Archive for October, 2011
Avoiding Indicatoritis
October 13, 2011 at 1:59 pm
Would-be traders all tend to focus on indicators. The sense, I suppose, is that if there’s just some magic indicator to be added to the chart, then trading becomes easy.
They’re way off.
Personally, I don’t rely on indicators. I am price & volume based when making decisions on trades, and although I might occasionally glance at a moving average or something, I like to keep my charts clean and put my focus at the roots of all indicators – price and volume.
Does that make me better? Maybe.
Does it make me more decisive? Absolutely.
Back when I first went full-time as a trader (remember I already had over 2 years of part-time experience trading), there was a guy in our trading office who suffered from indicatoritis. His monitor was the most colorful thing in the office, but also the most confusing. It looked like a child had taken the entire spectrum of dry-erase markers and drawn all over his screens – a complete mess from which no sense (or cents) could be made.
This was a man grasping for some kind of a signal, but what he actually got was 50 different signals which contradicted each other. His search for clarity resulted in confusion.
That’s not a technician at work, it’s a futile (and wasted) attempt at adding an ounce of consistency to his results. He was looking in the wrong place.
A few years later, I saw a presentation by a guy (who still maintains a pretty large following in the technical analysis community) who “sees” his plays develop from charts with so many indicators that price itself is virtually obscured. Are you kidding? Suffice it to say, I think he derives zero value from those charts in terms of actual trade signals, but rather makes a really good living off confused traders seeking a magic bullet.
Indicators: Use Sparingly
Traders by and large rely too heavily on indicators, when it’s far better to use those indicators for confirmation. The price chart should tell you everything you need to know, but if you want some secondary assurance, then an indicator can provide that – so long as you’re using the right ones and at the right time.
Remember this when it comes to indicators: more does not equal better! Simple is ideal.
The hard part of trading is getting out of losing trades and staying in good trades. The hard part is not locating the magic bullet. Don’t waste your time expecting to find the secret to 99% profitability, because it isn’t out there.
A better use of your time and effort is to focus on improving your methods. Even better, improve your mentality, because that’s where the real game of trading is won or lost.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
Day Trading Gaps
October 10, 2011 at 4:56 pm
Day traders love to fade gaps, but it’s not always the right thing to do. In this video, I’ll point out some key traits of big gaps to watch out for when deciding on initiating gap-fill trades.
Day trading gaps can be quite lucrative, particularly when it happens early in the session. However, there’s a flip side to it which must be considered – and it costs many traders money to ignore the warnings.
Check out the video for more on this topic, and be sure you’re on the email list so you’re always notified of new updates like this one.
Be sure to view in HD (720P) and full-screen mode for best quality in the video.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
Video Review of the Indexes 10-9-2011
October 9, 2011 at 1:45 pm
The indexes broke major support zones last week to mark new 52-week lows, but by week’s end, it proved to be a bear trap.
Can You Trade Full-Time? Part 4
October 7, 2011 at 9:46 am
Be sure to check out Part 1, Part 2 , and Part 3 of this series if you haven’t already, as they offer some important groundwork for this series.
This is the final portion of the 4-part series on “Can You Trade Full-Time.” It’s one of the most common questions part-time traders ask me, so I wanted to give you a list of considerations as a resource in case you’re wondering if you’re equipped with what it takes to make it.
Keep in mind that the things I’m sharing here are my opinions of things I think are needed in order to trade full-time, but your unique situation may differ, so modify accordingly.
Here in Part 4, we’ll look at risk, your needs, and your trading plan.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
Can You Trade Full-Time? Part 3
October 6, 2011 at 8:07 am
Be sure to check out Part 1 and Part 2 of this series if you haven’t already, as they offer some important groundwork for this series.
We’ve arrived at Part 3 in the 4-part series on “Can You Trade Full-Time.” This is a subject I’m asked about all the time, so I thought you’d find it helpful to compile this list of considerations as a resource to you as you wonder whether you’re equipped with what it takes to make it.
Keep in mind that the things I’m sharing here are my opinions of things I think are needed in order to trade full-time, but your unique situation may differ.
Here in Part 3, we’ll discuss how to avoid the mistakes that trading professionals avoid.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
Contrarian View
October 5, 2011 at 8:03 am
Just for fun, let’s look at both sides of this market, pretending there are actual bulls out there. (All kidding aside, there are, even if they’ve been M.I.A. of late).
This market has been plenty heavy of late. The big moves I’ve caught recently have all been on the short side, and bearish consolidations abound in the charts. Simultaneously, bullish setups are few and far between, to say the very least.
But let’s look at the bullish case right now. If I’m leaving anything out, please share it in the comments, but here are a few things to consider regarding those who are counting on a lasting turnaround:
– Nowhere else to put cash right now. This is true, and a biggie. With the bond bubble keeping money managers quite leery, and precious metals already correcting sharply from their recent highs (have you seen gold?), the so-called “safe havens” haven’t been immune to the selling either. Equities are still seen as the place to be going forward.
– Multiples are contracting, value players getting more interested. The biggest difference between a technician and the fundamentalist is how momentum is viewed. Fundies look at low prices as entry opportunities, whereas technicians look at them as downtrends which may continue. These days, the value players are seeing better numbers, which may get more of them involved.
– EVERYONE seems to be sitting on considerable cash piles right now. If this market catches a bid, that cash is tremendous potential fuel for a lasting rally. As prevalent as fear has been on the way down, it will also be relevant on the way back up — who wants to miss the big rally? Nobody who runs money, I can assure you. Underperformance is worse than losing money (sadly) in the world of portfolio managers, so you can fully expect cash to come off the sidelines quickly when signs of stability finally emerge.
The bear is still alive and well, with fresh 52-week lows being made Tuesday in every index. Nonetheless, it’s always wise to look at the other side of the trade. It’s responsible, and it either lets you keep defending your stance or it presents reasons to shift (which the best traders are always willing to do).
Keep an open mind, nothing is ever out of the question in this market.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
Can You Trade Full-Time? Part 2
October 3, 2011 at 12:27 pm
Be sure to check out Part 1 of this series if you haven’t already, as it offers some important groundwork for this series.
Here’s part 2 in the 4-part series on “Can You Trade Full-Time.” I’m asked this regularly and wanted to compile a list of considerations as a resource to you as you wonder whether you’re equipped with what it takes to make it.
Keep in mind that the things I’m sharing here are my opinions of things I think are needed in order to trade full-time, but your unique situation may differ.
Here in Part 2, we’ll look at the question of “Do I have enough to trade with to make a full-time income?”
We’ll also take a closer look at what you’ll need to be starting with in terms of both capital and trading tools.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Follow TheStockBandit on Twitter or get our free newsletter to keep up!
