Author Archive for Jeff White
Jeff White is the founder of www.TheStockBandit.com, a nightly newsletter for active traders. He has been trading his own account for over a decade and currently trades full time in Texas.
Watch for Timing Themes
July 12, 2010 at 7:02 am
As a rule, no there is no specified timeframe which I refuse to trade. However, it is always a good practice to pay attention to developing themes in how the market is moving.
For instance, (and this changes periodically, hence no hard-set rule), not long ago the market was in a bit of a routine of not doing much for the opening hour or so, and then finally we’d pick a direction and make a move. When I began to notice that, I’d get extremely picky with which trades I’d take in the opening hour. Once that routine changed and we started seeing cleaner moves right after the opening bell, I was again willing to trade whatever happened to be on the move.
Listen With Your Eyes
There are always timing themes you can pick up on if you watch closely. An obvious one is that it’s common to see stocks get quiet around the east coast lunch hour as traders step away, so that’s a good time to stay pretty quiet with your trading. Sometimes we’ll settle into routines of making big moves in the final 30-45 minutes of the day, offering some nice potential late in the session.
Just keeping a close eye on these kinds of things, or keeping a trading journal will help you to identify common behaviors of the market and notice times to stay away or be more active. Stocktickr has a time of day feature which will tell you which times of day are best or worst for you, among many other stats it’s able to generate, which makes it a great tool to check out if you haven’t already.
Here and Now
One thing I’ve paid attention to lately is the rhythm of the market moves. The market has been volatile and very reversal-prone, and yet there has been some order to it if you look a little closer.
Taking SPY as an example, we’ve seen several moves take place, both on the upside and downside, of similar duration and size in the past couple of months.
For these examples, I’ve counted the bar where a low or a high is set as bar 1, and have used the final bar of the move as my total. In the chart below, we see from the flash-crash May 6th low, there was a 6-day bounce before a reversal kicked in. And from the July 1st low, we’re now sitting on a 6-day bounce (through last Friday).
We’ve seen a pair of 9-day declines as well, starting from May 13th and ending on May 25th, and another from June 21st to July 1st.
Here’s a closer look for you:
Paying attention to the size, duration, and general rhythm of prices carries tremendous benefits to you as a trader. Watching for chart patterns is a great place to start, but don’t just stop there. Study price moves closely, and see where it gets you.
What have you noticed lately?
Trade Like a Bandit!
Jeff White
Swing Trading & Day Trading Service
www.TheStockBandit.com
Are you following me on Twitter yet?
Video Review of the Indexes 7-11-2010
July 11, 2010 at 12:48 pm
The buyers went 4-for-4 last week with the major averages recovering what had been lost in the previous week of relentless selling. And for a holiday-shortened trading week, the action was quite good from start to finish.
Traders should be returning to their desks this week, and just in time for the start of earnings season and options expiration. Needless to say, we’re going to need our best, so it’s time to prepare once again for whatever the market brings our way.
As we head into a brand new week of trading, let’s examine some important levels to keep an eye on in the days ahead. That will have the greatest influence on how individual stocks are going to move, so it’s where the trading week begins.
This clip was also posted over on the Trading Videos site (as always), and perhaps you’ve seen it there – but in case you didn’t, I wanted to put it here on the blog for you.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Trade Like a Bandit!
Jeff White
Swing Trading & Day Trading Service
www.TheStockBandit.com
Are you following me on Twitter yet?
Video Review of the Indexes 7-5-2010
July 5, 2010 at 4:33 pm
The bears pitched a shutout last week, going 5-for-5 as the market continued its slide. New correction lows were reached in each of the major averages, reminding us all of the struggle this market is having to stabilize.
Support zones have been broken, and trends remain down, but with deeply oversold conditions having emerged, a bounce is becoming something to be on the lookout for. When it arrives and how long it will last are unknowns right now, but suffice it to say the easy money has quite likely already been made on the short side for this particular wave of the decline.
As we head into a brand new week of trading, let’s examine some important levels to keep an eye on in the days ahead. That will have the greatest influence on how individual stocks are going to move, so it’s where the trading week begins.
This clip was also posted over on the Trading Videos site (as always), and perhaps you’ve seen it there – but in case you didn’t, I wanted to put it here on the blog for you.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Trade Like a Bandit!
Jeff White
Swing Trading & Day Trading Service
Are you following me on Twitter yet?
Making it Back
June 29, 2010 at 7:01 am
Anytime the market makes as big and consistent of a run as it did from March 2009 to the April peak, there’s a growing confidence that invites new money to the game. Those who were completely spooked in early 2009 saw an impressive rebound, not only in prices but in their willingness to participate.
Of course, the longer in the tooth a rally becomes, the closer the end of it naturally gets. That’s unfortunate for some, but it’s simply the nature of risk in the market. After all, those who step out on a limb first will stand to make the most if they’re proven right, while others who wait for more of a sure thing may be among the last to the party right before it ends.
It’s natural for someone who buys at or near the peak to quickly find themselves underwater, and at this point just a short time removed from the April highs, there are no doubt many folks who were late to the party now feeling serious pain.
That feeling of panic has set in for them, and in most cases, there’s no exit plan. The failure to designate a safety net prevents level-headed execution of a game plan, so now they’re forced to think fast in the heat of the moment, sparking a slew of potential mistakes. Making it back now becomes the primary goal, as if there’s something magical about getting out unscathed. Nevermind the fact that the entry was made in hopes of turning an actual profit.
Exaggerating Errors
Traders face this dilemma on every timeframe when in a bad trade. With a negative P&L on the day, week, month, or year, the focus turns from sticking with a strategy to doing anything that might get them out of the hole – and fast.
Along with this mindset comes an urgency factor which may not have been present before – uh oh! The sudden recognition that they might be perceived as having been wrong strikes fear in their hearts and now the race is on to erase the losses.
I’ve been there plenty of times, and it’s no fun. But over the years, I’ve found several ways to reduce the impact of my errors. Here are a few things I try to do when I find myself underwater:
- Slow down. Often times the desire to just get into anything that might be moving means it’s also easy to overtrade. Spinning my wheels won’t help my P&L, and it sure won’t help my objectivity.
- Get selective. Rather than jumping quickly on anything that comes along, I’m going to be much more effective if I wait for the cream of the crop to surface. Waiting for the best risk/reward opportunities to arrive means passing up many other plays along the way, and returning to holding a high standard for where my capital is allocated.
- Trust your method. Some stretches of trading are better than others, absolutely. At times it’s extremely frustrating, while other times it feels almost easy. So there will be ups and downs, but over time my method has served me very well. When I find myself with the wrong color P&L, I remind myself that I’ll eventually get my groove back, so long as I don’t stray far from my style. As they say here in Texas, “dance with the one that brung ya.”
Translation for Timeframes
On a day trading timeframe, it can be tough to take a few hits early in the session. Your confidence gets quickly shaken, and you wonder whether it’s just a tough start from which you can recover, or if instead it just isn’t your day. The key is to avoid emotion-based decisions, which will lower your standard for trades and shift your attention to the money rather than the price action. Never do you want your losses to cause you to force trades, so if that’s your primary motivator, get away and return another day. If instead there are still ample opportunities for good trades, patiently wait for the best risk/reward setups and then make the most of them.
For a swing trading timeframe, streaks will happen where at times it seems you’re on the wrong side in every trade you place. Making it back will take a little longer, but it can be done if you’re methodical about it. Cut down your size immediately while you wait to find your groove, as that will slow the pace of your losses if you continue to time trades poorly. Become selective, because confusion can set in quickly if you aren’t following a clear strategy with a known objective. Patience will be crucial, but it can pay quite well, too.
Finding yourself down in a hole is no fun, but it’s a reality of trading that each of us will face from time to time. So take a long-term view with your trading career, even if your timeframe for each trade is quite short-term. Doing so will keep you level-headed when it’s the hardest, and it’ll make you tougher and better as you find your way back on the right side – and you will!
Trade Like a Bandit!
Jeff White
Swing Trading & Day Trading Service
www.TheStockBandit.com
Are you following me on Twitter yet?
Technical Grade: F
June 22, 2010 at 7:09 am
Every chart should be given a grade, if for no other reason than it’ll require you to evaluate the entire situation and make a decision. Should it be traded? Should it be watched? Should it be avoided?
Looking at the chart of F below, this one earns an ‘F’ on recent behavior as well.
Have a MENT
June 21, 2010 at 6:49 am
Quick trades can be among the best kind, keeping capital tied up for a limited time and offering fast gains when they do their thing.
MENT is one I’m eyeing for such a trade. The stock has been quite active of late, moving all over the map within a $2 range for the past several months. Key resistance is now just overhead, and is being tested on the current bounce. Even better, volume has been spiking with advances of late, pointing to solid participation on the buy side.
We may see a breakout occur in MENT any day now, so I’ve got it on my radar for a trade if it can push through the $9.75 resistance area. This one hasn’t shown a lot of recent continuation, so it isn’t one I’m planning to keep a long time… Just long enough to get paid and move on to the next idea.
Here’s a closer look for you:
Trade Like a Bandit!
Jeff White
Swing Trading & Day Trading Service
www.TheStockBandit.com
Are you following me on Twitter yet?
Video Review of the Indexes 6-20-2010
June 20, 2010 at 12:03 pm
The major averages finally put in a few days of rest last week after some lively action on Monday and Tuesday, holding onto some nice recent gains.
Key resistance zones have for the most part been cleared (with the RUT being the exception), and currently are serving as short-term support. Even if we see those levels given up in the days ahead on a dip, it wouldn’t be such a bad thing. That’s based on the potential for a higher low to form on the next pullback, so as always, it’ll be the character of the next dip that will hold valuable information for us.
As we head into a brand new week of trading, let’s examine some important levels to keep an eye on in the days ahead. That will have the greatest influence on how individual stocks are going to move, so it’s where the trading week begins.
This clip was also posted over on the Trading Videos site (as always), and perhaps you’ve seen it there – but in case you didn’t, I wanted to put it here on the blog for you.
Let me highly suggest clicking the “HD” on the video player and then going full-screen for best quality.
Thanks for stopping by and I’ll see you here soon with more.
Until then… Trade Like a Bandit!
Jeff White
Are you following me on Twitter yet?
