New guys, now is not the time

Mav88 · Oct 31, 2009

I have a question: How is it that individual stocks can be low volatility and the indicies be high volatility? That seems impossible.

Then also how could the ES be good times while say blue chips stink?

illiquid · Oct 31, 2009

Dustin, don't get me wrong, I agree with your thread title but I think this thin market is actually coming to a sweet spot for individual traders of a certain size (goldilocks?) I would imagine not only is it hard for beginners, but the traders used to taking size positions are having trouble getting decent entries. Has it been necessary for you to cut down on position size at all over the year (not as a function of p/l but in liquidity of individual names)?

Dustin · Oct 31, 2009

Quote from illiquid:

Has it been necessary for you to cut down on position size at all over the year (not as a function of p/l but in liquidity of individual names)?

I've never been a size trader so liquidity hasn't been much of an issue for me, but I know what you are saying.

ang_99 · Oct 31, 2009

Its gotta be the algo's. All the buy side firms are using them and taking all day if not week to get into or out of a position.

jones247 · Oct 31, 2009

What stocks would you recommend that new traders play?

Quote from Dustin:

For you guys that like to trade those names I imagine there were some nice opportunities lately. I agree that this past week showed promise and I hope there's more to come.

Are you saying you think new traders should be trading AAPL AMZN BIDU?

Nexen · Oct 31, 2009

Quote from Mav88:

I have a question: How is it that individual stocks can be low volatility and the indicies be high volatility? That seems impossible.

I think they are on high on acid.

Dustin · Oct 31, 2009

Quote from Mav88:

I have a question: How is it that individual stocks can be low volatility and the indicies be high volatility? That seems impossible.

Then also how could the ES be good times while say blue chips stink?

Not at all impossible. The indices influenced mostly by a handful of stocks. When the market is active then everything else starts moving too. That's when there's real opportunity, at least for my trading style.

Quote from jones247:

What stocks would you recommend that new traders play?

I think a lot of new traders fall into the trap of trading the typical high flyers because they seem the most exciting. Sure, there's a lot of experienced traders making good money in those, but for someone inexperienced they are tricky. GS for example is one of the hardest stocks to trade imo.

This year I've focused more on low priced stocks because they were moving better than anything else, and nowadays there's more companies in the $1-7 range. After getting pretty good at trading them, I think this is a good place for new traders to start. The moves are much bigger percentage-wise and you still learn all the basics of trading (breakouts, reversions etc.). This was a previously ignored area for me, so it's just another tool in the arsenal going forward.

Bulldog Daddy · Nov 1, 2009

Quote from riskfreetrading:

1. Sympathies for your loss.

THANKS, BUT IT'S OK (SO FAR, ANYWAY)

2. It is actually 10 times as much as you think: 40K+ 10=50K. Then multiply by two because you could have been on the side of the guys who made from you that 50k.
So your loss with opportunity + previous high is ONE HUNDRED K.

EXCELLENT POINT. YOU ARE ABSOLUTELY RIGHT, FROM AN "OPPORTUNITY COST" POINT OF VIEW.

3. How much would have paid to avoid the 100K loss? How about the 10K loss?

ARE YOU REFERRING TO, FOR INSTANCE, OPTIONS? I GET THE CONCEPT BUT HAVEN'T USED ANY YET, THINKING I JUST DON'T HAVE THE "FEEL" FOR THEM YET.

4. There is nothing new in markets. You just realized there are new things. Hedge funds point is also off target. They lose more than you on average.

BY HFT, I MEANT HIGH FREQUENCY TRADES, NOT HEDGE FUNDS. WITH 60 TO 70% OF THE MARKET TRADING THIS WAY NOW, IS THIS NOT A DISADVANTAGE FOR THE LITTLE GUY? (IT WOULD BE NICE TO HEAR A QUALIFIED REFUTATION TO THAT NOTION) AND I AM OLD ENOUGH TO REMEMBER THE 87 CRASH, SUPPOSEDLY TRIGGERED BY "COMPUTERIZED TRADES." IS THERE REALLY NOTHING TO FEAR IN THIS ULTRA ELECTRONIC/ULTRA SPEED TRADING MARKET?

5. A Rule of thumb: One fat guy feeding on 9 guys, as long as markets fluctuate. Your job= be among the fat guys.

YES, BE A FAT GUY - THAT'S WHY I'M HERE. I KNOW I CAN BE, BUT I ALSO WILL PROBABLY BE "SKINNY" FOR SOME TIME TO COME. JUST AS LONG AS I DON'T GET "SKINNED" :-)

riskfreetrading · Nov 1, 2009

Quote from temcmahon:

YES, BE A FAT GUY - THAT'S WHY I'M HERE. I KNOW I CAN BE, BUT I ALSO WILL PROBABLY BE "SKINNY" FOR SOME TIME TO COME. JUST AS LONG AS I DON'T GET "SKINNED"

You seem to have a good attitude, but I would also be more alert than usual. The market is a place full of liars, etc, all of them are there to take the money of the next fellow.

The good news is tat it has rules that one can discover, but the chance of success are low in general.

I do not want to reveal some of what I know here in public, but if you would like to PM me, I would share a few things. In the meanwhile, I suggest that you try to look at a chart of SPY using: 15-minutes for one day, and 1 hour charts for price during 4 days. In each case you will have around 25 bars to look at. I will explain the reason for the 25 bars later.

After you have had a look at the charts, and make whatever analysis/observations that come to your mind (Note that no observation is also an observation), I would then make some remarks which would likely be new to you, and which I think would make some points in above posts clearer. Of course if you prefer to skip the analysis, you can shoot me a PM before then.

In any case, I would always try to be safe!

Bulldog Daddy · Nov 1, 2009

I do not want to reveal some of what I know here in public, but if you would like to PM me, I would share a few things. In the meanwhile, I suggest that you try to look at a chart of SPY using: 15-minutes for one day, and 1 hour charts for price during 4 days. In each case you will have around 25 bars to look at. I will explain the reason for the 25 bars later.

OK, OK, deep breath. Thanks for your kind reply, riskfree. But I don't even fell like I belong here. After reading ALL of the replies just in this thread, I fell really stupid. I've got the pile of books on trading and other topics that I haven't even read yet. I read FT, WSJ, IBD, Barrons, Forbes, and the Economist to get the Top Down look. I watch CNBC the views, esp. Fast Money. I've got all day to do it, and a decent stake, but I have so much to learn.

I will take your advice, and maybe PM you sometime soon. Thanks again. Meanwhile, I think I'm mostly lurking.