Registered User
Joined: 8/11/2005
Posts: 26
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I have been trading for about a year now but my trading account has been following a persistent downtrend and I'm not sure why. So I'm hoping I can get some help from you experts.
1. Following the trend: One of things I try to do is go with the short term trend of where the SP-500, COMPQX, DJ-30 might be headed. I know that no one knows for sure where the market may turn around and that's the inherent risk in the business. Unfortunately, by the time I see an established market trend and look for individual stocks that follow that pattern, the market does a U-turn. For instance on 7/20 I thought another downleg was coming. But instead it made a double bottom, surged up and stopped me out of most of my shorts. I'm not sure what I'm doing wrong.
2. Skill vs. luck: I am really not sure what it takes to succeed in this career. Is it really skill or is it just luck (read as success for a certain period of time). I've heard about traders who had successful trading systems and they do not work any more because the market has changed. So is that skill or was it luck? I would like to hear from any experts about how they overcame drawdown periods. I have the basic knowledge of trends, money management, waiting for entry, etc. and I'm looking for what more I need to learn before I can become successful.
Thank you in advance!
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Registered User
Joined: 3/25/2005
Posts: 67
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This is going to sound like a wise-xss response, but what other types of highly competitive professions could you possibly hope to learn and master in a year? It takes years to learn the basics and then more years to develop a style and then more years to become consistently profitable. Some may tell you different (especially if they are trying to sell you something), but the odds are highly stacked against you - no matter how successful you've been in other facets of life or business.
If you don't know a trader with whom you can apprentice, then about the only way is to read/study and hope that you can survive the learning curve (financially and emotionally). Trading requires a whole different set of skills and, especially, a whole different psychology than most professions. This is why many otherwise successful people are surprised that they cannot apply a little bit of brain power and start making a nice supplemental or full time income from trading.
For instance, an intermediate term trend trader must, at times, be able to withstand and manage risk through long periods (months) of more losing trades than winners and/or significant drawdowns. If you need constant positive feedback to feel that you are making progress, then this form of trading is probably not for you. As far as i am concerned, though, once you fall for the seduction of trading the shorter term time frames (day and swing trading), you are even more exposed to the inherent randomness of the markets. I very highly doubt that more than a few percent of the people who try to trade these short term timeframes are consistently profitable.
Another one of the most common reasons for failure is being undercapitalized. I suspect this is one reason that many new traders try to day/swing trade - because they can't (or think they can't) expose their limited account size to more than very small drawdowns per trade. In a similar vane, many under capitalized traders overtrade (size and/or frequency) and expose themselves to too much risk by trading options, futures or forex because of the leverage that is offered and the possibility (real but improbable) of hitting it big with a small stake.
Start small and build on your experience. Don't expect it to come with a new indicator, software, or book.
My 2 cents,
JG
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Registered User
Joined: 3/25/2005
Posts: 864
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Although I don't currently use this approach myself,
I was wondering if you might want to try picking a small group of stocks that are commodity driven and following closely how they behave intraday. (That is, if you have the time to day trade).
For example, the airline stocks fluctuate daily against the direction that oil prices or moving for the day.
It is not very hard to scalp a minimum of .50 or more from such symbols as LCC, UAUA, AMR, CAL, or GOL for example (setting trailing stops after your .50 is made)when their is a significant increase or decrease in the price of a barrel of oil for the day (significant to me is a 1% increase or decrease from the previous daily barrel price i.e. .73 cents or more up or down currently)
So, before trading begins, check the price of oil. Has it increased or decreased by 1% or more from the previous day? If it has increased, look to go short on the airline stocks intraday. If it has decreased, look to go long on the airline stocks intraday and set your price target to achieve at least .50 or more from the opening stock price (up or down).
I advise that you paper trade these scenarios before commiting any real money to see if this is something you can use.
Also, if you have time to day trade, you might want to check out the symbol QID. If the market is dropping or looks like it is going to drop significantly intraday, you can buy QID and hope to make at least $1 to $1.50 above the open price during the day. (Too bad you can short it though because just the opposite occurs when the market (Dow) is flying high).
Hope this helps.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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I would agree with most of the points of JohnGault.
Quote:"One of things I try to do is go with the short term trend of where the SP-500, COMPQX, DJ-30 might be headed. I know that no one knows for sure where the market may turn around and that's the inherent risk in the business. Unfortunately, by the time I see an established market trend and look for individual stocks that follow that pattern, the market does a U-turn."
Obviously this isn't working. Try to keep records of your trades and analyze what is going wrong.
Remember that stocks have their own trends and do not necessarily "follow" the SP-500 or DJ-30.
Look at these stocks (apply a 30 day simple moving average for trend)
for the year 2006:
PMCS: bullish to mid-April then bearish.
MOLX:bullish to early May06 then bearish.
EBAY: bearish
OGE:bullish.
Notice these stock had their own trends and didn't follow market turns.(over the exact same time period)
Focus on trends you can see. If you cant see it you cant trade it.
For example:
HBAN:flat.
RPM:flat.
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Quote:"Skill vs. luck"
It is not about being right or wrong. It is about making money on balance. If you are wrong on 9 trades and lose $100 each time and
you are correct once and make $1000 you are ahead of the game.
Your goal should be to find the strongest trends you can and exploit
them for profit.(on stocks not indexes)
I would try to read and learn as much as you can. If your trades are not working then reduce the size of your positions. Try to "test" you ideas and learn the pros and cons of your methods. (paper trading)
Hope that helps
Good Luck
diceman
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Registered User
Joined: 11/12/2005
Posts: 2
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It is very difficult. Wall Street is the other Las Vegas.
I am not trading this volatile bear market, but short QQQQ and long TLT, and always looking. Sometimes the best thing for me to do is be patient and do nothing.
The SOX will lead this market when it reverses in later in the year. It alwasy does.
This is my opinion.
I would not ask for advice. I would ask what someone did recently that worked out.
I tried to short USO on Thursday. There were no shares available to short. Why were there no shares available? I don't know. It was a good bed and others took them first, is the best I can figure.
I am not a good trader either, but know now to sell at a small loss instead of a big one.......now.
The markets are the most complicated game invented by man.
Good Luck and best regards!!
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Registered User
Joined: 10/7/2004
Posts: 2,126
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If you trade a longer time frame -
Did you protect your long term investmets with options?
If you are a daytrader -
Can you treat a stop loss as the cost of business?
Can you keep the cost of business small?
Can you do that without regret or strings attached?
If you are a longer term investors without the use of options as insurance - it is like a owning a car withour insurance. YOu wouldn't do that would you?
If you are a short term trader you must be nimble and execute as needed without regret (options won't help you here much). You must be able to change your mind in a sec notice and close your positions daily.
You can dramatically reduce your risk by scalping.
Risk increases from top to bottom as follow
Scalp - less risk
daytrade (swing)
Swing trade
position trade
long term trade - More risk
Finding stocks to play is the easy part, the difficulty is in executing a trade properly, and being able to protect your capital. Your insurance here comes in the form of options and stops.
Your personality will dictate your sucess; if you by now know that you are not made for this game I would kindly suggest that you find different vehicles for your investment that suit your personality a little better. There is a whole array of different investments out there besides the stock market.
good luck
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Registered User
Joined: 3/25/2005
Posts: 67
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pv78,
One additional thing to consider which might give you a bit of encouragement is that the past 2.5 months (some might say the past 7 months) have been as difficult as it gets in trading (imo, fwiw, etc., etc.). So if most of the damage and frustration you are experiencing has come during this period, i suspect you've got a lot of company, brother.
JG
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 Gold Customer
Joined: 12/2/2004
Posts: 28
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Greetings
I highly recommend three book that Worden puts out. "Street Smart Chart Reading I" and "II", and "Trader's Manifesto". Read them and then read them again. I've found them to be invaluable in attaining the right mindset for trading. Then read as many of the Daily Worden Reports,training and strategy videos, and notes as you can.
LOL
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Registered User
Joined: 3/25/2005
Posts: 864
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Please disregard my recommendation of QID because, as of today it looks like it may not be as reliable as I thought it was. It was very predictable during the first 2 weeks after its inception. But, as of today, it is starting to misbehave. Since, the Dow was down most of today, QID should have been up. So, I would not recommend your trading this one. It not behaving as was promised by its creators.
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Registered User
Joined: 3/7/2006
Posts: 244
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Put your money into an index fund or mutual fund and let a pro handle it. I'm very serious about that. Most people do in fact lose money trading.
Then study and paper trade until you develop a system.
This may look easy, but it is not. It takes a lot of knowledge, understanding and practice to get good at it. And it takes a lot of time. A lot of time.
Not dogging you but it always amazes me when people don't put in the time then wonder why they lose. That would be like me (44 and out of shape) walking onto the Colts field thinking I can play.
One thing I will give you though is you had the courage to admit it and ask for help. Most don't have the guts to do that. Now you just need to put in the time.
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Registered User
Joined: 3/7/2006
Posts: 244
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BTW, learning when to buy is actually fairly easy.
Learning when to SELL is the real trick.
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Registered User
Joined: 3/25/2005
Posts: 864
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It looks like 1/2 of 1% increase or decrease in oil prices from day to day (instead of the 1% I previously stated)is enough to set things in motion for the airline stocks I mentioned previously.
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Registered User
Joined: 12/23/2005
Posts: 41
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I dont even know i am even eligible to comment on this post, because i am also very knew to trading. i see quite a few stalwarts here. salute them and learn from them everyday.
but someone in this forum once said, "no one is right or wrong in trading, you are either too early or you are very late". a typical example is a post under "GRMN". i entered it as a short @100. got scared out when it made it to 109. some how made a scrambling trade to break even. now i dont trade this stock. but see today where it is trading at 89.50. it is just i was too early.
if your trades are similar to this scenario, i would just follow what others are suggesting. take time to understand YOURSELF. how much commitment you have before you enter the trade. if the trade goes against you EXIT. no matter what. you can always re-enter. HOPING the trade will work out is not an option.
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Registered User
Joined: 3/25/2005
Posts: 67
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raaja,
Re: your GRMN trade. You were either too early or your tolerance to the volatility was too limited.
I only mention the following as an observation, not as criticism. It may or may not be appropriate considering the timeframe you are trading in. My comments refer more to intermediate term decision making.
For trading intermediate term, you cannot be more concerned about being right and "locking in profits", no matter how small, than you are about sticking with the reasons for entering the trade in the first place. Before entering a trade, you must have established a set of conditions that will invalidate your reasons for entry or otherwise cause you to exit. If you don't have a plan, you'll end up just reacting to the randomness and volatility of the market. This is especially true if, like many new traders, being right and avoiding a loss is more important than following through with your plan and letting your profits run. A lack of pretrade preparation may also cause you to freeze and let losses grow if a trade happens to gap against you, for instance.
Have a plan. Manage risk. Losses are part of the game. I always like the comparison of losses in the trading business to scrap in a manufacturing business. You can't avoid scrap, but you want to minimize it. But if scrap (losses) begin to make up too much or your business processes, it's time to look at changing your processes.
JG
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Registered User
Joined: 3/9/2006
Posts: 25
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Hi to all.Just a smoll add on to this.JohnGault is 99% right,we as newbie we dont know where to exit.We do not have a plan.We dont know yet how to make the right plan.I got UFPT with right timing,after 2 day one big drop,i got scared and sold for -1300.After that UFPT started to climb back,but it is to late.Same with FUEL,bought in the right time,2 day on the road started to drop,scared and sold for -320 .Today i bought again.We need more time to take the pressure.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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Successful traders all share the following.
1. a proven method
2. discipline to follow their method.
3. risk management
Unfortunately telechart does not perform backtesting to guide people in the "proven method" area. If you are missing in any one of the three areas you will not be successful over the long term.
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Registered User
Joined: 10/7/2004
Posts: 426
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memorableproducts your comment above about QID not being reliable because the DOW was down most of the day is not correct. The QID tracks the Q's, and the Q's were up most of the day which explains why QID was down. The DXD was up that day because the DOW30 was down.
Ultra QQQ QLD follows the Q's
Ultra S&P500 SSO follows S&P500
Ultra DOW30 DDM follows the DOW
Ultra MIDCAP400 MVV follows MIDCAP
UltraShort QQQ QID mirrors the Q's
UltraShort S&P500 SDS mirrors S&P500
UltraShort DOW30 DXD mirrors the DOW
UltraShort MIDCAP400 MZZ mirrors MIDCAP
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Registered User
Joined: 3/25/2005
Posts: 864
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Thanks Booker,
I stand correct.
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Registered User
Joined: 3/25/2005
Posts: 864
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I meant corrected.
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Registered User
Joined: 10/7/2004
Posts: 11
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PV78:
Trading is a business where you are competing against some of the smartest minds in the world. Stop and think about that for a moment and really understand the implications of that. Given that, are your expectations of yourself realistic?
You do not mention having a defined, documented trading plan. That is imperative, and will help you remove the ambiguity of emotional decisions we all make. You should define things like the timeframe you are trading, your risk management strategy, your overall strategy from an entry and exit point, etc .... . There are several examples available on the Internet.
There are many smart people, and regular Joe's who have made, will make, and are making money in the market. In other words, there are many ways to make money in the market, but 1 sure fire way to loose it all .... you absolutely must manage risk at the trade level, return level, and overall account level. The goal is to preserve captial first, because without it, there is no trading.
One parting comment........ you speak of being long and being short .... they are not the same. Pick a position, and learn that, make money at it consistently, then think about learning the other direction. If you were a physician would you start your schooling by doing a heart transplant on a live patient or work with a cadaver.
Best of luck,
BGS
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Registered User
Joined: 3/9/2005
Posts: 71
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After all the input your head is probably choked up a bit I'm sure.
Number 1 thing.
What makes any stock go up or down?
Not earnings, or crammer on TV, or fundamentals, or the sales people on cnbc or the fact the company is P/L good or bad.
It's all an illusion con game driven by the institutes!
Period...
What they do to a stock moves it by buying or selling large blocks of it.
Supply & demand is the valuation determining element, not this ER reports or hoopla on the chatter box.
The big boys buy it, create a decrease in supply and guess what? Price goes up. Then vise versa.
Everything else is BS! Who cares why they did it either.
Just watch them.
Stocs, MACD, DMA lines, patterns etc, nothing drives a stock but supply & demand, controlled by the institutes who create that and then the price reflects it.
Where are they willing to buy it or sell it?
It's called support level and resistence level.
Learn those things, how to tell who is buying or selling and watch the price move based upon that one thing.
I used to be so over introspective on analyzing things I like most got blinded to the typical male brained logic intrigue of indicators galore fantasyland and lost sight of some things.
Learn the Stocs how they can show you the buying / selling volume in / out.
And do not listen to anyone of the super salesman on TV at all.
Their job it to bait people into a stock with blue sky hope after the institutes have played the momentum out to near its end.
If the instituters are buying it, watch it go up. If selling it watch it tank. Chose your direction and play what they are doing.
If there is something else that moves a stock price other then the institutes buying / selling then please inform me what it might be.
Thanks..
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Quote:"If there is something else that moves a stock price other then the institutes buying / selling then please inform me what it might be."
robwiley
While it may be true that "big money" moves the market. The real question is why?
If a stock that has been considered to have strong earnings growth. Announces that growth has slowed or will stop. The stock will fall. So in that sense earnings and fundamentals still matter.
Big money moves the market but it does so for a reason.
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Quote:"Their job it to bait people into a stock with blue sky hope after the institutes have played the momentum out to near its end. "
I don't know if its "their job" Part on the problem is we take people who basically "read" the news and make them financial analysts.
Someone on CNBC will say the Dow was up 30 points today and IBM announces an earnings decrease of 5%. All of a sudden they are a financial analyst.
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I agree with the basic idea that price trends up or down are what is important.
When you look at all the data there is on a stock. All we can make money on is price
movement.
Thanks
diceman
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Registered User
Joined: 3/9/2005
Posts: 71
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The job of institutes is to make money off of suckers.
You, me and others institutes.
They are thugs just like the IRS IS.
They make money and need people who do not understand their Game to play it and then pull the rug out from underneath us.
They do not tell us when the choice time is to get in. The magic show is that they start the ball rolling by acquiring some blocks of a stock.
Then the price moves.
Then the company CEO, company saleman expert, Crammer, Skudlow, CNBC talking heads, rymy chymy in unison "it's a good entry point" and low and behold the bait is taken by Ma and Pa you and me and the lesser wise money managers.
But, we are small and do not drive it, just enforce a little bit its momentum.
All the rationalization of why sell or buy that is inside the heads of the institues are fine. I am not that good to out guess their thoughts of why they choose to get in / out.
I am however simple enough to know the big bucks drive it.
I follow the "money trail" putting all theology aside.
They are a tsunami on a stock. Just be behind it and do what they do.
Again, if they drive a stock then doesn't it make sense to follow their path instead of technical or fundamental focused reasoning as to why "we" think they are going to do what they do?
Who cares or is that good to guess an institutes logic for a decision.
Just follow the tsunami wave!
If there is a more better thing then being on the backside of the Very element that move a stock please inform me.
Thanks
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Registered User
Joined: 3/9/2005
Posts: 71
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Not to beat a thing too much but, Why didn't we get told by the TV , radio, and "experts" information sources that the QQQQ had institues exiting at around $42 1/2 ?????
While we watch it and other issues crash.
Why, do they not hardly if ever tell us to Short this kind of stuff????
When Shorting is just as profitable???
Why??
Why is this intentionally witheld?
Yet all I ever hear is buy buy buy..
Why is this information not as emphasized equally?
By the way, who funds cnbc? Is it Wall street maybe? If so then I would be looking for a bias from their information.
Not to get off this thread subject too much but we need to be aware of the craftiness of those who pull the strings if we are going to learn how to trade and not get taken advantage of.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Quote:"Again, if they drive a stock then doesn't it make sense to follow their path instead of technical or fundamental focused reasoning as to why "we" think they are going to do what they do?"
This does not make sense to me. If technical analysis does "not work" how do we follow their path?
(wouldn't we have to use technical analysis?)
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Quote:"I follow the "money trail" putting all theology aside."
How? If TA does not work how can you tell where the money trail is going?
(if you follow support/resistance, price change, volume. then TA does work.)
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Quote:"Why didn't we get told by the TV , radio, and "experts" information sources that the QQQQ had institutes exiting at around $42 1/2 ?????
While we watch it and other issues crash.
Why, do they not hardly if ever tell us to Short this kind of stuff????
When Shorting is just as profitable???
Why??
Why is this intentionally witheld?"
The simpler question could be: "What didn't give a sell signal?".
#1. the 50 day mav was broken at 41.69
#2. MACD (12,26,9) went below zero at 42
#3. Trendline connecting April05/Oct05/Mar05 lows broken
at 40.74
#4. horizontal support broken at 40.14
#5. 5/20 dual mav cross at 41.86
(just the tip of the iceberg)
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If this is what the institutions have designed to separate the "suckers" from their
money. It seems like they have to do a better job.
You don't really expect to turn on CNBC and find your stock picks there?
Thanks
diceman
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Registered User
Joined: 5/17/2005
Posts: 221
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Trading is a hard thing. Find one thing that works for you and stick with it. Do not trade any thing that does not have a risk / reward ratio of 1/2 or higher. Do not trade low volume stocks (under 500,000)
I have found the open range breakout stratergy on stocks with very high relative volume has been working well for me.. just google open range breakouts.
Another one that works well at market opening is the deadcat bounce.... again just google it. You look for stocks that drop or gap down on open and then go up in the 1st 15 - 90 minutes , such as SCT last week on the -75% day .. made 25% on the deadcat bounce play and BPT today ...made 10% in the 1st hour of the market. This kind of play is common .. there is at least 1 every day.
If you day trade sign up for the Platimum service and come over to my club open range breakout .. see what we are doing.
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Registered User
Joined: 3/9/2005
Posts: 71
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Quote:"Again, if they drive a stock then doesn't it make sense to follow their path instead of technical or fundamental focused reasoning as to why "we" think they are going to do what they do?"
The istitutes drive a stock price.
Not fundamentals or ER reports etc.
They are --reasons-- institutes chose to get into it which is fine so I meant by the quote to focus on the monkey with the wallet who will drive the issue up / down, not to discard the technicals that help us see their foot prints leading over to the ABC pulpit where the market maket is at. We need to be wise enough to follow them and do what they are doing to be on the winning side of the wave.
Quote:"I follow the "money trail" putting all theology aside."
The money trail is the wallet of the monkey of the institutes. What he does drives the stock.
It's a bit too ideal to get that immediate information so indicators are the next best thing of course.
Lest we should actually be on ground zero where the rubber meets the road and we get it at the same time and price and be on the winning direction side of the tsunami wave.
Can't ask for too much from people who have a job to extract Money like all gun runners do.
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Registered User
Joined: 5/16/2006
Posts: 8
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PV78,
A note on your original point...I began trading about a year ago as well and am proud to be dead even. How I traded a year ago and how I trade now are completely different as I learn, develop, and refine; and as the market conditions change. As JohnGault said and I've heard others echo, the past several months have been very difficult for most.
Things I've found helpful:
- Read. I bet I've read 10-15 books in the past 12 months, almost all obtained from the library. Being a beginner, I tend to like the books that keep it simple - such as Stan Weinstein's and Bill O'Neil's. As I learn more, I read more complicated things, but don't necessarily try them. I also read IBD, Worden reports, and a handful of blogs.
- Track. A few months ago I became frustrated that I wasn't making any progress. I realized that I didn't have any idea how many trades I had made and how well they had done. How long was I holding positions? How much did I make/lose on each trade? How did my entry/exit points match the system I was trying to implement?
- Persevere. I consider the money I spend on investing to be tuition. If I were to lose 5% of my stake it would be money spent on learning how to do this. I assume there will be costs in the form of trading losses, which is why I'm happy to be even. I hope I'll be doing better year by year until I develop the track record I am hoping for long-term.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Quote:"The istitutes drive a stock price.
Not fundamentals or ER reports etc."
The fundamentals and ER reports are the reason the institutes drive the stock price.
The two cant be separated.
Strong stocks are strong for a reason.
Weak stocks are weak for a reason.
(They can be over-done to the upside and downside (emotion) but there is still a reason)
Someone who looks for "growth" stocks and picks as his basket of stocks. Ones with
rotten fundamentals and rotten earnings and simply "waits" for the institutes to push
them up. Will be a very sad market participant.
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One other point. I'm sure a beginner has heard of the latest technical indicator. Thought it
was great. Jumped in with both feet and gone broke. Is that the fault of technical analysis?
Before we state that TA does not work. We would have to look at how its applied. How much
work has been put into it. Is it the fault of TA or the fault of the user?
A strong stock must be strong technically.
A weak stock must be weak technically.
The two cant be separated.
All TA does is measure what's already there.
Thanks
diceman
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Registered User
Joined: 3/9/2005
Posts: 71
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Both are relavent. TA and the monkeys.
Monkey wants good banana called good ER or dot dot dot.
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Registered User
Joined: 3/25/2005
Posts: 67
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If anybody passed up reading tonight's Worden report, you need to go back and read the submission from Sir Bigfoot. Brilliant!
JG
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Registered User
Joined: 8/11/2005
Posts: 26
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Thank you all! This is great stuff and gives me a lot to think about.
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