The basic dilemma of a typical beginner

K

Kirkrrr

Hello ET,

Let me briefly introduce myself, as I'm hoping to be on here for a while. I am 25 and have been an unwilling market participant for about 7 years, roughly around the peak of the dot com bubble. I got my Series 6 and 63 around 20, which turns out is not a good age to be a financial planner for many reasons, but total cluelessness would probably be #1. About a year ago I got out of the Marines after doing my 4 years, and have been fairly successful as a professional poker player since (same name on www.twoplustwo.com if anyone is anal/bored enough to want to verify). Having gotten slightly bored with poker and way too young to settle, I decided to get into trading stocks and took the 7-day course at OTA (www.tradingacademy.com), which has been a geniune eye-opener. I have been trading stocks on and off for 3 months - had to take a lot of time off once the WSOP got going, but that's over now and so I can refocus. Having gotten that out the way, here's my question:

Like any amateur, I'm extremely good at buying at the top and shorting right at the bottom. My consistency with that is equally amazing and disheartening. I use candle sticks (but after reading the Tick thread will begin to learn to use that starting Monday, though I screwed with it for an hour after Friday's close and still couldn't figure out how to modify the periods) and volume, then waiting for the market to move in my direction before committing to the trade - usually. I don't use hard stops but if I see the market begin to move against me I either close out if already down, or start to reduce my position gradually, depending.

Trying to keep my post from getting too long, what sounds bad about this scenario? What should I be concentrating on/watching for? What should I be watching out for, aside from obviously losing money? I watch Jim Cramer twice a day, should I tape one episode and watch it 3 times?

Thanks all,
Kirk

PS. For those that didn't get it, the JC line was not serious, please save the flaming.
 
Hey man first of all welcome to the markets. I am also on 2+2 but i mostly lurk and very rarely do I post. Poker and trading certainly have many parallels, I am a average poker player i would say +90% ROI after 400 tourneys. I truly believe a sucessful poker player can be sucesful in the market.
 
buying at the top and shorting right at the bottom

It sounds like you are trading trends? Many guys here are trading counter-trend these days.
 
Quote from Kirkrrr:

Hello ET,

Let me briefly introduce myself, as I'm hoping to be on here for a while. I am 25 and have been an unwilling market participant for about 7 years, roughly around the peak of the dot com bubble. I got my Series 6 and 63 around 20, which turns out is not a good age to be a financial planner for many reasons, but total cluelessness would probably be #1. About a year ago I got out of the Marines after doing my 4 years, and have been fairly successful as a professional poker player since (same name on www.twoplustwo.com if anyone is anal/bored enough to want to verify). Having gotten slightly bored with poker and way too young to settle, I decided to get into trading stocks and took the 7-day course at OTA (www.tradingacademy.com), which has been a geniune eye-opener. I have been trading stocks on and off for 3 months - had to take a lot of time off once the WSOP got going, but that's over now and so I can refocus. Having gotten that out the way, here's my question:

Like any amateur, I'm extremely good at buying at the top and shorting right at the bottom. My consistency with that is equally amazing and disheartening. I use candle sticks (but after reading the Tick thread will begin to learn to use that starting Monday, though I screwed with it for an hour after Friday's close and still couldn't figure out how to modify the periods) and volume, then waiting for the market to move in my direction before committing to the trade - usually. I don't use hard stops but if I see the market begin to move against me I either close out if already down, or start to reduce my position gradually, depending.

Trying to keep my post from getting too long, what sounds bad about this scenario? What should I be concentrating on/watching for? What should I be watching out for, aside from obviously losing money? I watch Jim Cramer twice a day, should I tape one episode and watch it 3 times?

Thanks all,
Kirk

PS. For those that didn't get it, the JC line was not serious, please save the flaming.
More...
I think first you need to do is stop being worried about
- LOSING MONEY
AND making wrong decision.
As soon as you think you should be short and you are long..Just revedrse your position... There isn't much to it..
 
Quote from Kirkrrr:



Like any amateur, I'm extremely good at buying at the top and shorting right at the bottom. My consistency with that is equally amazing and disheartening. I use candle sticks

More...



If your interested in candlesticks, you might want to search for posts from this person.

NihabaAshi


You might get a little direction as far as interpreting candlesticks.
 
Like most young folks, you are ahead of the game some ways, and way behind in others....So you ask "what do I do", it is not an easy question to answer..

One thing you should be aware of....This isn't the best place to get answers....Why...because most of the people responding are retail traders, amateurs who know little more than you..

This is my world...I have worked in the markets for years....I think what you need is time.....and experience....in order to develop a better feel for the markets. Clearly you don't have that now...

As far as what to do...I think you need to fill in the gaps in your education...Your licenses, well they mean less than nothing when it comes to making money...

Do you know how research market action in order to obtain a tradeable edge? Probably not...If the answer is no...you need to start at the beginning

Do you know how to use Excel to model price action? If not, that is where you should start.

Go to a community college and learn to use Excel.

Do you have a background in basic statistics? If not, go to a community college and take the first year of stats.

In your spare time, get on the Internet and order the book
"The Mathematics of Technical Analysis" by Clifford Sherry. Try to understand what he is saying. Read slow.

Go get Dalton's book on Market Profile

Get a charting package and pick a market, S&P, NQ, YM, ER...Whatever and just watch the intraday action. Become a skilled observer...

I can recommend other resources if you will PM me...

Be careful about who you communicate with here, as there are sharks in the water. My advice is that you read the posts of the persons you wish to communicate with, and decide for yourself who is who..it is the same as with the larger world outside, there are some decent folks and some not so decent. Do the same with me and my posts. Always protect yourself and your capital.

Good luck
Steve
 
Quote from midlifeguy:

Whatever you want to do, do the opposite. If you think about buying, SHORT, if you think about shorting, BUY.
More...

Very bad advice, in my opinion. That's not the way to learn to trust your instincts and execute. As you seem to know, many beginners feel that they are only good at entering at exactly the wrong time. It's normal.

I've been reading posts like yours for a while here, and almost every one betrays a basic lack of willingness to work really, really hard at trading (not saying you're one of them, don't know yet - your experience as a Marine should make you different). I say this because in your situation, one of the best things you could possibly do would be to keep a detailed trade log and take printouts at each stage of your trades. However, most guys won't bother with this because it's 'too much work'. Write down your reasons for acting on entry and exit and analyze these at the end of each week. If you do this for a month or two, you will be amazed at what you learn about yourself. Also write down your trading plan in plain English. The most common problem I see here is that guys try to trade without a plan that they are reasonably sure will give them a positive expectation. You said that you use candlesticks but that isn't quite enough information to analyze your trading plan to see if you have a positive expectation.

You say you don't trade with hard stops. This is no problem if you have iron discipline. But be brutally honest with yourself in analyzing your trades post-entry. Are you actually able to take 3 losses in quick succession if that's what the markets are telling you to do? Do you ever hang on a few extra bars after the voice inside your head says 'Get out now'? If you don't have a clear idea about your ratio of winners to losers and its relationship to your expected gain/loss per trade, then you're flying by the seat of your pants, which (although some guys can do it and scoff at those who take a statistical approach), might result in your losing a bunch of money before stopping and going 'What the hell is not working here??' If you have 100+ trades you should be able to do this calculation and at least get an idea of where you stand. PM me if you want a more detailed explanation of this, but the information is all here via searching. There's a debate here about scaling in and out of trades. I think it's a fine thing to do - others disagree.

The hardest thing to do is not trade. The hardest thing to do at the poker table is fold and fold again if the cards dictate it, right? In poker, some guys can play a lot of hands and win because their technique is sound and they can read their opponents. I would say that that's harder in the markets - you can't bully them. Be prepared to be out a lot.

Lastly, there is a hell of a lot of good advice here, given by guys who can really trade, in response to posts just like this. If you spend 10 hours searching this site you will find a ton of good stuff. You know which keywords to search. Wade through a bunch of posts and grab the gems. It's a low risk/high reward thing to do.
 
I have only one comment. Never, ever enter a trend without waiting for a pullback. There are times when an expert trader can enter at the highs and lows but for a beginner it is just not worth it.
 
BearBelly is right, let the market tell you what it is doing first. It is like buying insurance, it costs you a little up front but later it is worth it.
 
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