wheezergeezer
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Its been a great couple of days.......good valuable information !! I second that,
there really are some smart guys trading on TT
there really are some smart guys trading on TT
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Hi Grey1
I wonder if you could please help me understand a bit more about (amongst many other things!) the matter of Weak/Strong stock selection? As you know, I use N Minute quite extensively but I have noticed on quite a few occasions that, by the time we actually execute a trade, a preselected stock from the list has moved up/down the list quite significantly.
For example, yesterday afternoon we 'decided' to look for an opportunity to Short Sell IBM because, when we initially looked, IBM was one of the bottom stocks on the list. However, over the course of waiting for the market to set-up to take the short, IBM had moved right up the 'N Minute' list so it was actually 'showing' as a Strong stock.
So, this makes me think that there must be other criteria you consider significant. Or, maybe I am just missing a point you have already explained. Anyway, any further advice here would be most appreciated.
Many Thanks
Steve
I wonder if you could please help me understand a bit more about (amongst many other things!) the matter of Weak/Strong stock selection? As you know, I use N Minute quite extensively but I have noticed on quite a few occasions that, by the time we actually execute a trade, a preselected stock from the list has moved up/down the list quite significantly.
For example, yesterday afternoon we 'decided' to look for an opportunity to Short Sell IBM because, when we initially looked, IBM was one of the bottom stocks on the list. However, over the course of waiting for the market to set-up to take the short, IBM had moved right up the 'N Minute' list so it was actually 'showing' as a Strong stock.
So, this makes me think that there must be other criteria you consider significant. Or, maybe I am just missing a point you have already explained. Anyway, any further advice here would be most appreciated.
Many Thanks
Steve
I noticed the same. When we traded IBM the first time, IBM was the weakest stock, then it became stronger. On the last trade IBM was stronger than average.
here is a video on instructions to locate our paltalk room and how to download the software
YouTube - How To Get Into Our Paltalk Trading Room
YouTube - How To Get Into Our Paltalk Trading Room
Grey1
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yes
Grey1
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BSD
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Losing: no more and no less than a cost of doing business as a trader.
Not being able to handle losing is imo the single most important reason why most fail who endeavour to make it in trading, or why many never maximise their potential.
One reason for losing was perfectly summed up by Mark Douglas excellent and very common-"sensical" observation that there is no Holy Grail, that none can exist because anything can happen anytime at all in markets overthrowing your clever analysis, all it takes is one big order going against you and triggering your stop loss.
Brett Steenbarger post here hits the nail on the head:
"Over the last few days, I've had the opportunity to talk with everyday investors as well as my usual contacts with prop traders and portfolio managers. One of the distinguishing themes in these talks has been stubbornness versus flexibility: the willingness and ability to maneuver and adapt to changing market conditions versus the need to stick with positions and be proven correct.
Among the traders, the ones who have done well in the recent market decline are those who have been selective in their risk exposure, riding short-term market moves, limiting overnight headline risk, and shifting positions tactically to adjust to volatile conditions. They have focused on making money--and limiting loss of capital. They've been quick to recognize when they're wrong, at times getting stopped out once, twice, three times before finally riding the anticipated market move.
The traders who have performed most poorly are those that have been stubborn. They have had strong views of markets and have stuck with those views, even in the face of markets that have moved against them. Convinced that markets are overdue for reversal, they have faced large losses as weakness has led to further weakness. They have been more concerned about being right than making money; they've been reluctant to be stopped out, instead waiting for markets to validate their opinions.
Interestingly, I'm seeing the same dynamics among individual investors. Some have made proactive adjustments to their portfolios to reduce risk, including reducing exposure to vulnerable investments (financial stocks, preferred shares, high yield bonds); some are also revising their views of the financial future, looking for themes and sectors that will benefit in a changed economic environment (firms that generate cash and are less reliant on borrowing; firms that appeal to consumer value rather than luxury; safe yields among beaten down bonds). Other investors are frozen, immersed in hope that "things will come back". They remind me of the dot-com investors who, stunned by losses of 50% in their holdings, insisted that a bottom was at hand. Sadly, many of these shares declined by more than 75% before we saw a durable market bottom--and many of those companies never survived the decline.
This is one of the paradoxes of trading and investing: you need distinct views to put your money at risk, and you need to persist with these views in order to ride winners. At the same time, you can't become married to these views; you need to quickly revise and even abandon your outlooks in order to limit losses. We can trade and invest for ego needs, and we can trade and invest to make money: over the long haul, we can't do both. It takes a strong ego to formulate and act upon one's ideas; an even stronger one to step back from those ideas in the face of non-confirmation."
LINK:
TraderFeed: The Need To Be Right Versus The Need To Make Money
Also keeping in mind his observation from working with top traders that:
Brett Steenbarger:
"...As a rule, maximizing batting average/minimizing drawdown comes at the cost of lowering overall system profitability...."
-Richard Dennis' former Turtles partner William Eckhardt corroborated that in Market Wizards:
William Eckhardt:
The Win/Loss Ratio
“One common adage on this subject that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. …
What really matters is the long-run distributions of outcomes from your trading techniques, systems, and procedures. But, psychologically, what seems of paramount importance is whether the positions that you have right now are going to work. Current positions seem to be crucial beyond any statistical justification. It’s quite tempting to bend your rules to make your current trades work, assuming that the favorability of your long-term statistics will take care of future profitability. Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance.
Market Wizards
-Billionaire hedge fund manager Bruce Kovner:
Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.
Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I'm getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn't go there if I am right.
Market Wizards
- Richard Dennis (Turtles daddy, who turned 400 bucks into several hundred million):
When things go bad, traders shouldn't stick their head in the sand and just hope it gets better.
You should always have a worst-case point. The only choice should be to get out quicker.
The worst mistake a trader can make is to miss a major profit opportunity. 95 percent of profits come from only 5 percent of the trades.
- Bill Lipschutz (Biggest earning earning trader for many years at the then investment bank Salomon Brothers before he started his own hedge fund):
I don't have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don't think you can consistently be a winner trading if you're banking on being right more than 50 percent of the time. You have to figure out how to make money by being right only 20 to 30 percent of the time."
New Market Wizards
An observation echoed by Kenneth Grant, who in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:
ACROSS ALL MARKET CONDITIONS, TRADING STYLES, TIME FRAMES AND TRADERS, ONE RULE HOLDS TRUE:
10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !
- George Soros:
I don't care when I'm wrong. I cut my losses and move on to the next opportunity. Trading is not about being right. It's about how much you make when you are right.
A lot of these people became Billionaires because they understood that losing is part and parcel of trading.
Not being able to handle losing is imo the single most important reason why most fail who endeavour to make it in trading, or why many never maximise their potential.
One reason for losing was perfectly summed up by Mark Douglas excellent and very common-"sensical" observation that there is no Holy Grail, that none can exist because anything can happen anytime at all in markets overthrowing your clever analysis, all it takes is one big order going against you and triggering your stop loss.
Brett Steenbarger post here hits the nail on the head:
"Over the last few days, I've had the opportunity to talk with everyday investors as well as my usual contacts with prop traders and portfolio managers. One of the distinguishing themes in these talks has been stubbornness versus flexibility: the willingness and ability to maneuver and adapt to changing market conditions versus the need to stick with positions and be proven correct.
Among the traders, the ones who have done well in the recent market decline are those who have been selective in their risk exposure, riding short-term market moves, limiting overnight headline risk, and shifting positions tactically to adjust to volatile conditions. They have focused on making money--and limiting loss of capital. They've been quick to recognize when they're wrong, at times getting stopped out once, twice, three times before finally riding the anticipated market move.
The traders who have performed most poorly are those that have been stubborn. They have had strong views of markets and have stuck with those views, even in the face of markets that have moved against them. Convinced that markets are overdue for reversal, they have faced large losses as weakness has led to further weakness. They have been more concerned about being right than making money; they've been reluctant to be stopped out, instead waiting for markets to validate their opinions.
Interestingly, I'm seeing the same dynamics among individual investors. Some have made proactive adjustments to their portfolios to reduce risk, including reducing exposure to vulnerable investments (financial stocks, preferred shares, high yield bonds); some are also revising their views of the financial future, looking for themes and sectors that will benefit in a changed economic environment (firms that generate cash and are less reliant on borrowing; firms that appeal to consumer value rather than luxury; safe yields among beaten down bonds). Other investors are frozen, immersed in hope that "things will come back". They remind me of the dot-com investors who, stunned by losses of 50% in their holdings, insisted that a bottom was at hand. Sadly, many of these shares declined by more than 75% before we saw a durable market bottom--and many of those companies never survived the decline.
This is one of the paradoxes of trading and investing: you need distinct views to put your money at risk, and you need to persist with these views in order to ride winners. At the same time, you can't become married to these views; you need to quickly revise and even abandon your outlooks in order to limit losses. We can trade and invest for ego needs, and we can trade and invest to make money: over the long haul, we can't do both. It takes a strong ego to formulate and act upon one's ideas; an even stronger one to step back from those ideas in the face of non-confirmation."
LINK:
TraderFeed: The Need To Be Right Versus The Need To Make Money
Also keeping in mind his observation from working with top traders that:
Brett Steenbarger:
"...As a rule, maximizing batting average/minimizing drawdown comes at the cost of lowering overall system profitability...."
-Richard Dennis' former Turtles partner William Eckhardt corroborated that in Market Wizards:
William Eckhardt:
The Win/Loss Ratio
“One common adage on this subject that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance. …
What really matters is the long-run distributions of outcomes from your trading techniques, systems, and procedures. But, psychologically, what seems of paramount importance is whether the positions that you have right now are going to work. Current positions seem to be crucial beyond any statistical justification. It’s quite tempting to bend your rules to make your current trades work, assuming that the favorability of your long-term statistics will take care of future profitability. Two of the cardinal sins of trading - giving losses too much rope and taking profits prematurely - are both attempts to make current positions more likely to succeed, to the severe detriment of long-term performance.
Market Wizards
-Billionaire hedge fund manager Bruce Kovner:
Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.
Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I'm getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. I never think about other people who may be using the same stop, because the market shouldn't go there if I am right.
Market Wizards
- Richard Dennis (Turtles daddy, who turned 400 bucks into several hundred million):
When things go bad, traders shouldn't stick their head in the sand and just hope it gets better.
You should always have a worst-case point. The only choice should be to get out quicker.
The worst mistake a trader can make is to miss a major profit opportunity. 95 percent of profits come from only 5 percent of the trades.
- Bill Lipschutz (Biggest earning earning trader for many years at the then investment bank Salomon Brothers before he started his own hedge fund):
I don't have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don't think you can consistently be a winner trading if you're banking on being right more than 50 percent of the time. You have to figure out how to make money by being right only 20 to 30 percent of the time."
New Market Wizards
An observation echoed by Kenneth Grant, who in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:
ACROSS ALL MARKET CONDITIONS, TRADING STYLES, TIME FRAMES AND TRADERS, ONE RULE HOLDS TRUE:
10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !
- George Soros:
I don't care when I'm wrong. I cut my losses and move on to the next opportunity. Trading is not about being right. It's about how much you make when you are right.
A lot of these people became Billionaires because they understood that losing is part and parcel of trading.
this is why i love scalping, i know your not letting profits run which is not good, but you are in and out and less exposure, also i have a set stop and fixed profit set in my ninja so im either wrong or right. Ok i need to maintain a win rate above 70% but ive found its doable if you go for almost perfect entries. Also if i like i can just up position size to make the small target more meaningful to me. It does not suit everyone and when trending i do stay in longer but so far in my trading career ive always come back to scalping and i think it fits my personality. For example following my cycle analysis yesterday i scalped in and out a few times from the call at the beginning with double the profit of most. I went back into market on spikes and larger candles basically sold when people where buying.........What can i say i like scalping, i wish i didn't but im a scalper, not many millionaires made it scalping i know but i just found i like the quick answer to whether im right or wrong in a trade and if i can mantain a small income this way then i will continue.
By the way i was up $410 at one stage yesterday but ended up going down to $470, but made some scalps with the sentiment towards the end and finished the day -$290.
great post bsd, enjoyed reading that,
By the way i was up $410 at one stage yesterday but ended up going down to $470, but made some scalps with the sentiment towards the end and finished the day -$290.
great post bsd, enjoyed reading that,
BSD
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Very valid points JJ no doubts.
Number one in trading is figuring out what you're comfortable with.
If that doesn't work the rest never will.
And scalping does have it's absolutely undeniable benefits, I started out as a scalper, went longer term afterwards, but am back at scalping now since this financial mess and consequent choppiness started. One excellent advantage of scalping is that it offers dozens if not hundreds of opportunities / day. It's not endlessly compoundable, but can still make you excellent money.
Good trading all.
PS I wrote the above post mainly because some people yesterday seemed a mite peeved at Oh-My-God actually not winning on every single trade, it was sort of like you could experience the feel-good temperature sinking in the room hehe.
Not anybody from T2W as far as I'm aware tho, might have been some total newbies who just stumbled on our room by chance.
Number one in trading is figuring out what you're comfortable with.
If that doesn't work the rest never will.
And scalping does have it's absolutely undeniable benefits, I started out as a scalper, went longer term afterwards, but am back at scalping now since this financial mess and consequent choppiness started. One excellent advantage of scalping is that it offers dozens if not hundreds of opportunities / day. It's not endlessly compoundable, but can still make you excellent money.
Good trading all.
PS I wrote the above post mainly because some people yesterday seemed a mite peeved at Oh-My-God actually not winning on every single trade, it was sort of like you could experience the feel-good temperature sinking in the room hehe.
Not anybody from T2W as far as I'm aware tho, might have been some total newbies who just stumbled on our room by chance.
I think you both bring up crucial points, namely position size in relation to timeframe. It is becoming increasingly apparent to me the need to be clear in your own mind what your time horizon is and what your subsequent position and risk size is going to be. To have a large postion size, perhaps SIZE compression on 1 min, 500-600 stocks, and to ignore the very narrow margins that a 1 min ATR gives and instead handle the trade as if you had your position size and risk based on 10 min compression, is a recipe for disaster.
It sorts out the men from the boys:
- demonstrates whether you are emotionally attached to the trades. If so the excellent works you mentioned should be read.
- demonstrates whether you have managed position sizing and risk properly, so that any loss can be absorbed and recuperated by future good trades
Most TT members are men (or women) and not boys, because they have seen enough of Iraj's teachings and methods to understand the cyclical nature of the market, top-down approach, multi-TF analysis and have seen the postive results from its correct useage.
So I agree that those who fail to see that are probably peeps from outside TT.
It takes time to learn this, experience it and feel comfortable with it, which is why those who stick with the TT forum and live trading room over time will win out.
Charlton
Slow moving market + scaling out
Thanks Iraj
for another interesting day - in fact just a half-day due to early close. It was a very slow moving market with few opporunities, but you called one of the few stocks with any degree of movement.
For the record here were details of that trade. Total movement $1.78. Total profit on just 200 shares $243 for a static half-day market. The last quarter of the position was left to run having taken 3/4 off the table. It had a breakeven + 2 cent stoploss, so was totally risk-free. The final quarter represented 36% of the total profit, showing why leaving part of the position to run, having already banked the rest, is a good strategy.
Charlton
11/28/08 02:40:05 PM 11/28/08 02:40:06 PM AAPL Sell Short 200 200 0 Market 93.95 Filled
11/28/08 02:51:16 PM 11/28/08 02:51:16 PM AAPL Buy to Cover 150 150 0 Market 92.89 Filled
11/28/08 05:36:04 PM 11/28/08 05:36:04 PM AAPL Buy to Cover 50 50 0 Market 92.17 Filled
Thanks Iraj
for another interesting day - in fact just a half-day due to early close. It was a very slow moving market with few opporunities, but you called one of the few stocks with any degree of movement.
For the record here were details of that trade. Total movement $1.78. Total profit on just 200 shares $243 for a static half-day market. The last quarter of the position was left to run having taken 3/4 off the table. It had a breakeven + 2 cent stoploss, so was totally risk-free. The final quarter represented 36% of the total profit, showing why leaving part of the position to run, having already banked the rest, is a good strategy.
Charlton
11/28/08 02:40:05 PM 11/28/08 02:40:06 PM AAPL Sell Short 200 200 0 Market 93.95 Filled
11/28/08 02:51:16 PM 11/28/08 02:51:16 PM AAPL Buy to Cover 150 150 0 Market 92.89 Filled
11/28/08 05:36:04 PM 11/28/08 05:36:04 PM AAPL Buy to Cover 50 50 0 Market 92.17 Filled
Grey1
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yes we took an excellent run from APPL.
Wednesday loss was and is rare and taking $1.80 from AAPL today was standard when I trade alone..
All said and done.. No excuses CHIN UP and watch me win the rest of the month .
Those of you who have seen my style of trading well know even If I go down on the day i wont lose discipline and come on top by the end of the day ,,,
Grey1
Wednesday loss was and is rare and taking $1.80 from AAPL today was standard when I trade alone..
All said and done.. No excuses CHIN UP and watch me win the rest of the month .
Those of you who have seen my style of trading well know even If I go down on the day i wont lose discipline and come on top by the end of the day ,,,
Grey1
losing discipline is my biggest weakness even to this day I have 50 trades that are breakeven or winners and I have 2 or 3 losers that are large have wipes out 3- 4 weeks in gains and at time i have revenge traded to recover losses with in june of of this year happened. this is the worst human mistake...
the thing is with me is that I think I am right all the time especially after I have a huge run.. then my ego gets in the way my positions get to big or my enrty are to compulsive.
you have to have a cool head to trade.
the thing is with me is that I think I am right all the time especially after I have a huge run.. then my ego gets in the way my positions get to big or my enrty are to compulsive.
you have to have a cool head to trade.
Trader333
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The ego can only operate by reference to the past or by projecting into the future. It cannot operate if you can bring yourself to be in the "present" moment. As the present moment is all we ever truly have, then try to not let the mind conduct any kind of comparison whilst in a trade. In other words what action is required by you "now". The mind will babble and try to get you to run through all sorts of things when in a trade. I have found it good when this happens to observe what it does as a third person but not let it (and therefore the ego), make decisions for me.
You may all think that I am mad for which I would understand
Paul
You may all think that I am mad for which I would understand
Paul
not at all, trading i have found is more mental and in the mind....Its a constent battle with yourself and you have to fight your demons every single day otherwise your toast......sometimes being right in trading can still not be enough to survive this game.........
infact form what your describing tells me your an experienced trader
infact form what your describing tells me your an experienced trader
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