Back to the Basics

Quote from knowledgebone:

Brandon,
As I write, I am sitting at my new job as a prop trader in NYC. Trading for my second day ever!! The strategies that we implement here are "proprietary" (whatever that means) and by that I mean we use filters to help us find trades. As I am new, I am only supposed to focus on certain filters and not do much trading on news. In reality everyone around me is trading on news, and other stuff but guess they are more experienced, eventhough most of them lose. I guess my problem is that I am having a hard time finding good entry points. It is ironic that you have most recently left the post above about using intra-day tick charts because that is exactly what I have been trying to do myself. I have been looking at the 1-minute tick chart and 5-minute tick chart. I try to look for support/resistance levels and then make a call based on that. In retrospect it is easy to see these levels, but in real-time it is not so easy. I am dying here....I want to put in trades, but my discipline is telling me not to because I cannot justify them other than the fact that I want a little action and do not want to be bored. What are your gleanings? Please help.
More...

If most of the guys around your are trading on news and not making money I guess you would not want to do whatever it is they are doing. Best thing to do is to focus on something big and small, by that I mean find a big picture pattern (15/60 minute chart) and then trade that when you find a sharp entry on the smaller charts (1,2 minute).

Brandon
 
The key to success as a trader is to get yourself into a routine. Boring, predictable. The same stuff over and over again. Once all the hype is gone, trading is a job and the only way to be successful is to treat it like a serious business. We are our own bosses, and we have to be the biggest assholes that we have ever been employed by or success will be fleeting if it is seen at all.

Because there is a ton of money on the line, and race, sex or family background will have nothing to do with making it tends to attract the brightest and most motivated people in the world. Great traders are in a word, hungry. All of these people are after the same money you are I are trying to make. So, prep work is key. In the following paragraphs I will show you what I do to prepare for the following day.

Market Analysis

The very first thing I do is look at the most popular cash indexes (Dow Industrials, Transports, Utilities, SP500, SP400, Russell 2000, Biotech, Semiconductors etc) on http://www.tradingscans.com . I also look at some key market statistics such as the VIX, 5 day and 10 day moving average of the TRIN, high and low of day for the TICKs, Volume, Advance vs. Decliners etc. This helps to give me a good idea of where the market sits. I also note any sectors that are producing setups.

Futures

Next I look at the four key futures contracts that I feel are important in moving the market. The CBOT's Dow (/YM) and 30 Year Bond (/US) and the CME's SP500 (/SP) and Nasdaq100 (/ND). I look at daily and longer term intraday timeframes to note key area's of support and resistance. This gives me a good idea of what price levels to be aware of the following day. The market analysis and futures analysis takes about 40 to 60 minutes.

Individual Stocks

I feel that it is very important for a trader to get a good look at the top stocks each and every day. This is true whether you trade stocks or futures for a living. I can not recall how many times I have gotten key insights just by scanning the various components of the SP500, Nasdaq100 and the top 200 volume stocks of the day. I look for classical setups such as pullbacks, breakouts, head and shoulders, flags, double tops and bottoms etc. The 90 or so minutes I spend each night on this has made and saved me more money then I care to count. Again, all of these can be found on http://www.tradingscans.com. Next I go back to my sector list. As you will recall I write down the sectors which themselves are producing good setups. What I will now do is go and look at each of the stocks in this group and analyze them for a trade. I look for setups and relative strength. This takes between 10 and 60 minutes depending on how many sectors are setting up.

Setups:
I next go to the various setups and scans that are programmed into http://www.tradingscans.com. The first one I always go to are the Oops setups. This is the one setup that I believe a daytrader could stake his or her career on and always come out ahead. It is by far the best setup I know of for stock traders. I next go to the trending section of tradingscans and look at the all uptrending (A) and all downtrending (A) stocks. As when I look at the database in the large indexes I am looking for classical patterns that can key me in to the next big move. All of this takes another 90 to 120 minutes.

When my analysis is done I tend to have a large number of stocks written down on a piece of paper to look at further (sometimes up to 50). I try to get this down to a manageable number (15/20) by looking deeper at these stocks. I will go over the weekly and key intraday timeframes to clue me in as to which ones might be offer the best opportunities. Finally, I look at my list from the prior day and see if there where any large movers on it that did not make it to my final list. When this occurs I will go back and study this chart to see if there is anything I missed would have had me putting this stock on the final list. I always have learned more by my mistakes then triumphs, so don't cheat yourself by avoiding this critical phase of your nightly study. This final sporting takes another 30 to 45 minutes.

All told I spend 4 to 6 hours each night market analysis. This is in line with all the most successful traders I know. Trading is a lot of time and a lot of work. It is something that you must have a passion for in order to continue on. I think it's also important to realize that your real work is done at night. Most traders make the mistake of thinking they work between 9:30AM and 4:00PM. This is like saying a professional football player works for 60 minutes on Sunday. That is ridiculous, the 60 minutes on Sunday is the commutation of years of hard work and practice. Sunday is when he gets to put it all together, let loose and play. If your trading is to be successful, that is how 9:30 to 4:00 has to be.

Trading Scans is currently a free product. Let us do the sorting so you can spend time with your family and loved ones. http://www.tradingscans.com

Brandon
 
[09:18] <brandon> I want to show you guys something
[09:18] <brandon> www.tradingfrommainstreet.com/img/scalps.gif
[09:18] <brandon> let me know when you have this up
[09:19] <brandon> yes
[09:21] <brandon> people ask me a lot how to handle a scalp
[09:21] <brandon> for me a scalp is generally the lowest risk trade out there
[09:22] <brandon> even though I stop out on more then half of them
[09:22] <brandon> the reason for that
[09:22] <brandon> is that I dont give it room
[09:22] <brandon> I got in at 4 cents
[09:22] <brandon> and on CHTR
[09:22] <brandon> as long as that 4 cents was holding as the bid I was fine in this stock
[09:22] <brandon> but then we started to have a situation
[09:22] <brandon> a few things
[09:22] <brandon> first the market was moving well
[09:23] <brandon> and this stock did nothing at all
[09:23] <brandon> but then my 4 cents gave way too
[09:23] <brandon> so[09:23] <brandon> you dont have to fall in love with stocks that you own
[09:23] <brandon> get out if it takes you past a comfort point
[09:23] <brandon> its cheap
[09:23] <brandon> you can always get back in
[09:23] <brandon> I will try a scalp 6 or 7 times sometimes
[09:23] <brandon> get in
[09:23] <brandon> out wrong
[09:23] <brandon> in
[09:23] <brandon> out loss
[09:23] <brandon> in out loss
[09:23] <brandon> in out loss
[09:23] <brandon> etc etc
[09:24] <brandon> but when im losing
[09:24] <brandon> maybe its a penny or 2
[09:24] <brandon> maybe im breaking even
[09:24] <brandon> lets say that CHTR was a $50 stock
[09:24] <brandon> then maybe this loss is 5 to 10 cents instead of 1 cent
[09:24] <brandon> but the point is the same
[09:24] <brandon> its very small
[09:24] <brandon> I DONT GIVE THEM ANY ROOM
[09:24] <brandon> a scalp doesnt deserve room to breath
[09:25] <brandon> if it cant go on its own
[09:25] <brandon> kill it
[09:25] <brandon> be done
[09:25] <brandon> does that make sense?
[09:25] <brandon> or help you guys in understanding how to approach the scalps?
[09:26] <brandon> i always love it when people say I wont scalp because its high risk
 
[11:44] <brandon> Im going to do a class
[11:44] <brandon> lately we have had a lot of newbies coming in
[11:45] <brandon> so I want to cover some things that will be helpful to them
[11:45] <brandon> I have a good friend who is just getting started trading and this is some of the advice I gave him.
[11:46] <brandon> Take things slowly. There is no need to rush things. The best way to quickly lose your money is to either go to Ballagio and bet it all on red or to make a lot of rapid fire trades in the stock market. Your initial goal is NOT to make a lot of trades. You should first seek knowledge without losing your pants in the process.

[11:47] <brandon> You wont make money your first 6 to 12 months, so use this time as the opportunity it really is to learn. Learn as cheap as possible. Open and IB account and piss people off by with odd lots by trading 50 shares at at ime.
[11:48] <brandon> One of the wort things I see happen to newbies is when they make a lot of money at the start and get too much confidence. Ultimatly they pay a lot more in the long run.
[11:48] <brandon> Dont Trade with Money You cant afford to lose.
[11:48] <brandon> This is critical for two reasons. First, most daytraders lose! Second, if you absolutely can't afford to lose the money in your account, you won't be able to make unbiased, unemotional trading decisions. If you're constantly thinking about your next mortgage payment, you won't likely be a successful trader.
[11:49] <brandon> BE EXTREMELY SELECTIVE IN YOUR TRADE CHOICES
[11:49] <brandon> Its ok to pass on a trade. You will not lose a dime on a trade you dont take. You can learn a lot from a missed trade as you see the outcome of the potential trade without having risked anything.
[11:50] <brandon> Wait for a setup that would hurt to miss.
[11:50] <brandon> If you did not take it, it would feel like you got kicked in the groin.
[11:50] <brandon> Maybe the perfect trade only appears once a week when you are starting out, but its probably going to be a money maker for you.
[11:50] <brandon> You will gain confidence which is your most important edge, period!
[11:50] <brandon> Your not born to make money for brokers.
[11:51] <brandon> Again, try to avoid losing money, and LEARN from what you see in the market. Eventually, you will gain experience, hopefully cheaply, and you will gain the corresponding confidence to initiate trades in less than perfect situations. In the meantime, look for the perfect trade opportunity.
[11:51] <brandon> For starters, go with the trend only.
[11:51] <brandon> It really is your friend and its the path of least resistance.
[11:51] <brandon> Perhaps look for a stock in an uptrend on the daily chart, that is pulling back down to support on the daily or intraday chart. Ideally, the stock will be rising on heavy volume, and declining on weak volume.
[11:52] <brandon> AVOID NEWS PLAYS Don't attempt to buy the stocks mentioned on CNBC. This is a losing game for the new trader. To profit from these stocks, you will need to be extremely fast to enter your order before the thousands of other daytraders watching CNBC.
[11:52] <brandon> They will beat you every time. Don't waste your time with these plays. Similarly, avoid trading stocks based on stories from other news media. If a stock is favorable mentioned in Barron's, or the Wall Street Journal, the stock will gap up the next day, but by then it will be too late to purchase the stock. The news has already been taken into account in the price of the stock.
[11:52] <brandon> Read as much as you can. There is all kinds of good info out there.
[11:52] <brandon> DON'T BECOME EMOTIONAL
[11:53] <brandon> If you are emotionally attached to your trading, you will have a much more difficult time making money. This is another reason why it is best to start trading with an almost insignificant position size (100 shares or less). Unemotional trading is a huge advantage (or even prerequisite) towards successful daytrading.
[11:53] <brandon> BUY LOW, SELL HIGH There are as many successful daytrading techniques as there are successful daytraders. However, for new traders, I would encourage them to buy stocks with limit orders on pullback during an uptrend. Don't chase stocks, you will ultimately buy the stock at it's top. Buy waiting for pullbacks, you will win the spread on every trade and be buying the stock at a discount from it's highs. To summarize this entry philosophy, your candidate list of stocks should be stocks in an uptrend that are now in a short term downward move within the context of the uptrend. Ideally, the stock should be approaching some support level on the pullback at the point of entry.
[11:53] <brandon> TRADE FOR TRADINGS SAKE
[11:53] <brandon> too many people come into the market wide eyed and very quickly are parted with thier money
[11:54] <brandon> Seek to improve yourself with your trading.
[11:54] <brandon> Trading is a great ends into itself
[11:54] <brandon> your whole life comes into play on a single trade.
[11:55] <brandon> All of your strengths and weakness as a human being.
[11:55] <brandon> The market is the worlds most expensive phyciatrist, so I dont suggest using it as a shrink
[11:55] <brandon> but it is a great opportunity to improve yourself.
[11:55] <brandon> To overcome your own weakness
[11:55] <brandon> and by focusing on that
[11:55] <brandon> by focusing on continual improvement
[11:56] <brandon> you will reach profitability without even thinking about it. it will be the byproduct of excellence in your trading.

Brandon
 
I wanted to take a few minutes to post a thank you to everyone who took the time to attend our online seminar, and to thank Baron for having us. I hope you found it enjoyable, and the info will be helpful to you.

Brandon
 
Just a quick note to let you know some new things that are going on. Late this week to early next week we will be offering brokerage services to you through a third party. Stock trading will be 9/10 cent per share, we will be offering the very competative bullets ($1.90ish) and LEVERAGE to traders. For those of you who would like to trade stocks but can not due to the PDT rule we will be able to provide you with financing and you will not have to take the Series 7 to get it.
 
Moving averages tend to serve as great levels of support in the context of an uptrend. For the purposes of my trading I use the rising 10 day, 20 day and 50 day simple moving averages. Strong up-trending stocks tend to bounce off of rising moving averages. When we see the Pullback Buy Setup , and the pull-back has brought the stock back to a rising moving average this greatly increases the accuracy of the setup. Should this moving average also occur at an area of minor price support the odds are even better.
Brandon
 
We as professional traders and aspiring professional traders usually come into the market wired wrong. We learn in normal society that we need to get up at 6 AM every single day, get ready for work and come hell or high water be there. This mentality severely impedes the aspiring market professional in his or her journey towards success.
As a professional market player your job is not so much to make money as it is to preserve capital, i.e. to lose a minimal amount of your capital when the chips are down. You must protect your trading capital like it is a newborn baby. This means not trading when the market is choppy and confused. If your system would have lost X amount of dollars today, but you happen to have noticed the market is not treating your system kindly so you are on the beach soaking up the sun and sipping mai thai collecting interest on your margin account, this is a very real victory.

In times such as we experiencing right now, if you desire to keep trading you should do so with minimal risk to your account. In normal times we are willing to risk 1% on a swingtrade (up to 2% is acceptable) and 1/2% on daytrade. Right now our acceptable risk is half this.

Many novice traders will use a martingale money management system when things are not going so well, double down on trades after a streak of losses in an attempt to get it all back in one monster trade. When we see this in a trader we start to worry about his or her future because we can be relatively certain the end is near.

In times when your viable trading system is not working a true market professional will employ an anti-martingale approach to money management. (S)he takes smaller and smaller risks until the market begins to again treat him or her kindly. By using an anti-martingale style to manage your risk you assure that you are taking your smallest losses when the system you are using is performing its worst. By using an anti-martingale system the professional trader manages to weather a storm that capsizes others, forever taking them off the seas of the market.
 
You must log in or register to reply here.
Back
Top