Author Archive for Jeff White

Trading With Indicators

February 12, 2007 at 9:47 pm

Hope you made some jingle today to start off your week on a profitable note!

Just wanted to let you know that this week’s free newsletter is up over at TheStockBandit.com. This week I discuss Trading With Indicators, along with a few pointers for when and how to use them. Price is always the most important factor, but indicators do have their place if applied properly.

By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.

Trade well this week!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

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

Trading Intentions vs. Trading Actions

February 1, 2007 at 9:46 am

We’re all weak from time to time! Even the most disciplined suffer from moments of weakness. But, it’s how we learn from those moments that will determine our growth.

Case in point: The other day I was heating up some leftovers from Macaroni Grill. It wasn’t enough for 2 servings, but it was more than 1 serving and I knew it. I just decided to heat it all up, intending to eat what I wanted and leave the rest. Yeah, right!

Next thing I know, I’m down to the last few bites from what was originally a huge plate of food! What happened? I love to eat good food but I’m no Kobayashi! I surprised myself with what I put away, but it’s easy to see how it happened. When I loaded up the plate to begin with, I left the door of possibility wide open.

They say if you make decisions ahead of time, that once it comes time to make a critical choice you will make the right move. I failed to do that with my Macaroni Grill leftovers, and you know where I’m going with this — Trading!

I’ve done it too many times and the odds are that you’re familiar with it too. That trade you never intended to let get away from you just somehow managed to get too big. What started out as a 2 or 3% loser just seemed to snowball and before you blinked you were staring at a 15% loss. Ouch!

Bad News First

The bad news is that as humans, we’re prone to mistakes and that means repeat offenses. We might not have it within ourselves to keep a mental stop and act on it when we should. Blame it on not paying attention, blame it on a slippery market maker, you can even Blame it on Mexico if you need a reason, but the truth is that failing to put our original intentions into an actionable plan is what can make a bad trade even worse.

Preventing Pain

You aren’t alone, every one of us have let trades slip away when we shouldn’t have. The good news is that it’s fixable, and that means it can be avoided (unless the stock gaps big against you). It’s so simple, but yet easy to forget or ignore. Don’t fall into that trap.

It’s your money, so be vigilant! Set your stop loss as soon as you get filled on your entry, and trail it higher as the trade progresses so that you can let your profits run. Personally I do this with conditional orders through CyberTrader because they let me specify exactly what needs to happen to trigger an exit, but even a plain-Jane stop loss will do the job better than a mental stop, so use whatever tools you have at your disposal and turn your trading intentions into actions!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Stock Trading, Day Trading[/tags]

Day Trading: The CNBC Debate

January 27, 2007 at 1:57 pm

As I watched CNBC’s clip on the return of day trading Friday, I was entertained by the banter. On one side was Trey Robinson, an acquaintance of mine from CyberTrader who just happens to be the Director of Business Development (who would possibly know more about the scope of traders in the market today?). On the other side of the argument was Michael Farr, a long-term portfolio manager who clearly knows very little about day traders being that he only deals with buy-and-hope hold investors.

Day Trading Differently

Trey discussed the higher net-worth clients that are accounting for the increased level of day trading in recent months (there has been a lot of buzz lately regarding this), and it’s not surprising to hear that much of today’s trading crowd is notably different than the bubble crowd of several years ago.

Trey Robinson of CyberTrader discusses today’s day trader on CNBC. (Click image to launch video)

By taking a portion of their portfolio to day trade, the new crowd is able to diversify their timeframe rather than just attempt to match the market’s returns over time. They’re also using sophisticated tools to help execute their trading strategy while reducing risk. Truly a sophisticated new breed of day traders, no doubt.

Long-Term Investing Contradictions

As Michael started to speak about day traders, he wasted little time before jumping right to unfounded claims such as “these people are speculating and not investing,” and that “when the music stops, it’s over.” He also added that “when the general trend turns down, these people don’t make money.”

How ironic! He failed to mention that a long-term investor such as himself can indeed suffer considerable losses during a market correction, especially considering how few are hedged or short selling the way most day traders do. It’s also interesting to note that his long-term investors can be at greater risk than a day trader during a downturn, especially considering that they are mostly invested at all times and a day trader can take a position in cash (thereby preserving capital, not losing it).

Michael also failed to mention that even long-term investing also involves a level of speculation. After all, what guarantee does any investor have that his choice of investment (whether day trading or long-term investing) will produce a profit as expected? There are no guarantees in the stock market, regardless of timeframe.

Day Trading Reduces Exposure to Risk

On Friday at TheStockBandit.com, some members and I were discussing on my trading blog the sizeable downside gap in HAR after the company had reported earnings. Interestingly, a day trader would have had no exposure to the risk of an earnings gap which occurs overnight, but the long-term “investor” would have felt the full sting.

Same thing for the incredible downside market gap which followed 9/11: no harm to the pure day traders, but long-term investors needed considerable time to recover.

It’s pretty clear that even long-term investing involves significant risk (geopolitical event risk, earnings gaps, analyst downgrades, etc.), but one can easily argue that day trading reduces the exposure to risk due to the limited holding periods. Who can disagree with that?

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Trading, Day Trading, CNBC, Stock Market[/tags]

Slow Movers Can Be Steady

January 22, 2007 at 12:22 pm

Every stock moves differently than the next, and a big part of trading well includes matching your personality with the personalities of the stocks you trade.

After all, if you’re an impatient type-A person, you’re probably not trading MSFT because the thing moves so slowly. On the other hand, you may like the slow and steady type of stock because it fits your trading timeframe.

If the latter describes you and you’re a patient trader, check out IACI. It’s been in a steady uptrend for many months now, and it’s just now trying to break out of a bullish ascending triangle pattern. That should spell upside continuation for the stock if the pattern is confirmed. I see an earnings date set for 2/8/07, and I would be out of this trade by then as that could have a big impact on this stock one way or another. Here’s a look at the chart:

(Click for full size.) Chart Courtesy of TeleChart.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

Trading on the Winning Team

January 16, 2007 at 12:16 am

I’m an independent person and I love to do things my way. Many of us do! But when trying to make our way in the market, we can’t ignore the importance of being on the right side of things, and that means going with the flow.

Trading on the winning team is far and away the most important way to not only locate trading ideas, but also the easiest (or least-difficult) way to extract profits.

Check out my thoughts on the topic in the Free Newsletter this week. There’s also a free trade idea you might be interested in.

And by the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

Trading Articles

January 11, 2007 at 3:46 pm

I just wanted to give you a heads-up regarding all of my archived trading articles. There has always been a full list of them available over at TheStockBandit.com (more than 150 articles), and along with the chart patterns page, it’s one of the most heavily bookmarked pages of the site.

But now they’re all arranged by topic, nice and orderly!

That makes it easy to skim the list for any general trading topics which you’d like to read about. The topics include such things as technical analysis, trading psychology, trading tips, and there’s even a nice archived list of my free newsletter articles which started being posting directly on the site a few weeks back. So the next time you need some reading material, check out my stock market articles list!

Hope you enjoy them, and I’ll of course continue to churn out the content here going forward!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

Look Out IB!

October 4, 2006 at 9:16 am

CyberTrader just put up this page which points to some pretty exciting enhancements on the way for clients on the CyberTrader Pro platform (like yours truly).

I’ve commented quite a bit about CT and their great customer service and particularly their wonderful conditional orders. Well, the coming enhancements will add quite a bit of functionality to the conditional orders topic, particularly #4 on the list.

Needless to say, CT is about to take not only trade management but order management to another level with the coming features, and that means more flexibility for traders which is always a great thing!

I’m really looking forward to this and you can see the list at this page.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Trading, CyberTrader, Conditional Alerts, Conditional Orders, Risk Management[/tags]