RM's occasional market calls...
- Thread starter Rearden Metal
- Start date
that looks really good.. can i ask a few questions?
"what indicators do you use"/ "can i ask how you trade. read the tape, or time&sales? or anything else?"/ "how do you determine likely market direction"/ "what riskto reward ratios do you use"/ "Any chance u would share some trading secrets? I would love to see how you do it or some type of methods!"/"what's your strategy?"/ "If you were to categorize your style, what would it be? Momentum, Buying pullbacks, Mean Reversion, Breakouts?"/ "what do you base your trades on? Do you read the tape or do you use technical setups?/ " Do you only trade stocks that have news on them that day?"/ "If you are a tape reader, then how do you trade the nasdaq and the spyders???"
hahaha just kidding.. Good job
Yep, that was the one. Thanks for digging it up.
I'll add something else here, in the hope it helps communicate the nature of your position. For me, it is almost instant to analyse a chart now. I can tell, typically within a minute, the condition in force and whether it presents an opportunity for me to trade or not.
Explaining what I see is a different matter. I have a short term view on Gold, that it will squeeze higher to at least 1500. This means I am not short and will not look to short until conditions change. I do not carry overnight so am not holding longs, but I'll be looking for short term longs over the next few days.
As an exercise tonight, I worked up a short term intraday gold chart covering the period since the low. Past is prologue and one of the areas newbie traders typically fall down on is not giving themselves enough context. (Working out which market cycle we are in, which timeframes are in play, what positions are held, and therefore where the market needs to move (from high probability POV) is not easy or obvious, so where do newbies start?)
However, without reflecting the correct timelines, a trader is going to be looking at either insufficient context, or a timeline too large to reflect what is currently happening in the market.
Trying to keep this short, I can see well over a dozen separate pieces of information in this chart which leads to my conclusion of it going higher. To explain the whole picture to a novice would be possible but not prudent - think several thousand words (and you thought this post was long) giving numerous concepts. Discovering or understanding each concept in itself requires a shed load of work and original thought. It would be like speaking in a foreign language, and the only way to teach would be to order the concepts correctly and teach each one, and then teach how the concepts relate. It would probably take at least a year for an able student to get to grips with consistent analysis of historical charts.
Working up the chart and writing down all the information I had used to arrive at the conclusion took a few hours today. As I apply the same type of analysis in pre market and before taking trades, sharing even one written analysis would give away 70%+ of the concepts I am using to trade markets. Would I share any of that? Not a chance. RM certainly doesn't need any help to make money, but sometimes its fun (this being a lonely business and all) for traders to share their viewpoints on where markets go next. I learned this evening that I'm extremely limited in what I can say to him regarding gold, as it isn't prudent to give concepts or edges. And he knows more than 95% of members here already.
The original yellow card was for someone asking a simple question about what would constitute "confirmation" of a short. You see it isn't possible to give a full, useful and meaningful explanation without giving away a large proportion of the secret sauce. This assumes of course that the entire reasoning for the trade is according to a structure which can be accessed and explained consciously. Traders will individually differ in their analysis and how much weight they give to what could be termed "pattern recognition" or "gut instinct" and how would one effectively communicate this part of the analysis?
So in summary, even if it wasn't professionally unwise to share the secret sauce, it would be masses of work to explain, probably wouldn't be understood, and would likely contain elements so unique to the trader doing the analysis that a full understanding could not be transferred. In the end there is no substitute for doing the work, and putting in years of logical thought and analysis.
Could a newbie be pointed in the right direction? Sure, but this would require plenty of individual time with an aspirant who had the right qualities. The teacher would have a lot to lose and not very much to gain, even if they had the time to give.
In summary, I hope you all appreciate what is being shared on this thread, which is already incredibly generous, and why it isn't possible or prudent to offer more.
Quote from Rearden Metal:
Damn, I used to put myself in the same pachydermous category as Gordon Gekko? Seven years later, and I still haven't reached that level. At least I <i>did</i> learn to tone down the arrogance a notch or two.
I had to look that one up! I would like to think that I have learned some humility also. Making a lot of money very quickly is probably both the best and worst thing which can happen to a young trader.* After that phase is over, committing to continuous improvement to compete at the next level taking it beyond a money making exercise and instead concentrating on doing the job as well as you possibly can is more important in the long term.
Being in the market is truly humbling. I play it a little bit better than the novice who make the predictable mistakes, and this is enough for a few meals. In fact, enough for a lifetime of meals if done consistently. But I'm by no means a big player. I still make plenty of mistakes and there are many areas I could improve on. If it were not for my own stubbornness and various personality aspects I've had to work hard to manage, I'd have done orders of magnitude better than I have. Perhaps one day, perhaps not - I'll discover my limits over the course of a career same as anyone else. I know my place in the food chain. I reckon there are only a few really really big fish worldwide, who have achieved such understanding of flow and such mass of capital that they are alone or very nearly alone at the very top of this particular food chain. I doubt most of them are on any rich lists or manage OPM.
* - best because it gives us the incentive to make the considerable investment needed to get through the learning curve (and the first hand knowledge that it is possible to make money doing this - lack of belief that it is possible kills many aspirants stone dead before they begin - for those who haven't yet made money trading, RM and others who have posted here are, as well as the big traders with a public profile are doing a service by demonstrating for the world that it can be done - four minute mile syndrome), and often the finance to do it (depending on how much of our initial gains we give back) ... worst because what does quick "easy" money do to most kids who by definition lack maturity and wisdom? I can think of several great traders who started out making a lot of money quickly either by fluke or by a method which stopped yielding results when conditions changed - Livermore in the bucket shops, "nokomisjeff" who posts here and started his trading career catching a huge beans move in the 70s, RM, Paul Rotter, people who made a fortune through sheer luck during the boom, etc...
I've just re-read this and many years of spending 60+ hours a week working with very little to no social interaction has completely slaughtered my communication skills...hopefully my main points get across okay after a re-read or two.
Earnings dump was beautiful, but past that, been acting like crap for shorts.
Gold: Technically I'm still short, but with VERY light size. Still waiting for higher prices (or bearish confirmation) to get in for real.
ADT: My entry to size back up at $42.30 was clearly wrong. I've been wondering what could have caused this problematically strong bounce, and now it comes to my attention that ADT's CEO will be on Cramer tonight. We can all guess what they both will say:
ADT CEO: Everything is rosy, and our earnings are gonna be absolutely fabulous! Housing sector is recovering.
Cramer: Buy Buy Buy! Booyah!
While we've seen a bit of a rally in ADT already, Cramer's nonsense this evening has the potential to push this thing up a little more (maybe). This would be an artificial/pump rally, likely to bring about the correct LT shorting point tomorrow or Wed.- the one I should have waited for.
Alternate scenario: Cramer could possibly notice ADT's aggressively encroaching new competitors and back off his previously bullish stance. <b>Question: Would that be out of character for him?</b> I don't usually watch that crap, so I have to poll the audience...
ADT: My entry to size back up at $42.30 was clearly wrong. I've been wondering what could have caused this problematically strong bounce, and now it comes to my attention that ADT's CEO will be on Cramer tonight. We can all guess what they both will say:
ADT CEO: Everything is rosy, and our earnings are gonna be absolutely fabulous! Housing sector is recovering.
Cramer: Buy Buy Buy! Booyah!
While we've seen a bit of a rally in ADT already, Cramer's nonsense this evening has the potential to push this thing up a little more (maybe). This would be an artificial/pump rally, likely to bring about the correct LT shorting point tomorrow or Wed.- the one I should have waited for.
Alternate scenario: Cramer could possibly notice ADT's aggressively encroaching new competitors and back off his previously bullish stance. <b>Question: Would that be out of character for him?</b> I don't usually watch that crap, so I have to poll the audience...
Yeah, most likely he just pumps ADT again tonight, IMO.
So the following is NOT a market call, but rather I'd like to direct your attention to an interesting, dramatic stock with even more near term volatility practically guaranteed: TSLA. See what's going on there? Powerful bull run for the last few weeks, massive short interest at 42% of float (The 7th highest of all- http://wsj.com/mdc/public/page/2_3062-nasdaqshort-highlites.html#shortF ), ridiculous options skew due to unavailability for borrow, and earnings May 8th after the close.
I have no play in mind here, I just think something interesting is about to happen...
P.S. Anyone else have CNBC on right now and notice the repeated, annoying PEN CLICKING going on there? I'm the only one being driven nuts by that shit, aren't I? Edit: That does it! Going on mute...
Also, ADT received an analyst upgrade from Morgan Stanley. That might be a factor in this.
http://www.minyanville.com/trading-...48?camp=syndication&medium=portals&from=yahoo