the days to come.
Unless the bulls can take more print money from Uncle Sam to buy the market, it might struggle further.
Let's see how the long term investors reaction.
As for traders, let's take all the opportunities that the market offers on a daily basis.
Thursday, May 3, 2012
NQ (QQQ) Thursday Trade Setup
The market went down today and shows some selling pressure.
It stays sideways after the selling pressure from the open and went down hard as show from this 5-min. chart.
Sell short is the trade of the day as shown from the top arrow with the cover below.
It stays sideways after the selling pressure from the open and went down hard as show from this 5-min. chart.
Sell short is the trade of the day as shown from the top arrow with the cover below.
NQ (QQQ) Wednesday Trade Setup
The market open below yesterday's open but recovered after an hour or so.
The bears run out of support and most participants revert to the bulls side and the market turn upside.
Shown is the 5-min. chart with the entry setup pointed in an arrow at the bottom.
Notice the big green candle with a long wick tail at the bottom showing the market is on the reverse mode.
Trade what you see as the saying goes.
Exit the trade before the close and enjoy your profit!
The bears run out of support and most participants revert to the bulls side and the market turn upside.
Shown is the 5-min. chart with the entry setup pointed in an arrow at the bottom.
Notice the big green candle with a long wick tail at the bottom showing the market is on the reverse mode.
Trade what you see as the saying goes.
Exit the trade before the close and enjoy your profit!
Friday, April 27, 2012
ES Setup Trade
The market made a tight consolidation today, and made a nice entry setup from this 5-min. chart.
Being patient in finding and waiting for a high probable setup can be a profitable trade.
Like this one!
Being patient in finding and waiting for a high probable setup can be a profitable trade.
Like this one!
Monday, April 23, 2012
QQQ (NQ) Short Trade Setup
The market tumble today and made a short quick entry from this 1-min. chart of NQ Futures similar to QQQ etf.
In this kind of market environment, applying quick trade is the only way to take the market offers.
The short entry was at the upper arrow and the cover position is at the lower when it tries to recover.
In this kind of market environment, applying quick trade is the only way to take the market offers.
The short entry was at the upper arrow and the cover position is at the lower when it tries to recover.
Friday, April 20, 2012
QQQ and NQ Trade Setup
Showing high probability trade today for the QQQ etf and the NQ Futures.
The market went up in the open but was not able to sustain its momentum
It runs out of gas in the mid day trading, probably traders take their loot before lunch and went on drinking spree early.
The best trade is to put a short position as shown from the arrow while traders went home already.
Exit the trade before the close and enjoy the leftover loot.
That's how in trading, even the big traders are out already you can still capitalize from their leftovers.
The market went up in the open but was not able to sustain its momentum
It runs out of gas in the mid day trading, probably traders take their loot before lunch and went on drinking spree early.
The best trade is to put a short position as shown from the arrow while traders went home already.
Exit the trade before the close and enjoy the leftover loot.
That's how in trading, even the big traders are out already you can still capitalize from their leftovers.
Thursday, April 19, 2012
NQ Trade Setup
Early trade in the open can make you a good profit if you can capitalize on the price action.
Showing the 2-min. chart of the etf QQQ similar to the Nasdaq NQ futures the two trades.
Showing the 2-min. chart of the etf QQQ similar to the Nasdaq NQ futures the two trades.
Wednesday, April 18, 2012
YM Trade Setup
The market made a choppy move today for it run out of gas from yesterday's breakaway.
And also due to some unfavorable earnings reports from other leading stocks.
Showing here an entry setup for a long trade.
The 3-min. chart here from the YM futures market shows an interesting pattern for a bullish trade.
A mini cup and a handle formation.
The entry is at the lower arrow and just monitor it till you meet your desired profit.
And also due to some unfavorable earnings reports from other leading stocks.
Showing here an entry setup for a long trade.
The 3-min. chart here from the YM futures market shows an interesting pattern for a bullish trade.
A mini cup and a handle formation.
The entry is at the lower arrow and just monitor it till you meet your desired profit.
Tuesday, April 17, 2012
The market made a stunning comeback today after weeks of getting pummeled by the bears.
A typical buy in the open and sell in the close is the no-brainer trade today.
Just buy any of the three index below in the futures market and you can close your eyes and make money the whole trading day.
Sometimes the market will give you surprises that you won't have a hard time looking for trades.
It's just right there in front of your screen and just take the money and put it in your wallet.
Easy trading in today's market!
A typical buy in the open and sell in the close is the no-brainer trade today.
Just buy any of the three index below in the futures market and you can close your eyes and make money the whole trading day.
Sometimes the market will give you surprises that you won't have a hard time looking for trades.
It's just right there in front of your screen and just take the money and put it in your wallet.
Easy trading in today's market!
Sunday, April 15, 2012
NQ Trade Setup
Showing some trade setups that were conducted last Friday's trading session.
The entry was at the lower arrow and the exit was at the upper arrow.
Nice breakout from the entry but was short lived.
After that it stays sideways most of the day until it drops late in the close.
The reason for the entry trade is the formation of the two big green bar from the bottom.
Notice that they are almost flat from the low of the day and by reading the price action, you can put an entry for a long trade.
It formed a failed cup with a handle pattern or a deep saucer pan minus the handle.
The entry was at the lower arrow and the exit was at the upper arrow.
Nice breakout from the entry but was short lived.
After that it stays sideways most of the day until it drops late in the close.
The reason for the entry trade is the formation of the two big green bar from the bottom.
Notice that they are almost flat from the low of the day and by reading the price action, you can put an entry for a long trade.
It formed a failed cup with a handle pattern or a deep saucer pan minus the handle.
Saturday, April 14, 2012
I'm Back...
Been a while not posting and I'm back!
Quite busy doing trades practicing the return of the market's surge.
Been trading the NQ (Nasdaq futures) for a change but I'm a little bit late trading it.
It's been on a roll since the first day of the year and the way I can see from this daily chart is that it's starts to make a pause.
It's like a runner who's on the lead for so long and starts to run out of energy.
It might be the return of the volatility come the next trading months?
The tech stocks are on a roll probably because of the iPad/iPhone mania.
Quite busy doing trades practicing the return of the market's surge.
Been trading the NQ (Nasdaq futures) for a change but I'm a little bit late trading it.
It's been on a roll since the first day of the year and the way I can see from this daily chart is that it's starts to make a pause.
It's like a runner who's on the lead for so long and starts to run out of energy.
It might be the return of the volatility come the next trading months?
The tech stocks are on a roll probably because of the iPad/iPhone mania.
Monday, April 9, 2012
I saw a nice, concise post by Greg Harmon of Dragonfly Capital this weekend on the topic of "What is Technical Analysis" and I thought I'd bring it over, both to educate readers who might not be familiar with the framework and to have it somewhere I can refer to it in the future! He does a great job if explaining not only what it is at the 40,000 point foot of view but what it is not – and I often take for granted the fact that many people who stop by the website have never heard of the concept or only vaguely know why anyone would or would not use it.
In many ways I think of technical analysis ("TA") as hocus pocus – not because it is 'magic', but due to the fact the reason it gives any proposed advantage is because so many other people use it. Hence it tends to self reinforce as more people and institutions (over the years) use it. To that end, why does a 200 day moving average matter… but not so a 137 day (or 253 day) average? Perhaps Fibonacci retracements can be better argued as not being "hocus pocus" as they are found widely through other disciplines but you get the drift; of course this is only my opinion and I am sure could be argued strenuously by others.
"TA" does not seem to be used very much at all anywhere in the mutual fund world (I don't think I've read more than 5-6 stories in 15+ years about it's use in the mutual fund world) but is much more prominent among the hedge fund and non mutual fund institutional set. While some people ONLY use technical analysis and nothing else, I think it's best used as another tool on the tool belt, but to each their own.Via Greg:
What it is
Technical Analysis at its base is an interpretation of price action plain and simple. It can be interpreted in many ways. Some use resistance and support levels based upon previous points where an asset has struggled to move higher or lower. Some use trend lines that rise or fall to glean insights into changes in buying and selling sentiment. Many look at historical patterns like triangles, wedges and channels to try to estimate how prices will react going forward. Still others look for cycles and patterns like Fibonacci ratios, seasonal factors, election cycles and longer cycles like Elliott Waves and the Kondratieff Wave for an explanation. It can get quite complex with derivatives of the price action in momentum oscillators and volatility measures. Volume can play a role as well as an indicator appetite. But no matter what tools they use all technicians are looking for an edge to give a good entry or exit on a risk reward basis for a deployment of capital. A risk framework to design a trading strategy around. A forecast. A possible future with contingencies.What it is not
This is a subtlety many that do not practice TA fail to grasp. A possible future with contingencies. There is nothing about certainty in that statement. TA is not a road map. It does not point to an outcome. Probability is more like it. It is not fixed in time either. The read can change with changes in the price action, expected or unexpected. Nothing is certain. It can change with time. The closest thing to certainty in the TA world are horizontal support and resistance lines. They do not change, but they are also not made of concrete. Price can just as easily blow right through them or gap over them as it can be halted. And what has worked in the past may or may not work in the future.
Sunday, April 8, 2012
Are You A Victim Blamer?
Impulsive people have a way of reaching conclusions and taking action that, in comparison, with normal deliberations and intentions would be considered impaired. Acting on a whim, giving in to temptation, doing what you have told yourself, time and again not to do, is acting impulsively. Impulsive people are not self-confident but simply hope and wish for results. Quite simply they have no long-term goals, within which trades and management should be planned, only immediate urges. Their behavior is abrupt and unplanned. The time between thought and action is very brief.
The net outcome of unplanned behavior is when failure occurs, the process of analyzing bad trades malfunctions. The person cannot accrue effective lessons from the loss. Without a plan, impulsive people can’t develop methods to determine what works and what doesn’t. They can’t understand why they failed.
Impulsive people are also deficient in a certain method of thought process. Normal people weigh, analyze, research and develop an initial impression. Impulsive people guess and bet heavily without much thought. Impulsive people are often victim blamers. The results are reflective of character and personality, not intelligence.
Victim blamers tend to interpret anything in life that doesn’t go their way as somehow aimed against them, believing somebody or something is working against their welfare. It may be a boss, a girlfriend or an entity such as a company or the government. Or it may be outside forces such as “bad luck,” “nature,” “evil forces”. They never learned to assume personal responsibility for their own actions vs. blaming others. While everyone tends to lapse into blaming others at least sometimes for their misfortune, this trading type makes blaming their primary defense mechanism to deflect their own sense of urgency.
Because they are looking for someone to blame for their investments that lose money, they are among those most in favor of intense governmental investigation and prosecution of market manipulation of any kind. With each fresh uncovering of company accounting fraud, brokerage-analyst duplicity, insider trading or any other type of market manipulation, they smile and say, “See, I told you they’re all out to get us!” But this only tends to make them feel more helpless and assume less responsibility for their own investing decisions. If you have a tendency to be impulsive, the cure is to put together realistic and sound goals along with a realistic trading plan. Make yourself work towards the attainment of those goals by not violating the rules of your trading plan.
Tuesday, April 3, 2012
How To Become A Day Trader
By Michael Sanibel | Investopedia – Fri,
Mar 30, 2012 2:52 PM EDTOnce the bubble had fully deflated, the easy money dried up. Many of those who had profited through good luck and timing left trading and looked for other work. They discovered that day trading, like any other profession, requires education and skills to consistently make a living. For more information, see Day Trading: An Introduction.
BasicsA pure day trader buys and sells stocks or other investments and ends the trading day in cash with no open positions. If a position is held overnight or for several days, it's called a swing trade. Most day traders use both approaches, depending on their trading style and the nature of their investments.
Day trading requires a professional software platform and a high-speed Internet connection. While it's possible to design and build your own trading platform, most traders use a prepackaged setup provided by their brokerage or a specialized software company. It's best to have a powerful desktop with at least two monitors, and preferably four to six. You need multiple screens to display the charts and technical indicators that will provide your buy and sell signals.
When you use a brokerage platform, ensure that real-time news and data feeds are included in the package. You'll need that data to construct charts that expose trends and portray the time frames and trading strategies you want.
Technical IndicatorsFamiliarity with stocks and market fundamentals isn't enough to succeed as a trader. You should understand technical analysis and all of the tools used to dissect chart patterns, trading volume and price movements. Some of the more common indicators are resistance and support levels, moving average convergence/divergence (MACD), volatility, price oscillators and Bollinger Bands.
Learning and understanding how these indicators work only scratches the surface of what you'll need to know to develop your personal trading style. Hundreds of books have been written about day trading, and you can also take classes online or in person.
StrategiesTrading requires sufficient capital to take advantage of leveraging fairly large positions. Most traders make their money on relatively small price movements in liquid stocks or indexes with mid to high volatility. You need price movement to make money, either long or short. Higher volatility implies higher risk, with the potential for greater rewards and losses.
Unless you can buy several hundred or more shares of a stock, you won't make enough money on trades to cover the commissions. The lower the price of the stock, the more shares you'll need to gain sufficient leverage and total price movement.
The key to successful trading is developing techniques to determine entry and exit points. Most traders develop a style that they stick with, once they are comfortable with it. Some only trade one or two stocks every day, while others trade a small basket of favorites. The advantage of trading only a few stocks is that you learn how they act under different conditions and how movement is affected by the key market makers.
DisciplineDevelop a process and try it out with fictional trades. Refine the process and find what works for you. Only then should you put real money on the line and start actively trading the markets. Experienced traders define what constitutes a trading setup and the pattern and indicator combination they want to see before pulling the trigger. They rarely deviate from those setups in order to maintain focus and keep their emotions at bay.
Once you enter a position, stops should be placed to get you out of that position when a specified loss threshold is reached. If a trade is going the wrong way, hope and prayer will not help turn it around. Exiting the trade frees up your capital to redeploy to another more promising trade. You want to exit losers as soon as possible and ride the winners as long as they're profitable.
The Bottom LineThe success rate for day traders is estimated to be around only 10%, so if 90% are losing money, how could anyone expect to make a living this way? The answer lies in professional training, diligent research, refined skills, great discipline and the ability to admit mistakes and cut your losses. You have to be prepared to make split-second, unemotional decisions based on information that is sometimes incomplete, contradictory and changing by the second. The statistics prove it's clearly much easier said than done.
Day trading is not for the faint of heart. A winning strategy may involve executing many trades in one day, while avoiding the trap of overtrading and running up huge commissions. Day trading can be fun, as well as profitable, if you learn the ropes and set realistic goals.
Thursday, March 29, 2012
Trading Psychology, The 14 Stages of Investor Emotions
Efficient markets are based on the assumption that rational people enter transactions with the intent to maximize gains and minimize losses. While this theory is sound, most investors are not the purely rational robots that efficient markets rely upon. Instead, emotions often cloud our decision-making and prevent us from acting in a rational manner.
Knowing we can never conquer our inherent emotional biases, we should seek to understand the range of emotions we may experience as investors and how it affects our interactions with the market. A common market psychology cycle exists that shines light on how emotions evolve and the effect they have on our decisions. By understanding the stages of this cycle, we can tame the emotional roller coaster. The fourteen stages are:
Sean Hannon, CFA, CFP is a professional fund manager.
Efficient markets are based on the assumption that rational people enter transactions with the intent to maximize gains and minimize losses. While this theory is sound, most investors are not the purely rational robots that efficient markets rely upon. Instead, emotions often cloud our decision-making and prevent us from acting in a rational manner.
Knowing we can never conquer our inherent emotional biases, we should seek to understand the range of emotions we may experience as investors and how it affects our interactions with the market. A common market psychology cycle exists that shines light on how emotions evolve and the effect they have on our decisions. By understanding the stages of this cycle, we can tame the emotional roller coaster. The fourteen stages are:
- Optimism – A positive outlook encourages us about the future, leading us to buy stocks.
- Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.
- Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are.
- Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.
- Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.
- Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly.
- Fear – The market realities become confusing. We believe the stocks we own will never move in our favor.
- Desperation – Not knowing how to act, we grasp at any idea that will allow us to get back to breakeven.
- Panic – Having exhausted all ideas, we are at a loss for what to do next.
- Capitulation – Deciding our portfolio will never increase again, we sell all our stocks to avoid any future losses.
- Despondency – After exiting the markets we do not want to buy stocks ever again. This often marks the moment of greatest financial opportunity.
- Depression – Not knowing how we could be so foolish, we are left trying to understand our actions.
- Hope – Eventually we return to the realization that markets move in cycles, and we begin looking for our next opportunity.
- Relief – Having bought a stock that turned profitable, we renew our faith that there is a future in investing.
Sean Hannon, CFA, CFP is a professional fund manager.
Wednesday, March 28, 2012
Have you ever seen two people in the same situation act differently? With trading futures this is really evident. Only one side gets to make money.
How a person handles sinking (losing money) will help shape what they become as a trader. The second thing that my mentor every told me was learn how to lose. Winning is easy. Here are some key things about losing:
Losing is a result. A loss is a culmination of an action or inaction, own it.
You can’t control when you lose only how much. It is ok to lose, it is not ok to lose big.
In the beginning, it is easier to learn through losing than winning. Understand why you are losing and winning. Losing is what makes you put in the work. Winning is what makes you continue to put in the work. Allow yourself the second opportunity.
Don’t run on a broken leg. The worst day is always the second day. You will get better at healing until then recognize it.
Stick to your limits. If you cannot stick to your loss limits than you should not be trading. It creates a path you do not want to go down and hole that is hard to get out of.
Run it like a business. If you are losing more than you are making, risk less. If you can’t make $200 you should not be risking $800 a day.
You can’t prevent yourself from losing but you can control everything before and after. That is the best that the market has to offer. It has to be enough. Lose with a purpose or it will always be greater than your wins. Don’t epitomize the definition of insanity. Clear your head and come back, however long that takes. Learn how to lose so that your winners count. Exit every trade the same, with confidence.
No trader likes to lose but the best traders know how to swim.
From Trader Habits blog...
Monday, March 26, 2012
The market is on the upward move as shown from this chart, Russell 2000 (the small caps).
Switching my concentration to monitor the small caps which comprises all the small companies as compared with the S&P's and the Dow.
Though they all move almost in the same direction, this time I am preferring to concentrate with the Russell 2000 which is the equivalent of the IWM etf.
Switching my concentration to monitor the small caps which comprises all the small companies as compared with the S&P's and the Dow.
Though they all move almost in the same direction, this time I am preferring to concentrate with the Russell 2000 which is the equivalent of the IWM etf.
Dont Follow Your Passion, Follow Your Effort
I hear it all the time from people. “I’m passionate about it.” “I’m not going to quit, It’s my passion”. Or I hear it as advice to students and others “Follow your passion”.
What a bunch of BS. ”Follow Your Passion” is easily the worst advice you could ever give or get.
Why ? Because everyone is passionate about something. Usually more than 1 thing. We are born with it. There are always going to be things we love to do. That we dream about doing. That we really really want to do with our lives. Those passions aren’t worth a nickel.
Think about all the things you have been passionate about in your life. Think about all those passions that you considered making a career out of or building a company around. How many were/are there ? Why did you bounce from one to another ? Why were you not able to make a career or business out of any of those passions ? Or if you have been able to have some success, what was the key to the success.? Was it the passion or the effort you put in to your job or company ?
If you really want to know where you destiny lies, look at where you apply your time.
Time is the most valuable asset you don’t own. You may or may not realize it yet, but how you use or don’t use your time is going to be the best indication of where your future is going to take you .
Let me make this as clear as possible
1. When you work hard at something you become good at it.
2. When you become good at doing something, you will enjoy it more.
3. When you enjoy doing something, there is a very good chance you will become passionate or more passionate about it
4. When you are good at something, passionate and work even harder to excel and be the best at it, good things happen.
Don’t follow your passions, follow your effort. It will lead you to your passions and to success, however you define it.
From blog maverick/mark cuban
What a bunch of BS. ”Follow Your Passion” is easily the worst advice you could ever give or get.
Why ? Because everyone is passionate about something. Usually more than 1 thing. We are born with it. There are always going to be things we love to do. That we dream about doing. That we really really want to do with our lives. Those passions aren’t worth a nickel.
Think about all the things you have been passionate about in your life. Think about all those passions that you considered making a career out of or building a company around. How many were/are there ? Why did you bounce from one to another ? Why were you not able to make a career or business out of any of those passions ? Or if you have been able to have some success, what was the key to the success.? Was it the passion or the effort you put in to your job or company ?
If you really want to know where you destiny lies, look at where you apply your time.
Time is the most valuable asset you don’t own. You may or may not realize it yet, but how you use or don’t use your time is going to be the best indication of where your future is going to take you .
Let me make this as clear as possible
1. When you work hard at something you become good at it.
2. When you become good at doing something, you will enjoy it more.
3. When you enjoy doing something, there is a very good chance you will become passionate or more passionate about it
4. When you are good at something, passionate and work even harder to excel and be the best at it, good things happen.
Don’t follow your passions, follow your effort. It will lead you to your passions and to success, however you define it.
From blog maverick/mark cuban
Saturday, March 24, 2012
The market made a nice pretty move last Friday's session.
A surprising move considering a Friday trading is usually a profit taking day.
But that's not quite a surprise since the market is on the downward trend since Monday's trading open.
The Dow made a nice classic pattern to trade, a cup with a handle setup.
It drops further after the open to make a small cup formation opening for the setup at the consolidation when it reach red line.
A surprising move considering a Friday trading is usually a profit taking day.
But that's not quite a surprise since the market is on the downward trend since Monday's trading open.
The Dow made a nice classic pattern to trade, a cup with a handle setup.
It drops further after the open to make a small cup formation opening for the setup at the consolidation when it reach red line.
Friday, March 23, 2012
Every Adversity Contains The Seed Of …
The path to success consists of knowing your outcome; taking action; knowing the results you are getting; and having the flexibility to change until you are successful. You have to find the beliefs that support your outcome, the beliefs that get you where you want to go. If your beliefs don’t do that, you have to throw them out and try something new.
The accumulation of all of our experiences creates the impression that “we know“. When in fact, we “don’t know“, we merely believe “we know“. Confused? Take for example the old cliché “Everything happens for a reason “. As a normal human being we usually invoke this cliché in our minds when something goes wrong, when something bad happens. There must be a reason this happened to me, perhaps someday I will understand. I knew I should have… I knew it, I knew it, I knew it. How will I ever recover? Sound familiar? It’s happened to everyone! Now comes a choice.
There are numerous ways people react to this situation. If we use trading as an example and assume for the moment we’re not doing well, we may; refuse to even open our statements (out of sight out of mind). We can feel hurt and frustrated. We might sit home and mope, or go out and get drunk. We will be mad. Seek blame; the broker, the advisor, a friend who recommended it, the company insiders whose shares we invested in. It doesn’t really matter, it just must be someone else’s fault, it can’t be me!
All of this might allow us to let off some steam, but it doesn’t help. It does not bring us any closer to our desired outcome. It takes a lot of discipline to be able to retrace our steps, learn painful lessons, mend fences, and take a really good look at new possibilities. That is, however, the only way to get a positive outcome from a seemingly negative result.
All successful people have the uncanny ability to focus on what is possible even in a negative situation, what positive results could come from it. They think “everything happens for a reason, and a purpose, and it serves them”. They truly believe that every adversity contains the seed of an equivalent or greater benefit.
The bible says, “you reap what you sow” it does not say you reap what you desire. Could the mistakes you have made, the losses you incurred, sow the seeds of learning? Does it make you think, perhaps all I need is a further education? And then get one? Or does it make you think, you need to be a professional, an insider, a floor trader, to make money in the markets?
You probably paid for your professional education. The market is your new education. Your losses, if any, are the cost of your new education. If you take the positive approach, say this is just the school of hard knocks. I will read, study and learn. Next time I’ll make money. From now on I’ll make money. Now you can say, this happened for a reason and it serves me!
Monday, March 19, 2012
Trade Like A Turtle
Been learning and observing the market for a quite a while and participates daily with its movements even in an "on and off" activities.
The thing that I noticed from all (or most) participants (especially the individual retail traders, the home traders) were all looking for the "kill" in the market.
And also looking for the "short cut" in trading the markets to make easy profit.
But that's not how the market works.
Unless you are working for the sophisticated prop firms, but if not, you need to trade in a slow pace with minimal but consistent expectations.
Making a low profit in the market that is equivalent to a minimum day's work might be enough considering how the markets is tough to trade.
Especially if you are still at the initial stage of your trading endeavor, expecting high returns should first ignore.
Trade like a turtle might be the suitable words to describe in trading the markets.
Trade the market in a slow calculated edge with minimal profit enough for a day's work is the right way to get involved in the market.
In other words, treat trading as a day job, not for the get rich quick scheme.
Otherwise, you will quickly lose your capital and if you are not ready also your sanity.
Trade the market carefully!
The thing that I noticed from all (or most) participants (especially the individual retail traders, the home traders) were all looking for the "kill" in the market.
And also looking for the "short cut" in trading the markets to make easy profit.
But that's not how the market works.
Unless you are working for the sophisticated prop firms, but if not, you need to trade in a slow pace with minimal but consistent expectations.
Making a low profit in the market that is equivalent to a minimum day's work might be enough considering how the markets is tough to trade.
Especially if you are still at the initial stage of your trading endeavor, expecting high returns should first ignore.
Trade like a turtle might be the suitable words to describe in trading the markets.
Trade the market in a slow calculated edge with minimal profit enough for a day's work is the right way to get involved in the market.
In other words, treat trading as a day job, not for the get rich quick scheme.
Otherwise, you will quickly lose your capital and if you are not ready also your sanity.
Trade the market carefully!
JAMES ALTUCHER: These Are The People Who Really Make Money On Wall Street
I came up with an ultra-perfect top-secret method for beating the stock market. I saw it right there on the screen after thirty straight hours of computer programming. My heart was beating fast. I was sweating when I went to sleep. I could only sleep for about two or three hours and I had to get up and check my work. I added up all the money I was going to make. I would never work again!
It didn’t work.
Every day I get a message that sounds something like this. “Can you introduce me to Steve Cohen. I have something that will make him a lot of money.”
I don’t mean to sound arrogant and I certainly don’t want to piss off people who take the time to send me emails (usually they flatter me first and say, “I love your blog and can you give me [insert rich guy]’s personal cell phone number.”)
Playing along I write back, “Why?” Like why would I give anyone’s email to someone I don’t know, for one thing.
Answer: “I have a method that beats the stock market.”
Usually it involves some moving average bullshit or there’s some new theory about commodities or whatever.
It’s all BS. NOTHING works. Let me repeat it a different way:
YOU ARE NO GOOD.
You’re not even a good person. You’re arrogant and rude. You smell.
I know from personal experience. You’re smart, talented and yet you want to use those talents to do some hocus-pocus that you think will put you ahead of the other 5 million people who are trying to win in the markets: people a lot smarter than you are, a lot hungrier, have a lot more computers, have a lot more inside information, have teams of analysts, etc. I cannot believe how stupid you are.
Let me describe to you the ONLY people who make money on Wall Street (and note: I am very bullish on stocks in general). By the way, all of the below people will slit your throat in a dark alley. They don’t like you, they want you to die a painful and disgusting death and they want all of your money. So beat it, punk.
People who hold forever. Warren Buffett, Bill Gates, etc. These are usually the founders of companies, who build their companies up, take them public and never sell their shares. Some people who try this have companies that fall apart and they make nothing. Some people who try it turn out to be multi-billionaires. If Bill Gates had sold his company in the early days instead of going public he would’ve made about $100 million or so. A good amount. But not the 50 or 60 billion he has today. Ditto for Buffett who was worth about $20 million in 1970 but didn’t sell a single share of Berkshire Hathaway stock during its climb from $6 to $100,000. (See, 8 Unusual Things I Learned From Warren Buffett).
So this presents an obvious way to make money on Wall Street. START A GOOD COMPANY that actually helps people. Then take it public and ride it forever. You’ll make money.
People who hold for one trillionth of a second. i.e. high frequency traders. Let’s say you want to buy some shares of IBM. These guys have computers with cables hooked right into the exchange who slip in the middle, buy some someone else, sell to you 1/10 of a penny higher and makes a sliver of money. These guys make money every single day and it’s a race to the bottom: who can get their faster, quicker, and more deflty to screw you out of 1/10 of a penny every time you make a trade. And by the way, probably more than 50% of trades on the stock market are done by these guys and a single mistake (think: flash crash) can cause the market reeling within seconds.
People with inside information: If you know Hilton is about to buy Marriott then you can make an awful lot of money. The Feds arrested a handful of people engaged in insider trading a few years ago but my guess is they only got about 1/10,000 of the people who have inside information. Every hedge fund manager trades on inside information all day long. There’s no other way for them to get any edge on their peers.
They use every means at their disposal. Not the old-fashioned bribery stuff of the 1980s. They hack into networks, they vacation where your CFO is vacationing, they use so-called “expert networks”. There’s no stopping the culprits.
By the way, this does mean that micro-cap companies that have public information but seems like it’s inside because nobody pays attention to them, could provide a small edge in the markets. But whoever is trading the large-cap companies are just losers. The kind of people you want to play cards with.
Congressmen. It’s legal for congressmen to trade on inside information. So, let’s say your congressman knows that a vote on some energy tariff is going to go a certain way he can go to his local casino table (stockbroker) and place his bets accordingly.
Guess whats happened the past few years since 2007 when all of America lost money in the stock market. As a group, congressmen are up 30% per year. If this continues I might consider running for Congress sometime soon instead of just running for the Vice-Presidency.
This is one of the reasons I think we should just abolish Congress.
People who take fees. I’ve been invited twice in the past few weeks to become a partner at different $100 million funds. In one case I said no and in the other case I kind of just blew them off. I’ve become a bit of a shut-in lately and the thought of meeting people and negotiating and selling..blah. I can’t handle it right now. I think I need medication.
But here’s how it works. You raise $100 million and you make about $2 million straight off the top in fees which you split with your partners and the people who raise you money. Then you split any money that comes in off the profits on the $100 million. In the long run you lose money for all of your investors but you make a TON of money on fees.
My favorite example is super hedge fund manager John Paulson. He turned one billion dollars into six billion during the housing crisis in 2007-8. He probably took a billion in fees off the table. Then he raised his fund from six billion to 30 billion as more investors poured in. Then, or so people tell me, he lost 50% and his fund went from 30 billion to 15 billion (these are rough numbers. Its give or take a few billion). So net-net he lost about $10 billion to the markets. And yet, he’s pocketed about $3 to $4 billion in fees, making him one of the richest people in the world without providing any useful service in the world. He made that money simply by losing even more money. That’s a pretty good job if you can get it.
Ugh, in general, try not to be an arrogant loser. And, by the way DO NOT spell “loser” as “looser” like everyone on the yahoo message boards. Also, shower more frequently. And don’t think you have a system for beating the markets. And, in the worst case, if you can’t get over your bad habits then either start a company or run for Congress. At least there you can legally steal from us and pretend like you are “representing” the people. Good luck and God Speed.
This post originally appeared at The Altucher Confidential.
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