Author Archive for Jeff White

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

Trading With Objectivity

July 8, 2008 at 10:39 am

Trading today’s markets is as competitive as any other endeavor. The brightest minds are involved, countless sums of money are at stake, and if you don’t show up prepared, you can get your face ripped off.

The Bottom Line, At the Top

Here’s the concept that so many traders miss: if your head isn’t clear, then do not trade.

Simple, but not easy, right? With dirt-cheap commissions and the ability to enter and exit trades with a single click, it’s incredibly easy to be overactive. It can be downright exciting to dart in and out of the market. The problem is, that typically leads to a loss of focus as you chase every tick, and rarely does it translate into overall profits. Instead, it can quite often lead to a nasty losing streak where you ultimately don’t know which way is up.

I can’t think of anything I’d like to avoid more!

Honesty Helps

Not long ago, a trader I know was being very up-front with his reasoning to stand aside, and it reminded me of the importance and the truth of this trader’s words. After being frustrated by a few trades, he commented that “today I don’t think I’ll be able to very objective….I’m clearly too angry right now to be productive. I don’t know if I’m like other traders but I’m (carrying) a lot of emotional investment baggage that will show itself in times like this.”

Wow! How often can you make that kind of admission to yourself? Self-honesty is a great thing to strive for in your trading, because the trader who knows himself and his own tendencies can avoid the pitfalls which so many other fall victim to.

This is indeed a trying time for traders of all but the shortest of timeframes. Long-term investors are getting hammered, and those with intermediate-term timeframes are having to stay very selective and hold high levels of cash while waiting for lower-risk opportunities to surface.

Whenever that’s the case, it’s of paramount importance to trade with your objectivity intact. If you’re thinking clearly and you have your head on straight, then nothing is holding you back and you can actively seek out new trading opportunities.

However, if you’re paralyzed by recent trading losses, if you have a distinct market bias which puts you at odds with the existing downtrend, or even if you have personal distractions away from the screens, then there’s nothing to justify being active. If that describes you, then sit on your hands for a little while and wait for the fog to lift. Remember your trading objective, and wait for the right conditions to surface (both externally and internally) before you get active again. You’ll prevent a lot of frustration by doing so.

Protecting Two Kinds of Capital

As traders, we all have to remember our top priority and keep our trading accounts intact so that we can stay in the game. However, often times we ignore the state of our emotional capital and the importance it carries. When we neglect the condition of our psychological capital, we leave ourselves vulnerable to a different kind of drawdown – the worst kind.

When we lose our objectivity and continue trading anyway, the harm done to our trading account can be significant, but often times it pales in comparison to what’s happening to our confidence. Once that erodes, it’s extremely difficult to replace, so take every measure possible to protect your confidence along with the dollars in your account. After all, survival is the secret.

Objectivity is key in this game, and to me it is a top priority to keep it intact. That’s how I’ll locate good opportunities to trade going forward without trying to force something that isn’t there.

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Trading Video – 10 Chart Examples of How Stops Work

July 3, 2008 at 7:00 am

Here’s another video of a trading lesson for your viewing pleasure over the long weekend.

It would be difficult to have missed seeing the tankage in the Metals & Mining stocks on Wednesday, as most of them reversed sharply after demonstrating a lot of recent relative strength. The turnaround moves seen in those stocks offered too good of a trading lesson to pass up, so I spent a few minutes pointing out 10 charts and 3 ways which stops could have been employed to reduce the suffering for those traders caught on the long (wrong) side of these Wednesday.

Feel free to share it if you’re a fellow blogger, the embed code is on the YouTube page.

Without further delay, here’s today’s video. Enjoy the show!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Swing Trading, Trading Video, Investing[/tags]

Trading Video – Relative Volume and Day Trading

June 30, 2008 at 9:11 pm

Here’s another video of a trading lesson to keep in mind this holiday-shortened week.

Shortened trading timeframes might mean tighter stops and a better ability to manage risk, but there are still some important factors to consider, such as relative volume. Today’s video discuses exactly that.

Feel free to share it if you’re a fellow blogger, the embed code is on the YouTube page.

Without further delay, here’s today’s video. Enjoy the show!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Swing Trading, Trading Video, Investing[/tags]

More on Learning from Trading Disasters

June 26, 2008 at 12:22 pm

The best way to stop a losing streak is to STOP!….Stopping lets your emotions calm down and lets you reestablish your momentum with your intellect.
– Marty Schwartz, Pit Bull

A couple of weeks ago, I received a pretty sad email. The trader who sent it had been losing money over the course of 6 years to the tune of $150k (yes, you read that correctly). He couldn’t stop. On this particular day the trader lost his last $16k gambling on an earnings release (the same gamble I caution against in my trading rules), sealing the fate of his account.

Another trader I know has really struggled to accept losses. Whenever she finds herself on the wrong side of a trade, instead of taking her medicine and stopping out, she often adds to the position and hopes her double-down is well-timed. In the past it has meant going through periods of inactivity while she waits for her stocks to come back, choosing to become a stuckholder rather than a trader. That hasn’t always worked either. Currently she’s stuck in losing trades with her capital tied up, unable to keep her money compounding due to her refusal to accept a loss and move on in expectation of making up for it elsewhere in another trade. She’s now hoping that the market will rebound to bail her out, babysitting those bad trades in the meantime.

Losing Control

Now, I don’t want to be Debbie Downer here 😀 , but the fact of the matter is that it happens all the time. Traders lose their heads, then they lose their way, and then they lose their shirt.

I continue to find reasons to harp on this lesson, and I suppose there will always be examples of the pain, frustration, and opportunity costs associated with letting losses get out of hand (my biggest trading fear). But to those of us who intend to survive, persist and succeed in the trading game, it’s worth occasionally stopping to examine the other side of the coin. After all, the mistakes of others serve as excellent reminders to us of what to avoid.

Get A Grip!

You might be struggling in this market right now, and if so, remember that there are a couple of things you can do. First, stop trading. Close out your losing positions and clear your head for a little while. It’ll be well worth it, both monetarily and mentally. Second, regain your focus. Remind yourself what you’re aiming to do with your trading, what your style consists of, and what you need to see before taking new trades. If you don’t see it, don’t push any buttons! And finally, don’t try to “get it back” quickly. That is the fastest way to compound your problem and double or triple the size of the hole you find yourself in.

It’s been said before that the market will expose your every weakness, and that’s certainly true right now, particularly if you’re biased to trading the long side. This is the kind of market environment that can bring the pain if you aren’t careful or in control of your trading. Fighting the current downtrend we’re in can make for a very tough road to travel.

As this market corrects, if you aren’t short, then cash is the next-best alternative until the technicals improve. So be very careful out there, don’t be a hero, and make sure you’ve got your game face on before getting active!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Guest Post at StockTickr

June 18, 2008 at 7:05 am

Just want to give you a heads-up that I wrote a guest post today over at the StockTickr Blog called Finding New Edges from Old Trades.

I think you’ll want to check it out, because it goes hand-in-hand with some of the things we’ve been discussing here recently (such as my previous post).

Here’s that link to today’s post one more time, and while you’re over there be sure to take a good look around – there’s a lot of great stuff!

Trade well today,

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

Evaluating Trading Performance

June 12, 2008 at 7:25 am

A trader recently asked me how I evaluate my performance as a trader, and while to many the answer might seem obvious, in reality there’s certainly more than one answer.

That’s because there are numerous ways to evaluate our performance as traders, but let’s look at 2 general categories for the purpose of this post.

The most common way to evaluate performance is based purely on the results…P&L, win rate, max gain vs. max loss, drawdown depth from account highs, etc. That’s the quick conclusion most people jump to, and those statistics are definitely important, particularly to those who simply want to know the bottom line.

The only problem with the data is that it only tells part of the story. Many traders know the bottom line, but they aren’t sure where to get answers pertaining to how to improve it.

Getting across that bridge requires another strategy.

Another way to evaluate our performance as traders is to closely examine our trading process. Doing this in an honest and objective manner can reveal some very useful information when it comes to modifying our trading plan moving forward.

In order to accomplish this though, we have to ask ourselves some difficult questions in search for the truth, some of which might be:

Did I have a specific plan for that trade and follow it?
Am I taking plays which I understand and which are suitable to my trading timeframe?
Am I trading too large, and as a result making poor decisions as I respond only to my P&L?
Am I preparing myself for the trading day by doing my homework?
Am I trading responsibly?
Do I have some reliable strategies which can produce a profit over time?

I think the deciding factor between these two main evaluations is the difference between data and our mindset. Sometimes we trade with the proper attitude and emotions, yet our data needs fixing. Sometimes our data is a little off, but what really needs fixing is our attitude or our mental approach (overtrading, revenge-trading, carelessness, fear, etc.). Taking notice of the symptoms will help us know which way to turn.

Personally, I used to evaluate my data at the end of every month, but now that I’ve been at this for a while, my frequency and evaluation style will vary as needed. When things are going well, I really don’t evaluate much at all, I just try to keep doing what is working.

When I get in a slump, I’ll first look at my routine to be sure that’s in order. Then I’ll turn to my win rate and determine if something is causing that to falter (like certain chart patterns not working, for example). If I’m still seeking a solution, I’ll then see if my max gain vs. max loss during that period is out of whack, or if my average gain vs. average loss size comparison needs to change.

As I go through this process, total honesty with myself is required or else I’m simply wasting time. And as I see certain things begin to stand out, I’ll impose some restrictions or new rules on myself in order to first stop the bleeding, and then hopefully right the ship.

So the next time you get to thinking about how your trading is going, be sure to look at some different angles than purely your P&L. While that may be the bottom line that you’re striving to improve, examining some other areas of your trading process can shed some very helpful light on how you can go about growing your trading account.

Trade well today!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com