New guys, now is not the time
- Thread starter Dustin
- Start date
very difficult but very important point. you spend most of the time playing defense and grinding... when the stars align you have to know when to press because it doesn't happen that often.
Thanks, talon. I didn't think I'd hear from you again on this thread, since you seem to be a high-flier, and I'm just lunch
I agree with your stance on fundamental analysis, per se. But I'm just learning that. I'm a new investor, and an even newer "trader". My acctg background and commercial lending analysis career is now decades old. I was a cracker in my day, but that was long ago, and a wholly different thing from what I"m trying to do now. I realized very early that fundamental analysis alone can be a total crock, even in this re-emerging market.
But I didn't know anything else, and I guess you'd say I've been plain lucky. For the record, I didn't buy on anticipation of earnings, I just bot because all seemed well fundamentally. What I know about technical analysis just yet, you could fit under the hollow of one of your claws
But I am a convert, and I recognize now that technicals are the way, the truth, and the safe cash.
I don't have a stop. I have a $26K, 47% loss on my hands, and after just two more trading seminars at Schwab (grand total of 4!), I wonder more and more if I should just walk away. Good news?
I'm still up about 3% on my overall portfolio (still haven't taken a real loss) and I could walk away from STEC tomw. Do you think I should?
Not necessarily. Strategies that work well in highly volatile markets may crap out when things quiet down.
Basically, Dustin is suffering drawdown because of shorting the market through this huge up-turn. He has tried to fade and find that pivot point where the indexes will make new lows, but the pivot never came.
Now Dustin finds himself completely drawndown looking at newbies make 500-1000% going long names like Dollar Rent-A-Car.
Come on Dustin. Just change your style of trading. The bear market is over. Maybe the energy complex still has a few good longs where you can make some eye popping returns like we all have these last few months.
Please move this thread to chit-chat as its about one trader trying to justify why he did not do so well since March. Its obvious, just trade the trend and dont question it with your theories about the Elliott Wave or Obama.
Now Dustin finds himself completely drawndown looking at newbies make 500-1000% going long names like Dollar Rent-A-Car.
Come on Dustin. Just change your style of trading. The bear market is over. Maybe the energy complex still has a few good longs where you can make some eye popping returns like we all have these last few months.
Please move this thread to chit-chat as its about one trader trying to justify why he did not do so well since March. Its obvious, just trade the trend and dont question it with your theories about the Elliott Wave or Obama.
A few thoughts:
The thing about fundamental analysis is that it's very easy to lie to yourself. If you figure a stock "should" be worth 20 and it's at 17.50 you buy. If it goes down to 15, you should buy more... at 10? Buy more... 5? 0.50? You see the problem. I think it's very difficult to do deep fundamental analysis without really being an expert in a sector.
Technicals, properly applied, tell you what's happening right now and in some cases what the most likely future path is. I say in some cases because markets are often nearly completely random. Show me a pile of 10 charts and 8 of them I will hand back to you and say "I have no idea". If you keep pushing me on them I will talk some bullshit but it's a 50/50 shot... I really know nothing. 2 of the 10 are interesting to me... and I would frame it out like "we should be buying this leg down and it should turn up somewhere in this area... then we need to watch that leg up and it should do blah blah blah." so it's always a case of knowing what the market should be doing if my analysis is right.
once the trade is on, i immediately start trying to find reasons to kill it... to find reasons it's wrong. i am constantly processing information the market is giving me... i know what it should be doing and if goes off that path i'm wrong. this is just a completely different approach than the kind of fundamental analysis i heard you talking about where you were saying "i'm right and the market is wrong."
each and every one of my trades always has a predetermined stop out point. this is something i have stressed without fail to every trader i have trained. you simply cannot trade in my world without know where you are getting out when you get in a trade. no exceptions. ever. this is the number one reason why traders fail in my opinion.
taking a position in front of earnings is gambling. there are traders who specialize in that, but they are very sector specific. if you didn't know that stock was reporting, then shame on you. we all get blindsided but this is one of the stupidest ways to lose money. i have been trading a long time and one of the things that will absolutely set me off on a rampage is when i "forget" some economic report is coming out and i have positions on. that is inexcusable stupidity, but we're all vulnerable to it sometimes. you are responsible for knowing upcoming events that will move your stocks (like... umm... same store sales for retailers?)
technicals are not the whole answer but they are part of the picture. i think most successful traders are a blend... i'm 80/20 technical/fundamental. you hear people on the internet talk about being pure technicians but i think that's from some unfortunate propaganda. why would you not avail yourself of all available information to make your decision.
let me also say that i think technicals as they are usually taught don't actually work that well. chart patterns (head and shoulders, etc) are iffy at best and indicators, to me, are worthless. in all the research we have done we have only found a slight edge from 2 indicators and you would be surprised to see that the charts i use dont even usually have a moving average. i think you get some real mastery of technicals when you can use them to read the psychology and the pressure of buying and selling behind moves. it takes time... tens of thousands of charts... to learn this.
you need to banish something from your thinking right now or you are dead. you said you "haven't taken a real loss." if you mean that you have open trades showing a loss and you don't think of them as losses because you havent closed the trades... then you are walking a dangerous path. if you put on a trade and it looses $10 on the first day, but you plan to hold it a year, then you have lost $10. Period. mark yourself to market every day... allow no room for bullshit and kidding yourself. The only way you will succeed is if you are brutally honest with yourself.
I can't tell you to get out of your trade. It's not helpful to say I wouldn't be in it, but if I was in it I would be looking to salvage whatever I could and just get out. The fact it did what it did today when the market did what it did is not a good sign. I would probably sell part of it now and see if I could get out higher on the rest but sell it if it goes lower. For me though, it would be about damage control and getting out of a bad trade. If you think the trade still has potential then you should manage it differently.
Don't be discouraged by losses. this is a brutally hard job. I also think you may be trading too large while you're learning. Save your bullets. I certainly don't know your financial situation but say I had $100K trading capital. While I was learning to position trade I would have maybe $1K invested in each idea. I know that seems like nothing.. you're thinking "I won't make any money at all like that." this is about learning not making money... you're not going to be making money at first anyway! Put together 6 months performance and then increase your size. EARN the right to trade bigger. that's also a concept that traders I have trained have had beaten into them.
sorry i dont have better answers. losses suck but turn it into a learning experience.
The thing about fundamental analysis is that it's very easy to lie to yourself. If you figure a stock "should" be worth 20 and it's at 17.50 you buy. If it goes down to 15, you should buy more... at 10? Buy more... 5? 0.50? You see the problem. I think it's very difficult to do deep fundamental analysis without really being an expert in a sector.
Technicals, properly applied, tell you what's happening right now and in some cases what the most likely future path is. I say in some cases because markets are often nearly completely random. Show me a pile of 10 charts and 8 of them I will hand back to you and say "I have no idea". If you keep pushing me on them I will talk some bullshit but it's a 50/50 shot... I really know nothing. 2 of the 10 are interesting to me... and I would frame it out like "we should be buying this leg down and it should turn up somewhere in this area... then we need to watch that leg up and it should do blah blah blah." so it's always a case of knowing what the market should be doing if my analysis is right.
once the trade is on, i immediately start trying to find reasons to kill it... to find reasons it's wrong. i am constantly processing information the market is giving me... i know what it should be doing and if goes off that path i'm wrong. this is just a completely different approach than the kind of fundamental analysis i heard you talking about where you were saying "i'm right and the market is wrong."
each and every one of my trades always has a predetermined stop out point. this is something i have stressed without fail to every trader i have trained. you simply cannot trade in my world without know where you are getting out when you get in a trade. no exceptions. ever. this is the number one reason why traders fail in my opinion.
taking a position in front of earnings is gambling. there are traders who specialize in that, but they are very sector specific. if you didn't know that stock was reporting, then shame on you. we all get blindsided but this is one of the stupidest ways to lose money. i have been trading a long time and one of the things that will absolutely set me off on a rampage is when i "forget" some economic report is coming out and i have positions on. that is inexcusable stupidity, but we're all vulnerable to it sometimes. you are responsible for knowing upcoming events that will move your stocks (like... umm... same store sales for retailers?)
technicals are not the whole answer but they are part of the picture. i think most successful traders are a blend... i'm 80/20 technical/fundamental. you hear people on the internet talk about being pure technicians but i think that's from some unfortunate propaganda. why would you not avail yourself of all available information to make your decision.
let me also say that i think technicals as they are usually taught don't actually work that well. chart patterns (head and shoulders, etc) are iffy at best and indicators, to me, are worthless. in all the research we have done we have only found a slight edge from 2 indicators and you would be surprised to see that the charts i use dont even usually have a moving average. i think you get some real mastery of technicals when you can use them to read the psychology and the pressure of buying and selling behind moves. it takes time... tens of thousands of charts... to learn this.
you need to banish something from your thinking right now or you are dead. you said you "haven't taken a real loss." if you mean that you have open trades showing a loss and you don't think of them as losses because you havent closed the trades... then you are walking a dangerous path. if you put on a trade and it looses $10 on the first day, but you plan to hold it a year, then you have lost $10. Period. mark yourself to market every day... allow no room for bullshit and kidding yourself. The only way you will succeed is if you are brutally honest with yourself.
I can't tell you to get out of your trade. It's not helpful to say I wouldn't be in it, but if I was in it I would be looking to salvage whatever I could and just get out. The fact it did what it did today when the market did what it did is not a good sign. I would probably sell part of it now and see if I could get out higher on the rest but sell it if it goes lower. For me though, it would be about damage control and getting out of a bad trade. If you think the trade still has potential then you should manage it differently.
Don't be discouraged by losses. this is a brutally hard job. I also think you may be trading too large while you're learning. Save your bullets. I certainly don't know your financial situation but say I had $100K trading capital. While I was learning to position trade I would have maybe $1K invested in each idea. I know that seems like nothing.. you're thinking "I won't make any money at all like that." this is about learning not making money... you're not going to be making money at first anyway! Put together 6 months performance and then increase your size. EARN the right to trade bigger. that's also a concept that traders I have trained have had beaten into them.
sorry i dont have better answers. losses suck but turn it into a learning experience.
Quote from Bulldog Daddy:
Thanks, talon. I didn't think I'd hear from you again on this thread, since you seem to be a high-flier, and I'm just lunch
I agree with your stance on fundamental analysis, per se. But I'm just learning that. I'm a new investor, and an even newer "trader". My acctg background and commercial lending analysis career is now decades old. I was a cracker in my day, but that was long ago, and a wholly different thing from what I"m trying to do now. I realized very early that fundamental analysis alone can be a total crock, even in this re-emerging market.
But I didn't know anything else, and I guess you'd say I've been plain lucky. For the record, I didn't buy on anticipation of earnings, I just bot because all seemed well fundamentally. What I know about technical analysis just yet, you could fit under the hollow of one of your claws
But I am a convert, and I recognize now that technicals are the way, the truth, and the safe cash.
I don't have a stop. I have a $26K, 47% loss on my hands, and after just two more trading seminars at Schwab (grand total of 4!), I wonder more and more if I should just walk away. Good news?
I'm still up about 3% on my overall portfolio (still haven't taken a real loss) and I could walk away from STEC tomw. Do you think I should?
Meathead.
I know this guy and have sat with him while he trades. He's not suffering any drawdown, and he's not some newbie blowhard on a message board.
You're here three months with almost four posts each and every day - try actually knowing what you're talking about before you give your unasked-for and inacurate - thus worthless - opinion.
Talon:
Your answers are spot on, for my money. Thank you very much. Including the answer about you not being able to tell me what to do with the position under question. I would have expected no other answer from a real professional.
I've been brainwashed by all the fundamental bs I've studied, but since mid-year, a light has gone on that, unless I get up to speed with technicals, I might as well buy a mutual fund <groan>
and bray and hee-haw with all the other asses.
For a long time I've been thinking I should just get out, get the technical basics down cold, and then wade back in with small positions, just like you suggest. Today I'm gonna do it, and tonight I can sleep well again. Thank you, sir.
You're welcome. Remember, being flat is also a position... you don't always have to be long or short!