Search Results for 'traders'
Formulating Your Market Opinion
The Market Wizards books by Jack Schwager are in my opinion among the best trading books out there, as the interviews with top traders simply offer so much insight. I make it a habit to re-read these books semi-regularly because of the insights they offer, and it seems every time I read them I either pick up something new or am reminded of an important lesson.
One interview with Tom Baldwin contained a comment which I found interesting, especially given the clear lack of enthusiasm in Baldwin’s answers. Although Baldwin seemed to come across as stiff, arrogant, and basically anything but friendly to Schwager, he still offered some food for thought.
When asked how he learned to trade, Baldwin replied with this answer:
…All day long I stood there and developed an opinion. As I came to see that my opinion was right, I was reinforced, even if I didn’t make the trade. Then when I traded, I knew from standing there six hours a day, every day, that most of the time I was right. I would see scenarios develop over and over again.”
Baldwin’s comment is probably an oft-overlooked statement, and yet it carries some real value. “All day long I stood there and developed an opinion.” That answer isn’t anything flashy, but yet it’s so accurate. Your market opinion, your feel for the tape, your instinct….it all comes from those countless hours in front of the screens. Whether you’ve got 0 or 10 positions on at any given time, you are still soaking in the data and gathering important info which you’ll call upon sometime later.
Trading the market can be very exciting, don’t get me wrong. Pulling some fast money out of a stock and nailing a trade is a real thrill, and those of us who get to trade daily know that. However, newbie traders are often surprised at how boring the market can be at times and how much waiting is involved. Trading doesn’t mean constant motion and pure adrenaline from opening to closing bell. A lot of times it’s monotonous and dull, and yet it’s still wise to observe.
That trade you’ve been stalking might finally come around and trigger an entry, in which case you’re back on the wagon. And on the other hand, you might have days where you sit for hours on end without ever pressing a button. The best traders know this and are willing to wait when conditions warrant.
Observing the markets, watching stocks, gauging order flow and sticking close to the tape in general will help you tremendously. You’ll learn more about how particular stocks move. You’ll see where mistakes are made by others who bought or sold at the wrong times, and of course you’ll learn a lot about the role which volume plays in the action.
If you want to be a good trader, commit to putting in your hours each and every day. If you get tempted to overtrade and push buttons when you know you shouldn’t, then step away from the screen. Otherwise, formulate your market opinion by constantly staying close to the action. You won’t regret having a free ticket to the show.
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]
Stocks & Commodities Magazine Interview
I’m honored to be appearing in the March ’08 issue of Stocks & Commodities Magazine as the feature interview, as it’s a great publication that I’ve read for years. They have interviewed some great traders over the years whom I’ve learned a great deal from, so when asked about my interest in being included I didn’t even hesitate. Here’s a snippet of the interview on the S&C website, but you can buy the full issue at any major bookstore.
To those of you S&C readers who arrived here as a result of that interview, let me welcome you to the blog! For a quick tour of the blog, this post is a good place to begin as it hits some of the highlights and favorite posts.
Thanks for stopping by to visit, and I hope you’ll return often. Enjoy the long holiday weekend!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Swing Trading, Trader Interviews, Stocks & Commodities Magazine[/tags]
Jack of All Trades, Master of 1 or 2
Most of us have heard the phrase, “jack of all trades, master of none.” What’s funny is that I don’t think that phrase was actually created to describe a trader, even though there are quite a few who certainly fit that description. For whatever reason, beginning traders especially seem to want to try a little bit of everything, kind of like a trading sampler platter.
What is it about us that makes us want to learn every way to skin the cat? Curiosity, perhaps. Drive, determination, ambition? Yes, probably. I’d say a lack of patience when chasing success also plays a part. But what so many of us tend to forget is that good trading doesn’t have to be complicated trading.
Even the most basic of technical analysis books will point out a number of different chart patterns worth studying, but the reality is that not all of them have to be traded. You can actually do quite well just sticking with a couple of favorite setups, provided of course that you stay consistent in how you enter and exit. You don’t have to master every trading style out there in order to be profitable – just getting good with 1 or 2 that you’re comfortable with is enough.
Trying to learn every trading style and expecting to apply them correctly in order to extract profits from the market is simply unnecessary. That’s not the objective of a successful trader. The experienced trader probably has a few tactics in his arsenal, but he knows he doesn’t have to use them all in order to do well. He can be profitable just by exploiting one or two good strategies, so long as he patiently waits for the proper times to apply them.
Does that mean you never try to grow or learn? Absolutely not! Successful traders will slowly add new strategies to their trading repertoire as time goes by, so strive to do the same. Finding new and different ways to profit is part of the fun of trading, and the market will at times reward your ability to adapt. So make an effort to become a well-rounded trader, but remember your bread-and-butter setups!
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]
Step up the Risk Ladder
Improving as a trader will include many things for you. Sure, you’ll learn to evaluate market conditions better as time goes by, and you’ll find better ways to respond to trading situations which in the past may have caused you to panic. As you improve, even your repertoire of trade types will increase as you add more advanced approaches like gap-fill plays and reversals. However, possibly the most important aspect of becoming a bigger and better trader is learning to increase your trade size effectively.
I’m a big believer in the notion that if you aren’t making money trading small that you won’t make money trading big. That concept sets the precedent here, so if you’re struggling to produce profits trading 100-lots, don’t even think about getting to 1000-lots. If you’re in that boat, keep refining your approach and set aside the notion that you should be trading bigger. You’ll know when the time is right.
Ready For More
When you’re consistently getting your P&L in the green, it’s probably time to start trading a little bigger. And while it’s easy to see on paper that simply quadrupling your position size may mean 4 times the profits, in reality it doesn’t usually work that way. After all, there are those pesky nerves to deal with!
The idea of multiplying the size of your profits is indeed an exciting one, but remember to approach everything first by way of risk management. Just as there are losing trades on smaller-sized positions, there will of course be losses on larger ones as well. Making certain that you can not only withstand larger hits to your account, but also the potential loss of confidence which could come as a result of larger-sized losses is imperative. Being “ready” to trade larger doesn’t simply boil down to having a bigger account which allows more buying power – it really comes down to your ability to accept increased levels of risk.
Baby Steps
Most experienced traders would agree that it’s not usually a great idea to find success at 100-share level or $100 risk-per-trade level and then jump straight to 500. The best approach is to incrementally add risk as you get more comfortable with the bigger numbers you’ll see on that P&L screen. Those good intentions of becoming a more profitable trader can get you into trouble if you jump too quickly into the deep end of the pool before you know how to swim well. A big increase in trade size puts your confidence to the test, and you want to be ready for that. Confidence is tricky in trading, as you have to have it to operate, but too much of it can cost you your objectivity. Protect it at all costs, and you’ll be glad you did.
If you’re considering bumping up your trade size, think of it as a ladder. Climb each step one at a time, and only move up to the next one when you’re ready. That approach will serve you well, letting you slowly add risk as you are comfortable so that you can keep making good trading decisions. Those good decisions don’t come from impulsive reactions to your P&L – they come from following your game plan for each trade. Patiently growing your trade size will help you stay focused on your trading plan, which is where profitability is rooted.
Remember, trading is a marathon, not a sprint, so be sure to sep up the risk ladder at a pace you can maintain.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Risk, Investing, Swing Trading[/tags]
Storing Watch Lists in Worden’s TeleChart
I have discussed watch list management before and how it’s an important responsibility for active traders. I store my watch lists in my charting program, which is TeleChart Platinum from Worden, and it’s nice knowing that at any time I can pull up a group of stocks with tradable charts. Watch lists truly are at the core of my swing trading method, and the constant review of daily charts is where I locate new trading opportunities and update important levels on my existing trades.
Storing my watch lists in TeleChart has a number of benefits, but here are several reasons why I do it:
Backup Watch Lists
Technology is great and it is the driving force at any trader’s desk, BUT it only takes one hard drive failure to send all of your hard work right out the window! I have dual hard drives in my desktop PC’s, along with external backup drives running at regular intervals to ensure that my data is recoverable in the event my primary technology fails. (I encourage you to do the same)! However, some of my watch lists have slowly been compiled across years of trading. TeleChart allows me to upload all of my chart settings (watch lists, trend lines, notes, etc.) to the Worden server, giving me added redundancy with my important chart data. Furthermore, when I edit settings on one of my PC’s, I can download the new settings straight from the Worden server to sync up all of my computers. This is huge when I am traveling and working on my laptop.
Store Multiple Watch Lists
The organization of your trading ideas is what will enable you to act quickly and decisively when the time comes to place trades. This can be as simple as separating long from short ideas, or as complicated as dividing up market sectors or even indicator-based scans. I particularly like this feature of TeleChart, because I don’t have to try to mentally separate certain ideas from others. The ability to create and label new lists helps me to compartmentalize my trade setups according to direction, timeframes, industry, or anything else I may specify.
Copy All or Selected Stocks Across Watch Lists
This is a major part of my daily routine, as I will manually screen several watch lists each evening in search of setups for the following day. The “flag” feature of TeleChart lets me hit the ‘F’ key to flag or unflag a stock, allowing me to mark stocks of interest as I go along. So for example, while working my way through a list of 500 stocks, I can hit ‘F’ anytime I see a stock which interests me and be able to pull those needles out of the haystack once I’ve completed the list by viewing these flagged items. Even better, I can copy only those flagged symbols to another list, or even remove them from a list altogether.
Another aspect of the “copy all or selected stocks” choice is that I can sort a list to separate only those stocks which fit my criteria, and then copy those symbols to a list. So for example, say I want to review a master watch list but I only care about stocks which had volume today of 500k. I can sort the list by 1-day volume, flag those symbols, and then copy them to another list. This is an excellent way to filter out only the stocks you want to review closer, cutting down the work load considerably.
At the end of the day, you need a system of some kind to keep your trading ideas organized. Having the right setups at the ready is a major part of a well-formulated game plan for your trading, and it’s much more difficult to act with speed or precision otherwise. Determine a way to keep locating new setups in the charts, and decide to stay organized with your trading ideas. It will keep you a step ahead of the pack.
Trade well today,
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]
Patience Takes Courage
Trading means many things to different people. Some love the excitement and the thrill of a financial adventure. Some people want something to talk about and discuss, while others simply want a hobby. However, plenty of us are in it for the money.
For those who are purely seeking profits, there are many ways to play the game. Different approaches and timeframes will require a variety of strategies, but we all have something in common: if we choose to play at the wrong times, it’ll cost us.
Opportunities will surface on a regular basis though, regardless of your trading style. A big part of becoming a consistently profitable trader lies in the recognition of those circumstances, so it doesn’t simply boil down to selecting a strategy. The proper implementation of your strategy is what matters most, and if you aren’t seeking to learn that then the market won’t hesitate to teach you.
I like to trade actively. The market’s always in motion, and that means certain stocks are on the move as well. It can be so easy to step off the sidelines and into the game, but timing is the biggest issue in whether those ventures will be profitable or not.
There have been some big moves in this market for the past couple of weeks, and that means there has been no shortage of opportunities. However, the moves have been swift and violent, so they’ve catered to a certain type of trader. The contrarian is one such trader, who may have been calling for a top on the way up and initiating short positions as the market climbed. Obviously that meant some pain while the advance was underway, but now it means profits. Another type of trader who has been able to benefit from the recent conditions is the momentum scalper. They are willing to chase stocks which are already on the move, darting in and out quickly to catch snippets of the moves, adding numerous small gains together to make their day’s pay.
While I have traded each of these strategies at different times in the past, neither one defines my current style. That means that when conditions changed quickly recently, my best plan was to shift into capital preservation mode. Recognizing the change of market character has saved me considerable money these past several weeks, while others have fought and lost because of their unwillingness to protect their trading capital.
Every one of us has a choice of how to manage our trading business. We can throw caution to the wind and hope that we get lucky, or we can be methodical in our approach and choose a path which improves our odds of survival at all times. Choosing the latter keeps us in the game, allowing us opportunity to collect profits when conditions do cater to our specific style.
Trading success does not come easy – we have to earn it. That includes putting in the week-to-week effort, but it also means controlling our emotions and urges in such a way that we stick with our game plan. At times those plans may need altering, but that generally comes after a prolonged period of having something else work better.
Right now the market is trading with higher volatility than we’ve seen. Of course there’s no way to know just how long the extreme moves will stick around, but fortunately as traders it isn’t our job to predict. All we have to do is react to what we see. At some point we’ll see calmer conditions surface, and that’s when those of us with a multi-day to multi-week trading timeframe will be able to return to higher levels of activity.
Until then, protection of capital is the top priority, and we simply must be patient until our favorite conditions return. That way we can pick up where we left off. It may be uneventful while we wait, but it certainly beats the situation so many others are now in who have to make up lost ground. Don’t insist on activity if you don’t see what you like. Have the courage and discipline to wait for your pitch, and if you’re new to the game spend some time determining just what you need to see in order for your strategy to work. It’ll be well worth it!
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]
Don’t Forget to Prep for 2008
Lately everyone’s discussing the so-called Santa Claus rally, and I suppose that is rightfully so given the recent upside. Rarely does the Santa Claus rally actually come on time, because the market is so forward-looking. Often it happens early or simply not at all, but this year it is right on time.
OK, so that’s kinda nifty but let’s talk about something that really matters: 2008.
The holidays are officially here, giving each of us the ideal time to reflect on 2007 and look ahead to the coming year. We can review what we’ve learned and consider ways we’ll apply those lessons going forward.
The idle time between now and January 2nd should offer you an
occasion or two to find some quiet time and get real honest with yourself. Take it and put some effort into reviewing your year. Don’t just run the quick numbers on your P&L – take a good look at where you can improve. Look at your trades, look for reasons why you lost and made money, and determine how to avoid the former and increase the latter.
Do you need to improve your skill set? Find a trusted resource where you can learn about tools you’re lacking. Understand the chart patterns. Educate yourself on trading psychology. Learn to improve your execution and expand your use of various order types. Whatever it is, equip yourself with the tools necessary to be a better trader.
What about your discipline? Are you slow to cut losing trades, hanging around in lame stocks when you know you should be bailing out and moving on to the next opportunity? Discipline applies to winning trades too – make sure you’re allowing your original game plan to play out and don’t cut the legs out from under those trades which are working in your favor. And are you exhibiting the discipline each day to do your homework and get prepared for the trading day? If not, create some new habits for yourself come January 2nd that will improve your odds of success.
Every single one of us has ways we can improve as traders, and it’s an ongoing process. What is holding you back from achieving the trading success you want so badly? Let me encourage you to find that area of your trading you feel you’re lacking in the most, and make it your focus to improve it in 2008. It could mean a major difference in your performance going forward, and that progress is exactly what each of us wants.
So spend some quality time with loved ones and friends over the holidays, but be sure to reserve some time just for you so that once January hits you’ll be right on track with your objectives and goals.
Merry Christmas & Happy New Year!
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]
