"A trader needs experience, and they need to pay for it."
- Thread starter kmiklas
- Start date
So what? Are you a psychologist? Most things you posted in other threads don't make sense.
And @kmiklas sounds like a genuine good bloke who wants to learn... so therefore he shouldn't listen to you...
- I set a goal of being right 3 out of 5 times. Then, every 5 trades, I make $1. Percentage-wise, that 60% right.
- I use a combination of swing trading and technique that I call "Trinity Trading." It's sorta like pair trading, but uses three equities. Pick three stocks in one sector that tend to move together, and study them. Get intimate with them. There's a lot of great information there!
- Stock picks should have a fairly even swing and good volatility. Generally, utilities and finance are good; tech not bad but can be a little wild; stay away from pharma. One drug decision can really hurt you. I'm still studying the other sectors; I just bought into basic materials today. A nice benefit of this strat is lots of diversity.
- Since you'll be shorting, stay away from cheaper stocks with good value that may be bought and spike up--they're a great upside play, but not good for this strat.
- The sweet spot seems to be equities that have around than $5-$15B in margin cap that have been around for a while. Too big to get bought, but not so big that their volatility is too low, or their share price is too expensive. They're also marginable, which some equities below $1B are not.
- Equities must have a share price about the same, so that the bets are consistent. Around $15/share works for me.
- Examine the typical swing, and set your profit goals accordingly. About 1/2 of an average swing is pretty good.
Example: Nasdaq:MU has a very nice swing, and tends to run with CSCO, MSFT, and most other S&P tech stocks. This is one member of my "Tech Trinity." As you can see in the following chart, I'm short at about $17.70. I think that I was long, but reversed when the price spiked up to $17.75 (3rd candle from the end). Now I'm waiting for my downswing. I will probably cover and reverse again at, hmm... about $17.50? Maybe $17.40? or $17.48 to cover my commissions. If I can make $0.20 on it, that's a cool 1.1% in an hour ($0.20/$17.62). If it spikes up, I'll just hold it for couple days. It'll come back. While I'm waiting I'll work a different trinity, write code, or research candidates for investment.
Important to note that I'm not trying to catch it perfectly at a high or low. I don't get greedy, I just take out of it an average amount, reverse my position, and wait for the next swing. You also get many more swings that way. Get a dozen or so equities swinging for you, and it can be a profitable day. (Unless you cross your orders, like I did today!
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Thanks. What is a semi? Slow day today.. only took 2 swings.
With the 3 stocks, there are 3^3 = 27 positions that can be taken, including closes/covers. They are outlined below. If there's a big sector or market force at work I'll go LLL or SSS with all of them. Like on the Deutsche Bank news all financials were moving in step. Nice thing about having three is that if one of them starts acting weirdly, it's easy to see against the backdrop of the other two. I might just close the position on the one acting up until it settles down; and/or, jump in at the moment when it starts to get back in line.
Code:
Possible positions with three equities.
L = Long, S = Short, C = Close/Cover the position.
LLL SLL CLL
LLS SLS CLS
LLC SLC CLC
LSL SSL CSL
LSS SSS CSS
LSC SSC CSC
LCL SCL CCL
LCS SCS CCS
LCC SCC CCC
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Got it - thanks for explaining. I can see how they could perform so well now. You have some game theory tied in -so it makes sense to account for stomping on that equities ROR wall which is something like 20-25%. I trade mostly futures/commodities 75% and equities 25% although my best prior years were pure equity trading of only semiconductor stocks. Never tried the pairs approach - I am sure to get into this now thanks to you
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You're welcome, good luck; I hope you make tons of ca$h.Got it - thanks for explaining. I can see how they could perform so well now. You have some game theory tied in -so it makes sense to account for stomping on that equities ROR wall which is something like 20-25%. I trade mostly futures/commodities 75% and equities 25% although my best prior years were pure equity trading of only semiconductor stocks. Never tried the pairs approach - I am sure to get into this now thanks to you
This system takes patience. I only took profit on two equities today. I almost took and reversed on a two others. One I think that I can get another 1% out of, so I decided to hold over the weekend. The other was one penny below my sell point. I could have taken, but I wouldn't have covered commissions. Funny how that happens!
I did buy into an Energy trinity today, so I'm happy about that. I also dumped 600 shares of stuff that was weighing me down. I took a bit of a loss, but I'm happy to get rid of the dead wood. This version of my portfolio is about where I want it to be.
Well done finding a link that clearly state the objective truth, that any official "definition of insanity" is not about doing the same thing over and over again expecting different results. Of course it isn't, but that's actually besides the point of the adage. Sayings like that must be understood within the cultural meaning that it has, so trying to understand it literally "from the outside" will not allow anyone to fully "grok" it. Doesn't matter who said it if the meaning is sound though.
"Definition of insanity is doing the same things over and over again, expecting different results", is an emotional response watching people, friends, family, companies, governments, etc. doing the same types of mistakes and actions with mediocre results, as if doing something new or groundbreaking. It's from an advantagous vantage point of view where it's often easier for someone else to see the mistakes of others, and finding it insane that people declare they do something different, but in actuality just repeat the same patterns over and over. Ie. it doesn't help much to reorganize if the incentive and collaborative structures remain the same. Cost-cutting may raise efficiency, but often done blindly to the cost of effectiveness. People keep trading without a fully completed and validated trading plan, expecting something nice coming to them by chance or by just "being in the game".
It's an adage about how people often repeatedly engage in irrational behaviour. It's often used generally, and a bit tongue-in-cheek.
I think it wrong to use about someone particular without having much insight into the specifics though.
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