Dissillusioned

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falcon

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Post Number: 19
Registered: 06-2003

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Friday, July 02, 2004 - 04:37 pm:

Can anyone explain to me why is it that i watch, the price goes up, keep watching, price goes up. I buy the price levels/tops. I hold, the price goes down. I keep holding, the price goes down. I sell, the price levels/bottoms, i watch, the price goes up and so on. This is how it's been for the last 9 months - yep 9 months in front of the computer for the whole day and not making any money but losing it - to think all those books i read and charting i do and this is what happens - i just cannot make any money because of the above certainty. Latest victim OSH. Bought 30/6/04 1.32, sold today at 1.26 (rock bottom) this is exactly the way for the last nine months - no matter what i buy or how long i hold. About to give up trading and go back to work as this seems the only way to make any money.

shubh_labh

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Post Number: 34
Registered: 06-2004

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Friday, July 02, 2004 - 05:40 pm:

Falcon, regards. Wait for experienced members who will have sincere qualified advice for you. I myself am still learning TA to improve my entry and to think I have been an investor/trader for the past eight years!

Nothing I tell you is going to make you feel any better but let me assure, YOU ARE NOT ALONE! I myself was about to buy OSH at peak today, previous losses from buying at highs of the day stopped me. I was considering to buy FLX @ 0.18 cents but previous experience kept me from buying when so many are waiting to unload at such huge profits.

I have a piece of paper in front of me. It reads:
“If I was sitting on 10% profit gained in a day or two; will I take my profits off the table before end of the day and more so on a Friday OR risk my profits till market opens on Monday?

This piece of paper has saved me from many losses. I am very careful in buying stocks which have gone up 10% 20% 30% in few days, which is that many people are sitting on huge profits ready to cash in!

Don’t be disillusioned. Get even. Try and improve your entry point in to stocks. At present, if your profit target is too high, lower it. Try until you have found a system that works for you. Charts help me a great deal. Not many people endorse my method for I have set a rule of no more then 2% loss on any individual stock. Very tight stoploss but it has served me well. I would rather pay brokerage and enter another day.

I am a newbie myself nd still learning. I hope you do well next week. Make sure you have proper money management and stoploss system in place. Just my personal experiences, you can have for two cents.

Here to learn.

soldierofortune

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Post Number: 5
Registered: 10-2003

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Friday, July 02, 2004 - 05:44 pm:

Hi Franco,

There are a lot of variables in this equation so the answer depends on many factors. You seem to be balancing fear and greed which is what everyone does to a certain extent.
You must do (I stress MUST DO)some personal development work so that you are aware of your emotions - sometimes this just gets better with age anyway.

Then its important to stick to a premade plan. So you don't rush after prices. I know its a cliche but there really is another trade tomorrow.

Here is what I do, it might help.

1.Only buy uptrending stocks.(if going long)

2.Buy them at the bounce off a trendline, so you are buying low(relatively speaking)- this requires patience. It also lowers your risk. That means you don't chase prices very far once they rise rapidly (again relative to your time frame and risk calculation)and this means you miss out on winners but it's safer.

3. I watch the market depth and only buy when I get the 'feel' that others are interested. (I don't necessarily buy when market depth shows this) It gives you a feel for the characteristics of a stock.

4.I don't react either way to news until i see what the result is (ie: osh bounced back I believe so you could sell alater and get a better price)

5.I sell if its a great % gain relative to the time frame and then just rebuy the next time it dips to a resistance point. (This sometimes means I miss out on profits but atleast I have money in the bank. (1 or 2 % in a day or two or even three is good -for me anyway)

6. I only risk 0.4% of the total bank. (It rarely works out that I lose that much)

7. If a stock just sits there I get out on a positive day and buy something else (not necessarily on the sameday)

8.I keep stops in my head because most of my losses have been from temp weird downward spikes.

9. I use a AOT brokers they are cheap ($30 per trade)and have great platform /info system which is free if you are frequent trader.

10. Use risk to determine position sizing as per D.Guppy books(not sure if that is his invention but thats where I read it.) Then I split the bank into 4 or 5 positions so that my position size is usually less than I could use if I wanted to relative to max risk. This makes me feel safe as I have split the money pool onto different stocks.
(I am not sure if thats the correct thing to do - I am open to suggestions)

11. Have a written plan - I use a proforma sheet that I fill in prior to a trade and tick all the boxes. That way I understand what will happen before hand. Less emotion comes into it.

12. Look at the indexes and see what the market is doing. If it's going down wait untill it levels off before going long with stocks. (This is subjective)Unless there is a good reason to do otherwise.

13. Keep a spread sheet record of everything you can think of and fall in love with it,look at it all the time and refine what you do.

14. I keep watchlists of stocks and visually scan them as often as practical. Set alarms when they get near 'good prices' or important lines. When I see a stock like osh which seems to be in an upward channel then I just wait till it gets to the bottom or near a major resistance line.(It may never ever go down again and you may miss out) I just put it on a list and wait. I have two lists, almost ready which has 9 stocks on it today. I have a watch list for later which has 79 stocks on it today. (yes that means I miss plenty but I can't think of a better way yet)

15. I use 3 chart views weekly,daily,alternate b/w 5 min and 60mins.

16. Keep everything simple. I use mainly the price bars,trendlines and volume. Often I look at on balance volume and guppy mma's.

I have been trading full time for one year and have made money every month so far on stocks. In fact the last time I lost any money was on TLS on the 5th of April when I got stopped out with a downward spike. Average time in a trade is 16 days. But it will be shorter as thats the way I am heading.

I hope that helps.

SOF

soldierofortune

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Post Number: 6
Registered: 10-2003

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Friday, July 02, 2004 - 06:36 pm:

Hi Falcon,

I forgot to say.
Everyone will lose some trades. What has helped me is going back over my trades and having a look at what happened.
Without dwelling on the negative aspects. Revisit your trades and see how you could do better. I often print the chart when I enter the trade so I can look back and see what I could do better (as opposed to what I did wrong)

Instead of having your focus on making money. Start with survival. Ie: The goal could be to not lose any money this month. Once I shifted to this goal instead of a % target goal, trading became easier.
I don't mean dump your technical analysis targets. I mean change what your mind is on. Keep your mind off the money and on the technicalities of the trade.

Regards SOF

falcon

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Post Number: 20
Registered: 06-2003

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Friday, July 02, 2004 - 08:21 pm:

Thanks shubh_labh but i doubt i will be buying anything soon, glad to hear that you have been doing well.

Soldier, man i've done most of those things you mentioned but nothing seems to works. Seems like the only way to win is not to trade - that's what it's come down to.

hilarius

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Post Number: 212
Registered: 04-2004

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Votes: 0


Friday, July 02, 2004 - 08:43 pm:

Falcon

How many of your trades were Weinstein Stage 2?

Do you have a list of the stocks you traded?

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

efficiency

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Post Number: 12
Registered: 12-2002

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Votes: 3


Friday, July 02, 2004 - 10:18 pm:

With the remark about Weinstein's Stage 2, I thought I'd take the liberty of expanding a little bit.

Foremost, the concept of stage 1 accumulation; stage 2 markup; stage 3 distribution; and stage 4 markdown can actually be attributed to Richard Wyckoff under the pen name Rollo Tape in the early 20th century.

The rather simplistic concept of all four stages hinges upon YOUR time frame. Weinstein's use of a 30 day moving average obviously takes a while for the "cycle" to transpire. Just as importantly, Weinstein suggests that after an initial breakout, waiting for a pullback to re-test the breakout.

My own style of trading, namely ATTEMPTING to buy the low of day 1 and ATTEMPTING to sell near the high of day 2 (and in turn heavy reliance upon the compounding of smaller but consistent profits) would not adhere to such stages. I also think that Daryl Guppy's Multiple Moving averages with their tight and wide bands (which is probably an expansion upon Phylis Khan's 5-15-30 MA) is just as VALID of a strategy and easier to identify IF you're going to use moving averages (which have an inherent lag). Guppy's tight short and long bands, which imply equilibrium and hence NO trend have some predictive power since equilibrium will not last. Conversely, when a price is well extended FROM a moving average, you can more often than not count on the concept of reversion TO the mean.

Is a tight Guppy band, whether short term OR long term Stage 1 emerging to stage 2? Is it stage 2 ready to head down into stage 3? The short terms ones can and do repel off the long ones. Is that a stage 1? Then again, the short at times pierce the long ones and go on down, Is that a stage 3 transforming to stage 4? It all hinges upon timeframe and in my humble opinion prices don't conform NEATLY into Weinstein's stages. Of course they're much easier to identify in hindsight.

At the price points falcon cited, ie $1.26, I'm not too sure that prices "behave" in a "conventional" fashion which would adhere to the 4 stages. Large gaps, wide spreads and blowoff spikes come to mind.

Reverting back to Weinstein, the book was published in 1988 and nothing since. His newsletter, The Professional Tape Reader was actually PURCHASED FROM a Canadian, Justin Mamis, who wrote (3) excellent books with far more practical detail than Weinstein's. In doing a by no means comprehensive web search, I cannot determine IF Weinstein's letter is still published.

A decade ago, I had seen Stan Weinstein several times on Paul Kangas's NPR Nightly Business Report (USA). He was quite the showman, but then......so was Joe Granville.

Yes, the proverbial stage 2, in theory, should be the most fertile time to own. Yet, in a parabolic scenario, 80% of the price move comes in the last 20% of the time.

Perhaps the essence of my point is that encompassed within those 4 stages, there is a lot of fluctuations/unknown variables/surprises, and other events, all of which have their respective opportunity costs.

efficiency

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Post Number: 13
Registered: 12-2002

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Friday, July 02, 2004 - 11:24 pm:

My preceding remarks didn't have much to do with psychology, just merely a response to Stage 2 and its possible application to the problem at hand

With respect TO psychology, one has to relate the inherent volatility of what they trade to their mindset. For example, if I buy just 100 shares of a $80 listed stock with the intent of holding it for two days (provided it shows a profit at the close of entry day), I won't have too many surprises.

Taking that same $8,000 and applying it toward a $1.26 stock involves 6,350 shares. A bit if a difference, eh?

Conceivably, it could yield a greater percentage move (in either direction) over the same two days. Doesn't that call for a DIFFERENT mindset?

Would you enter with ALL 6350 shares OR would you scale in? Scaling in means ADDING. Should you add to a winning position at the TOP of a 3 day range? Would you scale in by adding to a losing position (with the cliche that only losers add to losers in mind)? Would you settle for a smaller size and hence smaller profits. Should it be a surprise when the price doesn't do what you expected it to? Can yo remain emotionally DETACHED when it goes against you and do the "RIGHT" thing? And what is the right thing? Is it scaling into a losing position? I suppose it would be if it was deemed a stage 2.

I personally NEVER add to a losing position. I consider it a compound mistake.

I prefer NYSE stocks over Nasdaq, just my style. But.....when I do, on rare occasions trade OTC's, I have had some success with a concept referred to as NR7 (learned from Linda Bradford Rashke who in turn attributed it to Tony Crabel).

Simply put, it's the NARROWEST trading range in 7 days. Stated another way, the quiet before the storm. In essence, a high probability of range expansion (though other tools have to be used to surmise DIRECTION).

If one is buying at the TOP of a 3 day range only to watch it subside, perhaps the NR7 can provide some improvement in timing.

I might suggest to try back testing your data and look for range expansions following a NR7. Then look for direction indentifiers.

Also related to psychology, refraining from trading out of frustration, though perhaps understandable, is not only a NOT a solution to the problem, it's probably not a good remedy (other than preserving capital).

Paper trading is often suggested, but for me anyway, loses something in the translation. Hard dollars makes me cognizant. Trading with "scared" money can be counter-production and expensive, but nevertheless, for me, the best way to LEARN is not to read books, articles, forums, etc, but to actually trade. Sometimes just a "feel good" trade, meaning quick small scalps (to prove being right rather than making money).

And........HOPEFULLY learn from mistakes (toward the next similar - never identical scenario) rather than repeat them.......BUT.....to repeat "WHAT" works. And to do this over and over, the essence of trading.

hilarius

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Post Number: 214
Registered: 04-2004

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Votes: 2


Saturday, July 03, 2004 - 12:21 am:

Efficiency

The value of Weinstein stages is not primarily as a trading method so much as in the discipline of preparing the ground

Just as a farmer prepares his field for a harvest, so a trader does well to classify stocks according to the four key stages of immaturity, maturing growth, mature completion of uptrend, and collapse ... 1, 2, 3 and 4

By classifying one adds an element of impartiality to the selection process ... with early emerging Stage 2 and strong Stage 2 uptrends giving good probabilities of greater success than Stages 3 and 4, or early Stage 1

Yes there are those who specialise in day trading and range trading and all the hoopla of TA, but for the new entrant to charting the discipline of selecting Stage 2 opportunities can be the difference between early success and early failure

Another benefit is that it teaches the virtue of patience and not expecting to be a wizard at day trading and short term trading before paying dues in longer term selection that works

Just my thought

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

spider

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Post Number: 1693
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Saturday, July 03, 2004 - 01:23 pm:

This is going to sound hard but, here goes.

If you do not have an all consuming belief that you will find a way to succeed at trading, then I believe that you should pack it in and save yourself the pain!

If failure is an option then you have left the door open and eventually, when it gets too hard, you will use that escape door.

When the Romans would invade a country from the sea, their leaders would order that their boats be burned!
No turning back, fight or die!

What is it going to be?

spider.

If your answer is fight, start by giving us some more info' about you, remembering to include your trading time frame.

.

"The only time I really ever lost money was when I broke my own rules." - Jesse Livermore

"Which ever game you play, you do need to press the out button pretty quick if it has not done its deed." Scalper.

hilarius

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Post Number: 218
Registered: 04-2004

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Saturday, July 03, 2004 - 01:36 pm:

Hi Spider

All consuming belief that you will find a way ...

Such a belief needs to be based on a defined way forward

Falcon appears to have concluded that there is no way forward ... and so your advice to give up has already been accepted

You are right to seek more information before offering further advice

Clearly since we believe there is a way forward we need to offer more than just the Yes/No choice

Self belief is fine, but it does not provide the actual light that is needed in the darkness of the night

I would prefer self doubt to over confidence, for someone in Falcon's position

Until the way forward is found ...

There is much we need to know before we can help

With Best Wishes

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

hilarius

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Post Number: 219
Registered: 04-2004

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Saturday, July 03, 2004 - 01:37 pm:

PS There are several clues in Falcon's opening message

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities