Trading the US the Naz/Mr. Charts Way

[The Beyonder]

Hi Richard

Good to have you back.
I notice with a chuckle the stock you have shown as a test, is that a reference to anyone

Seriously though, when you test the set-up in this way are you simulator trading or just watching and observing?

Rgds

 

[Mr. Charts]

Hi timsk,
Thanks for your comments. Interestingly I am not the only one to receive such "unpleasant" messages, others here have too.
The source is the same.
However, the vast majority are decent people and I've had so many emails asking me to start posting again I've changed my mind. We'll see what happens.
IF the nonsense stops, it's a closed chapter.

Hi The Beyonder,
Well spotted, sir!
I had been thinking about posting again and when I saw what PSYS was, the irony almost clinched the decision ;-)
Watching and observing, deciding the exact entry point and then checking the micro-analysis at the time the level is hit. I set an alert to go off 5c before so I could bring up level 2 and watch how it behaved. This particular one was a no brainer because the level was a whole number and once that was lost and I saw how the market participants were behaving I just "knew" it would provide the 77th/100 winner.
I am very disciplined in my patterns and triggers and the amount of live analysis I do before a pattern joins my trading and coaching list, but I must confess I did feel I was just too strict with myself and should have taken the trade. However, there will be plenty of them to come, the market is always there tomorrow.
I now "know" from my experience of these pattern trades the likely probability of success in the future and that means I can trade and teach them confidently - no hesitation, just execution.
It's like having another tool in the tool box to use when the situation arises.
HTH
Richard

 

[Salty Gibbon]

PSYS

I suppose one should not shrink from trading this stock.

 

[Mr. Charts]

....even if its market cap is.

 

[RogerM]

Nice to have you back Mr C. Great post.

 

[ducati998]

Mr Charts,
Having been a past critic of both TA, daytrading, and on occasion some of your methodologies, in respect to novice traders, the confirmation of PSYS as a reference to "some anonymous" person, is beneath you.

Either name names, or sort it out via whatever method you choose. The reason for my post is that, based on what you have insinuated, I would suspect myself as being the "pest".
However, as I have never had any communication with you other than what has appeared in the public domain, when I post criticism, or otherwise, I am always willing to stand behind my words either with fact, or personal opinion ( hopefully logically arrived at ).

Therefore, when I post criticism of your thinking or methodologies, which I shall, they are not personal criticisms on yourself, they are criticisms on the viewpoint being espoused as I do not agree with it. That of course does not "prove" that my viewpoint is correct, however the inability to counter the argument against, must to my mind make one somewhat sceptical of the validity being propounded.

cheers d998

 

[ducati998]

Here is a list of "New 52 Week Highs" from Friday last.
Now, you mentioned 100 test trades, I don't really follow new highs, but there are enough each day to reach 100 in at least a week if not sooner.

That would suggest to me that your 100 trades were in point of fact 100 trades you chose to watch and use as a "test trade", thus they are not really representative of all the potential trades. As the market was pretty weak last week, there are suprisingly quite a few new highs. If the market had been strong, perhaps even more candidates. Would the larger sample show a statistically different result? I suspect that it would. Tradeable....quite possibly, by you, high probability, by a novice?.........hmmmmmmmm.

New 52-Week Highs
Symbol Company Name Today's High Price 52-Week High Last Price Previous Day's Closing Price Market Capitalization
BA Boeing Company, The 59.12 59.12 58.78 58.46 48.93 Bil
IMI Sanpaolo IMI S.p.A. (ADR) 31.72 31.72 31.40 31.31 28.84 Bil
IMO Imperial Oil Limited (USA) 78.90 78.90 78.15 76.14 26.76 Bil
DUK Duke Energy Corporation 28.49 28.49 28.32 28.01 27.12 Bil
DVN Devon Energy Corporation 49.55 49.55 49.55 47.75 23.76 Bil
CNI Canadian National Railway (USA) 64.00 64.00 62.49 63.31 22.17 Bil
HCA HCA Inc. 54.36 54.36 53.80 53.57 22.18 Bil
TXU TXU Corporation 81.39 81.39 80.81 79.63 19.37 Bil
SU Suncor Energy Inc. (USA) 42.60 42.60 41.50 40.21 18.78 Bil
UNP Union Pacific Corp. 70.19 70.19 68.66 69.70 17.92 Bil
UCL Unocal Corporation 64.60 64.60 64.35 61.69 17.41 Bil
MON Monsanto Company 65.60 65.60 64.66 64.50 17.22 Bil
RIG Transocean Inc. 53.46 53.46 53.23 51.46 17.25 Bil
LPL LG.Philips LCD Co., Ltd. (ADR) 23.20 23.20 22.91 21.55 14.91 Bil
SHLD Sears Holdings Corp. 138.75 138.75 135.39 133.17 12.85 Bil
MHS Medco Health Solutions Inc. 50.33 50.33 49.25 49.57 13.56 Bil
AKZOY Akzo Nobel N.V. (ADR) 46.56 46.56 45.85 45.98 13.1 Bil
EOG EOG Resources, Inc. 50.32 50.32 50.26 48.74 11.98 Bil
DGX Quest Diagnostics Incorporated 106.37 106.37 105.01 105.13 10.65 Bil
EIX Edison International 35.35 35.35 35.05 34.72 11.42 Bil
NBR Nabors Industries Ltd. 60.50 60.50 60.31 59.14 9.072 Bil
SUN Sunoco, Inc. 107.84 107.84 107.55 103.52 7.46 Bil
LQU Quilmes Industrial S.A. (ADR) 23.19 23.19 22.68 22.55 7.836 Bil
CVH Coventry Health Care, Inc. 69.40 69.40 67.89 68.14 7.265 Bil
PIXR Pixar 99.50 99.50 98.73 97.55 5.803 Bil
STU The Student Loan Corp. 214.65 214.00 211.03 209.01 4.221 Bil
PCO Premcor Inc. 64.64 64.64 64.00 59.68 5.71 Bil
NXTP Nextel Partners, Inc. 22.08 22.08 21.88 21.92 5.853 Bil
ASH Ashland Inc. 68.91 68.91 68.87 67.47 4.964 Bil
DRI Darden Restaurants, Inc. 31.28 31.28 31.05 30.68 4.933 Bil
APCC American Power Conversion Corporation 26.76 26.76 25.76 26.15 4.96 Bil
DNB The Dun & Bradstreet Corporation 64.50 64.50 63.56 61.45 4.388 Bil
LNCR Lincare Holdings Inc. 44.64 44.64 44.06 44.23 4.467 Bil
TRI Triad Hospitals, Inc. 50.65 50.65 49.79 50.10 3.894 Bil
BF.B Brown-Forman Corporation 54.95 54.95 54.23 54.75 3.526 Bil
HNT Health Net, Inc. 33.49 33.49 33.00 32.71 3.664 Bil
NMG.A The Neiman-Marcus Group, Inc. 92.16 92.16 91.25 91.51 2.694 Bil
OKE ONEOK, Inc. 31.23 31.23 31.05 30.82 3.236 Bil
CVD Covance Inc. 48.19 48.19 47.71 47.61 2.996 Bil
PPDI Pharmaceutical Product Development, Inc. 48.94 48.94 48.75 48.45 2.767 Bil
GPN Global Payments Inc. 65.00 65.00 64.75 64.49 2.507 Bil
TSO Tesoro Corporation 40.96 40.96 40.36 37.02 2.682 Bil
WDC Western Digital Corp. 13.12 13.12 12.90 12.75 2.692 Bil
SKS Saks Incorporated 18.75 18.75 18.60 18.05 2.599 Bil
NMG.B Neiman Marcus Group CL B 91.20 91.20 90.41 90.25 1.756 Bil
ENH Endurance Specialty Holdings Ltd. 38.10 38.10 37.13 37.84 2.274 Bil
LFL Lan Airlines S.A. (ADR) 36.20 36.20 35.69 35.60 2.276 Bil
ACDO Accredo Health, Inc. 44.94 44.94 44.23 44.41 2.165 Bil
CERN Cerner Corporation 54.96 54.96 51.95 52.51 1.911 Bil
BPT BP Prudhoe Bay Royalty Trust 72.69 72.69 72.49 69.80 1.551 Bil


Page generated 4/3/2005 5:56 PM eastern time

"1. Look at the daily new 52 week highs.
2. Remember there are many traders out there who buy these break outs the following day - an apparently logical swing trader play.
3. There are people out there like me (and MMs) who are looking to fade this move ESPECIALLY on a market down day.
4. The MMs (and perhaps some pre-market traders) often gap these up on open to encourage buying.
5. IF there is no follow through buying and the opening range breaks down below the previous day's high, these are very good shorts. Why? The buying hasn't materialised, the overall sentiment is negative, the buyers on the break out day and the buyers in the opening range see failure and loss and many want out so sell. The MMs are often happy to see (and encourage) a fall to shake out the weak hands and buy stock at lower and lower levels before turning the stock around for a profit.
6. Sometimes the fall lasts intra day only, sometimes the shake out continues for a few days. However, 77% of the time it is profitable intra day. The 100 I've watched beyond intra day sometimes do continue lower but I have not seen a behaviour pattern which is tradeable."


The above rules for daytrading pre-supposes some level of experience.
In that, if you cannot trade a weekly chart, or daily chart to a profitable conclusion, what makes you think that you can trade intra-day setups profitably?

Most "novice" traders, should if they are adamant that TA is the methodology that they wish to pursue, start at the blunt end of the stick, and trade a longer term methodology.

Why?
Because "decision, and thinking " time is what most new traders require. Intra-day just moves too fast for the majority, and their nice shiny new trading plans that read so well, end up being tossed out the window as market noise overwhelms them.

If you can trade EOD consistently and profitably, then you may well be ready to step-up, but why would you? Regardless, if you are not profitable in longer timeframes, you are almost 100% doomed to losing money intra-day as you are whipped every direction but profitable.

Your strategy is simply following the MM.
How many inexperienced traders are likely to be able to that consistently?

Follow through, or lack of it is notoriously difficult to spot in real time, as you need to assess where and from whom the follow through volume is being supplied, this data will not be available to all trading platforms that daytraders use. Even if you have it, interpretating it is not easy in a very limited timeframe..........think if you are trading 5mins bars, you think you can realistically assess legitimate follow through?

Counter-trend trades, are by definition short-term, unless of course it's a trend change. And that is decided, or analysed how?... Experience? MM? Other? Intra-day, a big call for a novice.

Your testing, like all testing is historical. You may argue that it's recent history, therefore more relevant and up to date..........I personally don't really see it that way .....but an individual choice.

cheers d998..........I'm INNOCENT I tell you!!!!!!

 

[Mr. Charts]

RogerM,
Thanks for you kind words,
Richard

 

[Naz]

Not only that but, without you, Naz would have to plough a very lonely furrow and I'm sure that you wouldn't want to inflict such a fate upon him.
Tim.

Very true Tim.

Nice to see you back Richard.

 

[Salty Gibbon]

Ducati

I don't believe that it is necessary to trade in a longer time frame before the " step-up" to day trading.

I started day trading from day 1, lost a minimal amount of money initially because I had the common sense and prudence to trade small size, and now almost 2 years down the line I have gradually stepped up the size and I am doing very well thank you for a relative newcomer to day trading.

As for newbies / novices following the trading strategies demonstrated by Mr Charts or Naz on this thread, I see no problem for them to attempt these trades provided they keep the size small and operate with a formal stop loss order.

I haven't yet seen you criticise Naz for posting trades on GOOG, RIMM, TZOO etc. I consider trades on stocks of this nature to be rather more dangerous for a novice to attempt since they are extremely fast movers. But they are great posts and even if you don't trade them they provide very valuable insights indeed.

As in all things, novice or not, each trader ultimately has to work it all out for himself and it is up to each individual trader to protect himself in whatever way he ( or she ) can.

Personally I don't really care if a novice blows out his capital on a trade shown on any thread. If a novice trader plunges in with a 1,000 share trade ( and I am sure there are many that do ) then they have to face the consequences of their own folly.

They will then proceed to the "95%" group post haste, lol.

Call me selfish but I believe that selfishness is a requisite trait for success in trading if you want to sit with the "5%ers"

The name of the game in at least the first 2 years of day-trading is not PROFIT but SURVIVAL.

Of course, this is all IMHO only.

G'day

 

[ducati998]

Salty,
It may well not be necessary for all, that is quite possibly true. However I suspect it would be advisable for most.

Starting small should be a prerequiite. However, and this is where I see danger, is that with many of Mr Charts example trades, he will state that he uses a 1000 share position. Then he will list a number of winning or losing trades. Many of the winners have been of the order of $0.20, $0.35 etc.

On a 1000 share position that equates to $350 @ $0.35.
Or, a $200 loss if taken on same position size and a $0.20 stoploss, which is still tight.

So far fine. If you have several years experience, you will realise a number of points.
1....Tight stops increase the # of stopouts, and hence losses. Novice traders will run much higher losses than potentially Mr Charts.

2...Now run the same scenario with 100 shares.
$0.35 win = $35.00 - $15 brokerage, = $15 profit.
$0.20 loss = $20 + $15 = $35 loss

As you can see the losses are double the winning trades.
What to do?
Well, trade a longer system, where your winning trades have a chance of returning you lets say $2.00 for a winner, and the same stoploss point, to keep the losses the same.

Brokerage as a % on small position size is a real cost to traders, and keeps chewing their capital while they are learning the ropes.

Personally I don't really care if a novice blows out his capital on a trade shown on any thread. If a novice trader plunges in with a 1,000 share trade ( and I am sure there are many that do ) then they have to face the consequences of their own folly.

Now, you say that hey too bad.........thats fine, you are not offering to charge for coaching.
Mr Charts on the other hand does charge for trading advice, mentoring, coaching etc.
Quite possibly on some buried thread all this is mentioned, but I haven't seen it.
But he, by offering to coach, should carry some responsibility for these new guys, who believe that just jumping in some momentum is a piece of ****.
Look at the chart of PSYS,....looks easy in hindsite, is it so easy in real-time?
All these charts that are posted are historical, no trades are taken and managed in real-time on these boards. Are they taken in real-time during the coaching sessions?

I haven't yet seen you criticise Naz for posting trades on GOOG, RIMM, TZOO etc. I consider trades on stocks of this nature to be rather more dangerous for a novice to attempt since they are extremely fast movers. But they are great posts and even if you don't trade them they provide very valuable insights indeed

No, but they are a tag-team are they not?

Call me selfish but I believe that selfishness is a requisite trait for success in trading if you want to sit with the "5%ers"

Sadly that is probably true. And even more reason to act with care from posted strategies that are advertisements for the coaching services, seminars, books, video's, systems, t-shirts on any BB.

The name of the game in at least the first 2 years of day-trading is not PROFIT but SURVIVAL

Amen.
cheers d998

 

[Salty Gibbon]

2...Now run the same scenario with 100 shares.
$0.35 win = $35.00 - $15 brokerage, = $15 profit.
$0.20 loss = $20 + $15 = $35 loss

Sorry, Ducati but this is all wrong. Trading with 100 shares on IB would incur commmisions of only US$ 2 ( US$ 1 in and US$ 1 out ).


So the profit would be US$ 33 and the loss would be US$ 22.

 

[ducati998]

Salty,
Fair enough, never used IB, didn't realise they were as cheap as that.

cheers d998

 

[Salty Gibbon]

Look at the chart of PSYS,....looks easy in hindsite, is it so easy in real-time?

Listen here all ye people.

Nothing is easy to trade in real-time.


Ducati, my only problem with trading longer time frames is I get scared about holding overnight positions. Look what happened to BIIB recently. I just like to be flat at the close of play and sleep really well.

Have a good day.

 

[ducati998]

Salty,

Ducati, my only problem with trading longer time frames is I get scared about holding overnight positions. Look what happened to BIIB recently. I just like to be flat at the close of play and sleep really well.

And thats fair comment, and a real RISK as far as Technical trading, and Fundamental trading goes.

There are ways to manage that risk, and daytrading is one way.
It's just that so few ever make any real money from it.

cheers d998

 

[aspex]

Pardon my ignorance. Who are IB?

BTW I trade Nasdaq100 minimum $10 per point using CFDs no commission but a 3 point spread.

 

[Salty Gibbon]

Interactive brokers

http://www.interactivebrokers.com/php/main.php

 

[Salty Gibbon]

There are ways to manage that risk, and daytrading is one way.
It's just that so few ever make any real money from it.

Few in relation to those attempting it, yes.

But those supposed 95% of failures constitute a lot of people, I reckon, who do not approach it in a serious and intelligent manner.

My own way is :

Start slow and small
Learn the ropes slowly
If you are doing it full time make sure you have enough money to support your family for a long long time
Gradually build up size
Get confident at each size level
Survive first
Win later

 

[Mr. Charts]

Thanks, Naz.
It's nice to be back where the vast majority of posters want to positively contribute ideas to everyone's benefit.
Salty,
your last post is so absolutely on the button - succinct and precisely correct.
Richard

 

[Salty Gibbon]

Cheers Richard, it's just a matter of plain old-fashioned common sense really isn't it ?