All Entries in the "Day Trading" Category
What Do You Do When You Hit Your Loss Limit?
April 26, 2012 at 8:15 am
Over the past 10 days, there have been two occasions where I hit my daily loss limit. Sounds like a tough stretch, but on a net basis it’s actually been positive thanks to some other good days.
Mind you, I’m generally a disciplined trader, and in a dozen years of full-time trading I have broken my discipline countless times but have never truly gone on tilt where it’s account life or death.
That said, I do not have a broker-set cutoff. That’s where you specify a dollar amount, which when hit will lock you out of making more trades. It’s still your account and you could call in and override that I suppose, but it’s at the very least a break in the action for you, and a very good thing for some people – namely, developing traders.
Back to my point and the title of this post, what happens when you hit your daily loss limit?
For me, it’s a general dollar amount where I start to understand that barring some really great trades, and with the amount of risk I am willing to take, I’m unlikely to recover. It’s a matter of recognizing that I’m likely to do more harm than good – either to my account or my confidence.
At times, I’ll hit that level and I just need to admit defeat, shut it down, and come back another day. I might leave my platform open and monitor the market or open positions, but I know I don’t need to press any more buttons. Adhering to that has on many occasions prevented deeper wounds to my account.
Knowing when to walk is found in two things: one internal, one external. Internally, you must understand yourself and your tendencies. Externally, you must be able to recognize current conditions and determine if there’s good reason to continue or not.
Over the past week, however, I had two different outcomes when I chose to trade beyond that mental cutoff.
Exhibit ‘A’
The first was a day where my limit had been reached, but I allowed my emotions to interfere. This was the internal element, and I was in no shape to continue. (That, by the way, also prompted this week’s video.)
I didn’t go on tilt, but I lowered my standards in what was ultimately a mild version of revenge trading. That never pays off, and in this case it cost me a little more. As it should have. I hit my loss limit plus another 1/4, which isn’t a ton but it is too much.
The mistake was that I continued to trade because of my P&L. Catch that? Because of it, not in spite of it.
Exhibit ‘B’
The second occasion was similar in that I reached my mental cutoff, but it was different because it was a day where my emotions were settled.
I continued to trade not out of anger or frustration or ego to prove I was right, but because there were multiple stocks in play which warranted my participation. Conditions were very favorable for making good trades, so I continued.
I was accepting risk beyond a normal cutoff amount, but it was with a level head and with some real potential to turn the day around. And I did. It was rewarding, not in the sense of “I told you so” but simply because I kept taking good trades when they surfaced, added it up in the end, and came out slightly ahead.
It’s nice to dig out a bad day, even if it means you barely do better than break even.
On some days, those are wins.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Ron Artest, Scrabble & Trading – WTBR Episode 4
April 24, 2012 at 8:40 am
Today, I bring you Episode 4 of When The Bell Rings.
In this episode, we’re talking about something that’s paramount to your success as a trader. It’s a mindset, but it’s something that requires intentional planning and not a fly by the seat of your pants mentality.
A weekend sporting event was too pressing to delay this message any further, so here it is.
I hope you get a lot out of this installment. Keep coming back for more in the days ahead, and of course if you find these helpful, then let me know!
Run time is 4:26.
(Direct video link is here for those interested in embedding it elsewhere to share).
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Week 16 Trades Review (Video)
April 20, 2012 at 10:05 pm
Week 16 is in the books, and truth be told, I would have been better served to have sat on my hands!
I wanted to offer a video recap of the trades I took. As you’ll see, I was stopped out several times on head-fake types of entries with stocks showing extremely limited follow through in either direction.
On weeks like this, it’s nice to be limiting risk. Each of us will encounter stretches where failed trades happen more often, and this was that week for me. I found a few winners, but the key for me was limiting my losses in order to maintain my objectivity and minimize the damage. This is where setting ego aside can truly save you in your trading, as backing away with smaller size on messy weeks will leave you digging shallower holes by digging with a smaller shovel!
This show-and-tell look at the trades I took this week should give you a feel for not only how I managed my trades, but also the kinds of setups which have been working well of late. And for those curious about our trading style in the member area, this should give you a good indication of what a typical week looks like. Check out the trial if you’re interested in adding our ideas to your own.
(Direct video link is here for those interested in embedding it elsewhere to share).
Be sure to view in HD (720P) and full-screen mode for best quality in the video.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Follow @TheStockBandit
Be Present – When The Bell Rings 3
April 18, 2012 at 8:48 am
Today, I bring you Episode 3 of When The Bell Rings.
In this episode, we’re talking about a common mistake among traders which seems so obvious – yet so few make it a point to avoid.
I hope you get a lot out of this installment. Keep coming back for more in the days ahead, and of course if you find these helpful, then let me know!
Run time is 4:07.
(Direct video link is here for those interested in embedding it elsewhere to share).
By the way, here are links to Episode 1 and Episode 2 in case you missed them.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Week 15 Trades Review (Video)
April 14, 2012 at 10:06 pm
Week 15 is in the books, and while it was far from impressive for the overall market, our trades fared well.
I wanted to offer a video recap of the trades I took. The previous week wasn’t great for me, but week 15 was worth trading and I was able to limit losses on failed trades while booking some solid gains in those which worked.
This show-and-tell look at the trades I took this week should give you a feel for not only how I managed my trades, but also the kinds of setups which have been working well of late. And for those curious about our trading style in the member area, this should give you a good indication of what a typical week looks like. Check out the trial if you’re interested in adding our ideas to your own.
(Direct video link is here for those interested in embedding it elsewhere to share).
Be sure to view in HD (720P) and full-screen mode for best quality in the video.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Follow @TheStockBandit
Strategic Adjustments that Pay Off Big
April 12, 2012 at 7:40 am
Like sports and business, trading requires the ability and the willingness to adapt. This involves continually learning and growing so that you’re never stagnant with a single approach.
Recently I sat down with Tim Bourquin for a MoneyShow Interview, and we discussed this topic of how Strategic Adjustments can Pay Off Big. The clip is 3 minutes and can be viewed here.
In the segment, we discuss trading biases, contingency plans, backing down when you’re uncertain, and the importance of focusing on a single market while still allowing yourself some ways to diversify within it.
(Other 3-minute videos from this same interview discuss The Trade Plan that Works For Me, as well as Win More by Risking Less, which you may also enjoy.)
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Follow @TheStockBandit
Wait for the Trend Line Break!
April 11, 2012 at 6:36 am
As a pattern-based trader, I use a lot of trend lines on my charts. When you look at my charts, the only indicator you’ll see is the 21-period MA of volume, which is the running 1-month volume average. Beyond that, it’s just price, volume, and trend lines around the patterns I see in price.
I keep it simple.
Confirmation of those patterns is what I require before taking entries on 99% of my trades, which means price crossing through a trend line. The way I view it, until that line in the sand is crossed, nothing has changed. The rest phase or pullback must not be done until then. I may detect price perking up or volume percolating, but until the trend line breaks, the setup cannot be fully embraced as a positive change of character.
Right now there’s an excellent example in the chart of AMGN of why waiting for that trend line break can mean preserving both capital and clarity. The stock is bullish, no doubt about it, as the intermediate uptrend remains intact since it began last August. Since then, we have a series of higher highs and higher lows.
In recent weeks, the stock has been pulling back quietly with some minor profit-taking leaving price drifting lower since the early-February peak. The prior breakout was around $65 (January) so it could be the stock is in for a test of that zone, who is to say otherwise? And until a break occurs to suggest the stock is back on the move, who cares?
Currently, the stock is floundering around beneath a very valid trend line, but no less a trend line which has yet to be crossed.
XOM is another example here as just recently the widely-anticipated push through the $88 level as recently as last week never happened. The stock has since fallen out of its channel to the downside. Waiting was the best option.
F is one more on the list with $13.05 resistance never being crossed, despite approaching it multiple times of late. Those who bought early in hopes of getting in “cheaper” ahead of the breakout actually paid up. The stock has exited its trading range to the downside, leaving premature buyers in what I’d call the “hurtin for certain” department.
Traders by and large love to predict what’s coming, and often will take anticipatory trades as such. Doing so can be an expensive way to get caught in a stagnant name.
Carefully consider whether a stock is truly getting on the move before committing capital to entries. Could be that waiting a little longer provides you with not only better prices, but better defined exits as well.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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Follow @TheStockBandit
