Author Archive for Jeff White

7 Trading Lessons from the Masters

April 13, 2009 at 1:58 pm

As a trader who loves my job, I find it difficult to witness any big event without looking for some parallels to trading. The sports arena is one of those places, and it doesn’t take much of a stretch of the imagination to recognize frequent lessons that are applicable to trading.

Just about anytime someone’s talent or emotions are being tested, you’re likely to also gain some insights which can help your trading.

This past weekend in watching the Masters tournament, I couldn’t help but notice a few things about some of the players.  Here are some of the things which caught my attention and the corresponding lessons…

1.  Some days you don’t have your best game, but grind it out anyway. Tiger was a little off all week.  He verbally discussed it, but it was also easy to see if you’ve watched him at all when he’s at his best.  But in spite of not having his “A” game, he chose to grind on every shot and concentrate as much as possible.  He came up a little short, but he had a chance on the back 9 on Sunday – which he admits is all he ever wants.  What if you’ve done the same all week with your trading by the time Friday afternoon rolls around – do you think you’d be satisfied?

2.  Stick with your style and be confident in your approach. Jim Furyk isn’t a long hitter compared to the guys he’s competing against, so he of all people is not going to overpower Augusta National.  He had to lay up on some of the par 5’s, but he kept to his strategy and it put him into the mix with a chance to win come Sunday.  Waiting for your setups to come along as a trader means not attempting unfamiliar approaches or those which don’t work for you.  Trust your method!

3.  When you’re hot, ride it – and enjoy the moment. Anthony Kim at age 23 is just one year older than Nick Adenhart, the Angels pitcher who died tragically last week.  Recognizing the similarities of not only their ages but careers as professional athletes, Kim was touched by Adenhart’s death.  Thinking of how brief life can be, Kim decided to enjoy himself and put life into perspective.  After reading about Adenhart on Friday, Kim went out to set a Masters record by making 11 birdies in a round.  He got out of his own way and allowed his talent to take over.  When you’re reading the market well and your trading is on track, trade a little bigger and see what happens.  It’s only trading.

4.  Take your lumps with maturity. During the second round on the 15th green, Padraig Harrington addressed a short birdie putt when a gust of wind moved the ball.  In accordance with the rules, he replaced the ball to its original position with a 1-stroke penalty, and made his par putt.  Having won the previous 2 major championships and having been in good shape on the leaderboard Friday, Harrington would have had plenty of reason to be upset or shaken.  But he went on about his business, not allowing a bad break to rattle him.  When a good trade suddenly reverses on you or unexpected news costs you money, accept it like a mature trader.  Keep plugging away with unflappable confidence.

5.  Embrace opportunities with confidence. Kenny Perry has been close before in a major, having been beaten in ’96 in a playoff during the PGA at Valhalla in his home state.  He’s won a number of times on the PGA Tour, and worked himself into the lead during the Masters.  Success would have meant he’d become the oldest winner of a major championship, as well as his first major win.  Facing the opportunity which Sunday brought along, Perry knew he’d either succeed or fail.  And he relished the chance to walk that fine line.  Trading afraid or scared won’t bring the success you crave.  View every chance as an opportunity to build greatness, and face it head-on.

6.  A little bit of nerves are good. Chad Campbell found himself right in the mix all week as he searched for his first major victory.  When asked by the press about his nerves being on such a big stage and facing such a huge opportunity, he openly admitted that he had been and would be nervous.  He also noted that having some nerves are a good thing, that they show you’re intense enough to care.  When you find yourself nervous over trades, is it because it matters to you or is it because you’re afraid?

7.  Don’t let a poor start steer your day. Angel Cabrera struggled early on Sunday as he found himself playing in the final group.  At 1-over par through 5 holes, he was playing worse than everyone else on the leaderboard, losing ground and clearly uncomfortable.  But he settled himself down and played solid for the remainder of the day, finishing with 3 birdies in his last 6 holes to get into a playoff – which he eventually won.  Allowing your first few trades of the day or the week to define you isn’t the best course of action.  Even if your year is off to a poor start, you can still salvage success.  Stick with your game plan and trust that your experience and effort will pay off.  Your attitude is a weapon – either you hurt yourself with it or you use it to your advantage.

I hope your trading week is a great one!

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]

Now on Twitter

March 26, 2009 at 4:59 pm

Knowing that Twitter probably ‘tipped’ some time ago, I have nonetheless been reluctant to join the ranks of Twitter just because I was afraid it might be a time sponge.  And with much more going on in life besides trading, my time is valuable – just like yours.

But as a semi-early adopter in the world of blogging (guys like Charles Kirk and TraderMike both began before me), I knew it would be something that might make me better.  A better trader, a better writer, and better at interacting with those in the trading community.  The trading community is kind of a small world when you get down to it, and I love being in the conversation if there is one.

So, just wanted to punch out a quick post to let you know that I’m now on Twitter and you can follow me @thestockbandit if you’re on there too.  I’ll be putting up some thoughts & ideas there, some quality links worth checking out, and I definitely hope to have some good conversations with you as well!

See you 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]

SEC Fees Set to Quadruple on April 1

March 16, 2009 at 6:45 am

This is no April Fool’s joke.  I wish it were – it’d save me a lot of money!  But the SEC is making a mid-year adjustment to transaction fees, effective April 1, and it’s a significant one.

Right now, traders pay $5.60 per million dollars in sales, which granted, doesn’t sound like much.  It’s a cost of doing business for traders, and not a very steep one at that when added to commissions.

However, in 2 weeks when the SEC fees change, it will go to $25.70 per million – more than 4 1/2 times higher.  That’s not quite as bad as the proposed Trader Tax which was recently making so many headlines, but it’s more real and it’s going to happen.

Putting the Pen to Paper

If you’re actively day trading, here’s what this translates into.  Depending upon your level of activity and the size you tend to trade, this could translate into several thousand dollars more per year in fees for you.

For example, let’s say you sell an average of $1M in stock each day.  That’s a very feasible number considering you could sell 20,000 shares (buy + sell = 40,000 total) over the course of the day at an average price of $50 (20,000 X $50 = $1M).  For that activity level right now, that would basically cost you $5.60 in SEC fees on top of whatever your commission is.  With the new structure, you’d pay $25.70.

Do that 5 days a week, and it’s $100 more per week.  Trade every week at that level, and you’re looking at a hike of $5,200 over the course of the year.

Here’s a link to the SEC Mid-Year Adjustment to Fee Rates document itself for more intricate details if you want to check it out.

Bottom line:  keep improving as a trader and it’ll be fine!

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]

TheStockBandit University Has Launched!

March 12, 2009 at 9:14 am

There is a lot to be thankful for right now if you’re a trader. But if you’ve been part of the buy-and-hope crowd throughout the past 16 months, it’s been a tough ride – and might not be over yet.

Ignoring account statements sure isn’t the most responsible way to react right now, and yet it’s probably incredibly common. Those familiar with that mentality are quite likely rethinking their approach, especially given the fact that the S&P 500 has actually lost 40% over the past decade.

Index funds, schmindex funds.

As a trader for the past 11 years, I’ve come to appreciate the flexibility that trading offers. I wasn’t full-time initially, and yet I still recognized the aspect of defense which trading offers – a luxury that the buy-and-hope crowd knows nothing about.

During that time, I’ve run across many people who know a little about “the market” but very little about trading. Things like hardware, software, lingo, order types, psychology, money management and much more are just not the kinds of things that automatic investment plan types are familiar with. So when the market takes an all-out beating like it has since the 2007 top, many in the longer-term crowd would consider becoming short-term but simply don’t know how.

Learning About Trading

All along, I’ve been providing a premium service for those who are swing trading and day trading, but those who don’t understand trading to begin with are not going to benefit from it.  They need a trading education.

There’s a huge information gap between investors and traders, so I set out to bridge that gap with the creation of TheStockBandit University.

TheStockBandit University is a 4-week course set up in an on-demand video format to teach those with the desire to learn about trading.

To clarify…

This is not a what-to-trade course.

This is a course for the aspiring trader seeking some trading education. It is designed to take you from 0 to 60 in the trading realm in just 4 short weeks. It’s there to equip you to start taking control and stop getting shredded in this (or any other) bear market.

Stop by the homepage and check out the intro video for more information on how to learn trading if you fall into that category.  Because remember, the idea isn’t to invest but to Trade Like A Bandit!

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]

Thanksgiving in March (For Some of Us)

March 10, 2009 at 7:50 am

The market was only down a few points Monday, and yet to many that probably feels like a gain.  That marks the 13th session of the past 16 in which the S&P 500 lost ground. Can you say hammered?

With every benchmark index having undercut important milestones (read: 52-week lows) and the habitual selling pressure of late, the mood has been sour to say the least.  And bold claims are being made by some about just how low this market might go.  Dow 4000, Dow 1000.

Give me a break.  I’m not saying those levels won’t be seen – they might.  But the predictions are pointless and there just is no magic formula to determine where this decline will ultimately carry.  What is important is that the trend is down, and it must be respected.

The conditions right now epitomize the old adage that “bear markets don’t scare you out – they wear you out.”

No Pain, No Gain?

Although the real spooky capitulation kind of fear has yet to be seen, disgust and disinterest are the dominating emotions right now.  Stocks are in the dumps and investors have found it beyond difficult to locate a good place to put cash – if they still have any.

It’s at times like this, among others, that it’s sure nice to be a trader.  Stocks are on the move daily, and we as traders have the flexibility to go either direction in search of profits.

The one-dimensional mindset of buy-and-hold simply doesn’t afford the advantages which traders enjoy, especially during times like this.  So while it may not be real thrilling to go home in cash every night as we’ve been doing for such a long time now, the alternative is to be “invested” and feel the pain of a bear market day after day.

A Sigh of Relief

The day will come when stocks move higher once again (for more than just a bounce), but right now it’s imperative that you and I protect our capital while the Street weathers the storm.  Patience pays in this game, and right now there’s just no technical reason to be making big bold bets for anything beyond the near term.  The uncertainty gauge is pegged, and that means we’ve got to stay cautious and selective for now.

So I’m very thankful to be a trader right now.  Hopefully you are too.

And if you’re of the longer-term mindset and you have some cash on hand, you might be thankful for the fire sale prices you now have access to.  But just don’t fall in love – there is not yet a technical reason to trust that the correction is over.

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]

Steep Trend Lines Beg to Be Crossed

March 9, 2009 at 12:41 pm

This market is ugly – as in really hideous.

Fear & Panic aren’t really even the appropriate words at the moment for this price action.  It’s more like sheer disgust.

Would-be buyers are trusting that they’ll see lower prices (almost by the day) to put their cash to work, so what’s the hurry?  And at the same time, bears who will eventually cover aren’t having to tiptoe around – they’re strutting.  Likewise, they sense no urgency for needing to exit short sales.

Such is the nature of a downtrend.

From the Mood to the Technicals

But as is often the case, there is a technical threat of a short-term reversal.  And it isn’t based on the oversold indications which are quite prevalent right now.  Simple is usually better in technical analysis, so in this post I’m just going to point to a couple of trend lines which are looking a bit too steep.

It’s important to note that the steeper a trend line tends to be, the more likely (and the sharper) a short-term reversal becomes.  So this is no prediction, but watch for a cross of these trend lines in the coming days should it happen to occur.  If it does, it just might produce a playable bounce.  (Notice I said bounce.)

A Look at the Charts

Up first: the DJIA.  Keep in mind this trend line is descending daily, so it changes daily.  At the moment though, a push back above the 6760 area would clear it.  Have a look:

StockFinder Chart courtesy of Worden

Next: the S&P 500.  Here again, the trend line descends daily and therefore should be double-checked to determine its exact value.  For now, a push back above the 700 level would produce an upside break and might result in a tradable bounce.  Here’s the chart:

StockFinder Chart courtesy of Worden

I hope your trading week is a good one!

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]

Know Your Method

January 20, 2009 at 11:29 am

For nearly a year and a half, I’ve been blessed to be a dad.  It’s been an awesome experience, and I have really learned a lot (though I still have a long way to go).

During the same time, I’ve been able to observe my wife in her role as a mother, and it’s really amazing how quickly a mother knows what their child needs!  I had heard of a mother’s intuition, but witnessing it first hand really puts it into perspective.

I think mothers start out with an innate ability, a talent, to determine their child’s needs.  And yet there are still the elements of practice and experience which enhance the natural talent that was there to begin with.  It takes work, but the combination of talent and effort produces quite a skill.

Similarities Abound

Trading isn’t any different in that regard.

As traders, each of us start out with some kind of talent.  It may be that we take quickly to reading the tape and gauging momentum, or it might be that we realize very quickly just where the boundaries of our comfort zones are when it comes to risk tolerance.  Whatever it happens to be, generally it isn’t long before we start to build a method around our needs.

And what’s so nice about trading is that’s entirely possible in the market – since there are so many ways to seek out profits.  We truly can custom-build a method which is fully-suited to us.

Once we get to that point, and if we want to trade responsibly, then one of our biggest obligations is to understand our method backwards and forwards.  We don’t have to know everything about the market or be able to predict what’s going to happen next.  Anyone who tells you otherwise just hasn’t traded much.  All we need to do is keep our eye on the ball and continue to monitor and adjust the way we’re trading in order to achieve better results.

Worthwhile Effort

Just like a mother’s watchful eye on her child, our ongoing effort to remain aware of everything that’s taking place can lead to a great understanding of our method.  As a result, we quickly learn when to adjust and how to go about modifying our approach whenever necessary.

What would it mean to you if you understood your method well enough that you could make small adjustments on the fly and right away improve your results?  It would be huge, wouldn’t it?

As the newness of the year begins to fade and early resolutions fall by the wayside, take a stand for your trading. Make a commitment – a goal – right now to become sharp enough that you pick up on subtle changes in the trading landscape which warrant your attention.

Learn to detect when the environment is not ideal for your trading, so that you will know when to adapt or back down.  And then when you see opportunities to do so, make those small adjustments so that you can stay on top rather than falling behind.

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]