Archive for July, 2008
Day Trading Community Loses Pioneer Harvey Houtkin
July 31, 2008 at 11:40 am
Harvey Houtkin, a.k.a., “the father of day trading” has died at 59. The original SOES Bandit was a controversial figure on the Street, but like him or not, it is undeniable that the man paved some early roads for early day traders which ultimately brought us to where we are today.
Some may argue that Wall Street was years ago destined to become more self-directed with the internet gaining popularity and online brokerages coming available, but Houtkin is credited with discovering some of the earliest methods which scalpers used to turn quick profits in the markets via the NASDAQ’s Small Order Execution System (SOES).
Harvey Houtkin was one who helped make the term ‘direct access’ an everyday phrase for those involved in the markets. He also undoubtedly helped start the shift in the commission structure which Wall Street used to utilize. Can you imagine having to phone your broker today to jump in and out of some biotechs, and pay $1 per share in commissions? Ouch – no thanks!
He was a pioneer who started a revolution, and as a Bandit myself I am sure glad he shared his methods with the world and got people thinking in a different way about trading the markets.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
Discipline is a Habit
July 30, 2008 at 7:47 am
Discipline means being willing to wait. Wait for your setup. Wait for choppy conditions to pass. Wait to increase your trade size until your recent results warrant it. Trading requires that ability from us, and if we don’t have it… well, the market will teach it to us!
As traders, we have to let conditions emerge which are most favorable for our trading. Our failure to do that can result in numerous outcomes, none of which are good!
Discipline means we close out a trade when our line in the sand is crossed, but it also means we stick with a winning trade while waiting for the move to develop. It means we don’t get bored out of trades – we stick with our game plan and avoid micro-managing positions.
But there’s one thing about discipline which few stop to recognize: it’s a habit.
Decisions, Decisions
That word, habit, has several connotations. There are good habits, such as trading responsibly or brushing your teeth before bedtime 😉 . And there are also bad habits, like losing control of your trading or biting your nails. So while “good” and “bad” might be relative phrases, it’s important to note that both of them are cultivated over time to become second-nature.
If given the choice, who would take bad habits over good when it comes to your trading? Nobody, right? Well here’s the thing: you do have a choice. You’re reinforcing some kind of habits every day – but which kind?
Look Both Ways Before Crossing ‘The Street’
This market has been a little wild lately, and while some traders love the chaos, others may not find it ideal. Whichever group you fall into, be honest about it with yourself. If you fall into the latter category (not lovin’ it), this is for you!
Many of us want to push buttons all the time and live up to our “active trader” reputation, but that’s not always good. If you’re struggling to find your way in this tape, be willing to take a wait-and-see approach…there’s nothing wrong with that. It’s far better than just making trades to see what happens, that is for sure.
The Road to Recovery
Making discipline a habit means a willingness to do the hard thing when you need to because you know it’s right. In your personal life that may mean diet, exercise, and just taking care of things which need doing even though they are no fun!
And while those kinds of things may be purely personal (not trading), you’d better believe they will carry over into other areas of your life – like trading. Remember, discipline is a habit. So start making it a habit in all that you do.
Begin with a little discipline and keep building on it. There’s momentum there. As habits start to take hold, you’ll find that your discipline improves in your trading, allowing you to better follow your intended game plan without having that internal struggle as often as you used to.
Staying disciplined might not ever become easy, but that just reiterates the fact that it’s worthwhile. Making the choice to be disciplined in every aspect of our lives will definitely carry over into trading, making you a better protector of your capital when you’re wrong and a more profitable trader when you’re right.
Now that’s one habit with some appeal!
Trade well today,
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
Earnings Expectations vs. Trader Expectations
July 28, 2008 at 11:55 pm
Around earnings time, the word “expectation” brings a dual meaning. There’s the Street’s “expectation” for EPS and other estimates on what the fundamental news will be when companies report, but there’s also the expectation of traders.
I put together a video for Free Newsletter subscribers over at TheStockBandit.com discussing this very topic (which will go out mid-day Tuesday), and in it I take a look at an excellent example of how those 2 kinds of expectations can collide – and which one typically wins out.
If you aren’t on the free newsletter mailing list, sign up here and you’ll have access to these kinds of videos whenever they are produced. But you gotta be on the list to get ’em!
Trade well out there!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Market View Video 7-28-2008
July 28, 2008 at 6:30 am
We’ve seen a nice rally unfold since the July 15th low, and now the million-dollar question is, “does it continue?”
There’s certainly room for further upside, and yet last Thursday’s decline serves as a nice reminder that even if we do climb higher it won’t happen in a straight line. Can you say trader’s market? That’s what we’re in, so stay on your toes out there because there will be some good opportunities.
Before you go pushing buttons this week, make sure to check out this week’s Market View video over at the main site for a closer look at the averages and some things to consider if you’re trading.
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
How Do Great Traders Control Emotion?
July 25, 2008 at 2:27 pm
Great traders are often thought of as talented anticipators of direction or momentum, or as exceptionally skilled risk managers, which many are. But an oft-overlooked trait which should always be mentioned is the successful trader’s ability to control emotions.
Use Your Head!
I definitely think every trader struggles with controlling our emotions from time to time, and it is one hurdle which trips up many would-be traders that never choose to get beyond it. And it is a choice – either you control your emotions, or your emotions control you.
I’ve traded in the same office with guys who broke keyboards over a $500 loss, and I’ve seen guys who can literally take a nap when up 6 figures on the day they are so cool, calm and relaxed – just total control. The difference between them wasn’t their account size either – it was in their minds.
Mapping a Path to Profits
I suppose the simplest approach for getting to where you want to be is that you seek to build that control over time. There’s a natural tendency to treat trading like watching a horse race and get excited or upset, depending upon the outcome.
However, the best traders have found the boundaries of their comfort zone, and they stay right on the edge of them. They know before they put on a trade what the worst-case scenario entails, and they proceed with the trade with that in mind, able to accept it if it happens. They stay within their risk limits by doing so. Further, they know that if they put on too much risk, they’ll not only lose more than they should, but they’ll likely make some poor choices along the way by focusing on the loss rather than making the best decision at any point along the way.
A great trader is able to think clearly from start to finish, and while there may be some mild irritation (enduring pullbacks), minor impatience (if the position stagnates), or slight satisfaction (as the trade begins to work), they avoid letting those emotions drive their behavior. They truly do stick with their plan, making modifications to it not on a whim, but only when absolutely necessary.
A Simple Solution
The best way to achieve that state of control is to chose to trade small enough that the outcome of any one trade doesn’t carry huge meaning. That will help to formulate a good habit of focusing on the trade, not the P&L (which is where emotions come from usually).
As you gain more control, you incrementally add more risk over time as you are comfortable, gradually increasing that comfort zone but not trying to achieve it overnight.
Develop good habits with small trades, and then slooooowly build your trade size along the way. If you strike the right balance between growth over time and clarity right now, you’ll be well on your way.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
Tonight’s Trading Webinar Reminder
July 23, 2008 at 6:25 am
Just wanted to post a reminder for tonight’s free trading webinar I’ll be doing with Blocks in conjunction with Worden. I’m excited about the opportunity to co-present with Craig Shipman, and it should be a fun and informative hour for those who are able to make it.
We’ll start tonight at 8pm ET, and I hope you’ll join us!
Here’s how you can register in about 5 seconds…
1) Use this link to the Worden homepage, and click the Blocks logo at the top of the page.
2.) Click the “Upcoming Webinars” description beside the July 23rd event.
3.) Enter your name & email address, and you’re good to go!
See you tonight!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
What Are You Doing Next Wednesday Night?
July 17, 2008 at 2:32 pm
I am thrilled to have been invited by the fine folks at Worden to help out with a free Blocks webinar next Wednesday, July 23rd at 8pm ET.
I’ll be co-presenting with Worden’s Director of Training, Craig Shipman on Discovering Stocks Suitable for Your Trading. It’ll be 1 hour long, completely free, and we’ll point out a couple of core trading concepts and how to put them into practice with Blocks. I hope you’ll join us!
Specifically, the webinar will cover how to locate stocks which are appropriate for your trading style, as well as how to evaluate pullbacks for potential buys.
Here’s how you can register…
Visit the Worden homepage, and click the Blocks logo at the top of the page:
Then click the Upcoming Webinars description beside the July 23rd event:
Sure hope to see you there Wednesday! It should be a fun, action-packed hour with some very helpful hints & tricks on using Blocks to find potential trading candidates.
And of course, if you aren’t already using this charting software, then you’ll see what you’re missing out on. I’ve discussed this revolutionary product before, and it just keeps getting better.
(PS. Those who register will have access to the archived webinar even if you can’t attend live.)
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
