Weinstein Trading and Fading

Quote from nesyo03:

First off let me say I have enjoyed your journal since it started. It's great for other traders to see your ups and downs. Over three years ago I was fading all strong moves. It was great for the most part and I was able to make some good money. Unfortunately I had big draw down days that set me back weeks or even months. After a year of trading like this I couldn't take the pain anymore and decided to trade with the trend and set some better risk management. Since then I have been consistently profitable and am very glad I began trading with the trend. I am not saying fading moves is not a profitable strategy, it just seems like you need better risk management so that one down day doesn't destroy a week or month of profits.

Just wanted to share my 2 cents from personal experience. Stay smart.
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Hello nesyo03,

Thanks for the kind words and I am glad you like the journal.

Fading does work for me when I just fade based on my rules of entry and rules of trading.

Its when I start out 'scalping' and then allow it to turn into a trade that gets me into trouble. As I sit here looking back I only have maybe two or three losing trades in the last six to eight months when I do not try to discretionary trade (or what I usually end up calling scalping) AND they are not big losses.

Every single large loss I have had is from discretionary trading and its taken a lot of pain and a lot of trials to fully understand that. I saw AIG up 40% today and i convinced myself that I could get 10 cents a trade over and over again and that it would not keep going higher if it did go higher.

I no longer care what a stock is doing and what it can or can not do. I am trading by my set of rules of entry (and not going to work on any new rules for a while either) and leave it at that.

My discretionary trading may have cost me a Ferrari but it will not cost me a second one

Best to you and your trading

Robert
 
Quote from BPtrader:

I didn't know one could lose 22k through scalping in one day.

You have to trade in very very very large sizes to incur such losses.
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Hello BPtrader,

Thanks for reading and thanks for taking the time to make a post in my journal.


It started out as a discretionary scalping and ended with digging my heals into the ground until I started kicking in stop losses which picked the top with amazing accuracy.

Best to you

Robert
 
Bob,

I too read your posts regularly and think you are a great trader. However, I would tend to agree with nesyo03 somewhat and I run a mean reversion system taught to me by one of the best traders on ET (you would know who I mean if I said his name). He told me once that 8 of the 10 top traders he knows run some sort of mean reversion or fade system although it is just one strategy of many and like all trading the rules too are constantly evolving.

I think the difference is that the system he provided me specifically avoids news plays or "flavor of the day" stocks like AIG where everyone is piling on, although I do see the temptation when these things get so extended. Overnights are extremely rare. It's a play along with the specialists/market makers and black boxes and even those guys step out of the way on stuff like AIG today. Regarding fades such as this someone here once stated that these strategies: "Let you eat like a bird, but poop like an elephant", which definitely has some truth to it.

So overall it's obvious that you are successful so maybe just a tweaking of your rules or even simply defining your risk (stops) is all that is needed.
 
By the way I had AIG long from 13.70 early (very small) but when I kept seeing the seller on the offer with the 100K+ order on ISE and BATS refreshing every 10 cents I bailed. Anyone else see that? I feel bad but probably not as bad as that guy selling at 13.80, 13.90, etc. He's gonna have some 'splainin to do to someone.
 
Quote from NoDoji:

Until very recently I feared the trend because I had no idea when it was "safe" to become part of it, or to catch it early on. I've spent the past couple of months studying trend trading, catching trends, when it's safe to counter-trend, etc., because my largest losses were fighting trends and I thought to myself "If I'd gone long there instead of short I'd be up $6000, not underwater."

I've found some of the largest moves come from breaks through the day's high on trending or consolidating stocks.

I've found the best countertrend trades are the ones confirmed by a lower high or a higher low.

I also know Robert's method of scaling into a position to fade a strong move can be an ATM machine, and minus HAR and ANR (overnights) his YTD return would incredible.

I think the only safe position size to hold overnight is 500 shares or less and after watching HURN the other day, even that size is iffy :eek:
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Hello NoDoji,

Thanks for your post and I think you have seen some of my most wild trades in the chat for sure.

I am also still convinced that overall my trading setups are about as good as I can ask for. Its the discretionary trading that causes the losses and that would include HAR (not sure about ANR ?? dont recall)

Even HURN was discretionary and there are a lot of them through the journal as well.

In the mean time I have several days worth of WSJs piling up on my desk and I could be spending that time reading them.

For the most part I have two different types of trades that I do. One is my standard signal that I developed over the years and it works great and produces most of my gains and the second is discretionary type where I "decide" that I can fade/trade it based on what I see in the chart and that has produced most of my losses.

Why this is not quite the "no brainer" as it may first appear is that ALL my setups started out by discretionary trading and I learned what was going wrong and adjusted. So for example the hits I took in the first quarter with gap ups allowed me to develop two signals that have been working great.

What I am going to do is just not trade unless my computer is "beeping" at me that a signal is reached. So I no longer have an opinion about a stock other than my setups.
Maybe I can get caught up on the WSJ (as well as the many other things I plan on this fall )and be able to keep/increase the gains I do have for the year.

After I reach a new high in NAV I will then start to look for actually trading some new setups that may come along the way : o )

Best to you and I hope the SnP futures are treating you well

Robert
 
Quote from Robert Weinstein:

....What I am going to do is just not trade unless my computer is "beeping" at me that a signal is reached. So I no longer have an opinion about a stock other than my setups....

Robert
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Focus more on your money management instead.

When you can lose 100K+ in a single month and 20k+ in a single day, your risk of ruin is too high and probably around the corner dude.
 
Quote from Robert Weinstein:


What I am going to do is just not trade unless my computer is "beeping" at me that a signal is reached. So I no longer have an opinion about a stock other than my setups.
More...


Its tempting to trade more than the setups we have worked so hard to dial in on...but once you can overcome the "want" or "need" to trade you will see how much better it is to just trade the setups you know.
 
Quote from nesyo03:

First off let me say I have enjoyed your journal since it started. It's great for other traders to see your ups and downs. Over three years ago I was fading all strong moves. It was great for the most part and I was able to make some good money. Unfortunately I had big draw down days that set me back weeks or even months. After a year of trading like this I couldn't take the pain anymore and decided to trade with the trend and set some better risk management. Since then I have been consistently profitable and am very glad I began trading with the trend. I am not saying fading moves is not a profitable strategy, it just seems like you need better risk management so that one down day doesn't destroy a week or month of profits.

Just wanted to share my 2 cents from personal experience. Stay smart.
More...

+1
 
Quote from Robert Weinstein:



I no longer care what a stock is doing and what it can or can not do. I am trading by my set of rules of entry (and not going to work on any new rules for a while either) and leave it at that.
More...

That's a very good point, there is a massive difference b/w simply fading vs trading exhaustion based on a set of conditions. :cool:
 
Quote from mattmecham:

Bob,

I too read your posts regularly and think you are a great trader. However, I would tend to agree with nesyo03 somewhat and I run a mean reversion system taught to me by one of the best traders on ET (you would know who I mean if I said his name). He told me once that 8 of the 10 top traders he knows run some sort of mean reversion or fade system although it is just one strategy of many and like all trading the rules too are constantly evolving.

I think the difference is that the system he provided me specifically avoids news plays or "flavor of the day" stocks like AIG where everyone is piling on, although I do see the temptation when these things get so extended. Overnights are extremely rare. It's a play along with the specialists/market makers and black boxes and even those guys step out of the way on stuff like AIG today. Regarding fades such as this someone here once stated that these strategies: "Let you eat like a bird, but poop like an elephant", which definitely has some truth to it.

So overall it's obvious that you are successful so maybe just a tweaking of your rules or even simply defining your risk (stops) is all that is needed.
More...

Hello Mattmecham,

Thanks for your ideas and comments. the eating like a bird and pooping like an elephant is surely how much of my discretionary trading as been.

My mean reversion system works great and without that I would not be profitable and would be looking for another way to make an income.

After several setbacks recently I think I was looking to increase the speed of higher NAVs of my account. I would go so far as to say discretionary trading my greatest weakness and yet I have justified it because I have at times made money from it and I have also developed new systems that work well as a result.

I will probably go back to working out new trades but I will wait until I reach a new high water mark in my account before I even consider it. if thats three months from now or three years either will be fine. In the mean time I will stick to watching yourtube or chatting in the chat room when things are slower.

That "tweaking of my rules" as you say is a great idea and thats also what I think is needed at this point.

Best to you and I think its great that you made money with AIG - better to get advice from someone who is doing well : o )

Robert
 
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