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     crowboy1960
Member
Username: crowboy1960
Post Number: 32
Registered: 12-2005Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 07:56 pm: |  
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Hi all,
This is my first post to this area. I probably should have visited long ago given that i've read that psychology is the most important thing in share trading.
I find I'm struggling a bit (lot??) with how to actually place an order. I'm finding I'm doing ridiculous things like today, someone posted "BDG may gap up today". So I look at market depth and there are lots of buy orders at way above last close (2.26 against 2.08) so me thinks, "Mmmmm looks pretty good". So at market open I hover over the buy window and press buy and lo and behold after a few minutes the price goes down from 2.15 where I bought. So apparently those high buy orders disappeared just before the close as the high was 2.15. So then the price slides down and I decide that I'd better put a pretty tight stop loss under it and I decide that is 2.07. OK, I do that and the price goes down to 2.08 and at that point I, the genius, decide "obviously it's going to go under my stop loss, might as well sell it here and get and extra $5". So I close out, and 2.08 is the low for the day and then it goes up to $2.10 and the market depth after the close shows 120,000 bidding 2.10!!!! Am I an idiot or what????
This sort of thing has happened a few times now. The other thing I'd like some feedback on is the idea that smart money buys on down days. I've always thought I want the price to go up therefore I should put a buy order in at market. I can't yet get my head around me wanting the stock to go up so buying when the stock price is going down, will it keep on going? I know that if my system is telling me it's looking good I should trust it and be prepared to enter on a down day. Coz the thing is if it's really good it might go straight up and not have a down day (from my reference point anyway).
Any advise would be appreciated as at the moment I'm feeling like a complete loser  .
Regards,
CB.
PS I'd particularly appreciate people views on the idea of buying on down days, coz that's got me puzzled.
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chart_rider
Member
Username: chart_rider
Post Number: 151
Registered: 01-2005Rating: 
Votes: 1
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| | Wednesday, January 25, 2006 - 08:37 pm: |
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crowboy
I've looked at the 1 min chart for BDG and you are exactly right, there was a load of volatility for the first 20 minutes or so.
Such volatility is not unusual at opening, I would say more the norm than the exception. A good idea would be to stay clear of trading for the first half hour at opening, just watch to get a feel for what's going on.
You haven't said if you're an intraday trading or position trading. If the later, then the period at opening time should definitely be blocked out from the trading plan. Even if intraday trading, it's still a deadly time to play and making consistent wins during this period would be very difficult.
If position trading, a good method of maintaining control is to restrict the placement of trades to a certain time of the day, eg the last hour, where the closing action generally provides more manageable movements to deal with and the price action of the day can be used as a reference (eg by placing an order at a nearby support level defined by the days action).
Whether buying on down days or not depends a bit on the trading plan. If the plan is to buy breakouts, then buying would not be taking place on down days. If the plan is to make use of minor pullbacks, then waiting for some kind of confirmation of trend continuation is probably a good idea. This means not trying to pick the lows and accepting that some of the upswing will be "lost" while waiting for a confirmation.
There are an unlimited ways of trading, and some of those who trade on down days may be trading very short term with very tight stops and large positions to allow quick profits on small moves. Without knowing the full trade plan of a trader, it is not possible to determine the validity or reasoning behind a single statement.
Part of trading psychology is to not necessarily ignore what others are saying, as plenty can be learnt by listening, but not to let other styles and methods to interfere with your own strategy. If you have faith in your plan, then it must be followed, even if only so that it's validity can be tested over time, but more importantly only the consistent application of a trading method can lead to consistent returns.
CR
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crowboy1960
Member
Username: crowboy1960
Post Number: 33
Registered: 12-2005Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 09:18 pm: |
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Thanks CR,
Thanks for the advice, it is much appreciated. I am definitely a position trader BTW. I think I have a good trading plan, the trouble is I go off the rails from time to time and every time I do it costs me. Like today, it ALMOST fitted my trading plan but not quite, but all I could think about was it's going to gap up and away it'll go.
Unfortunately I can't rely on acting on the close as, although I'm on holidays now, I'm back at work on Monday and 1) I can only place orders using my brokers (CMC) Java app and 2) I can't access it the Java app at work and as well it is technically wrong for me to trade on my employers time.
I guess the lesson for me is to make sure each trade exactly follows my trading plan and put a limit order for a price I'm happy with. But then there is a problem as CMC won't let me place a buy order above the current price, so as you say in a breakout situation my order will never get filled. Maybe I just have to put an order in and if it doesn't get filled it doesn't get filled.
At least I've learned something today, hopefully after getting smacked by the market enough times I'll learn my lessons (coz every time I do deviate from my trading plan, I do seem to get smacked by the market ).
Thanks for the advice, it is very much appreciated.
Regards,
CB
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captain_chaza
Member
Username: captain_chaza
Post Number: 1659
Registered: 02-2003Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 09:52 pm: |
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Are you saying
You only make a move after 5 Up days?
If you are?
The odds of you succeeding against the Landlubbing Profit takers are very grim
Can you point out to me the success rate of the 5 green candle setup that then go on steadily without a substantial profit taking day?
Whether you jumped on at the top of the day or the bottom of the day
I do feel your day of choice was incorrect and could have been quite dangerous
Some do keep going but most don't
It's just a matter of probabilities
If you find you hesitated for >3 days
Then just leave it alone and learn by it
Don't watch out for your pennies on a wrong day!
We all get it wrong
Some just get it more wrong than others
Hope this helps
"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893
"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897
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crowboy1960
Member
Username: crowboy1960
Post Number: 34
Registered: 12-2005Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 10:26 pm: |
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Hi Cap'n,
Thanks for the response, yes I agree, it was a very dangerous day for me. No I'm not saying I make a move after 5 days, I'm saying I was blinded by the thought of BDG gapping up ( and keeping on going) that I followed my trading plan 95%, when 95% of it said proceed and 5% said don't. But the way I regard every smack from the market is a lesson that costs the amount of money i lost (in this case $55). What I have been succesful in doing is recognising when I have made a mistake and making my losses relatively small, which is a big bonus, otherwise I'd be broke. I guess the main thing is that each time i make a mistake (and there have been a few lately ) I learn a valuable lesson.
Thanks for your advise, Capn, I willingly accept all the advise I can get, as I know it will save me my hard earned money!!
Currently I'm Googling for material on trading Psychology as obviously this is my major problem at the moment.
Thanks,
CB.
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perler59
Member
Username: perler59
Post Number: 798
Registered: 09-2003Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 10:32 pm: |
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CB, if your broker won't allow the type of orders you want to use, get a new broker  I know its obvious, but someone had to say it I think hershy trades with buy-stop orders, so he may be worth asking.
http://www.incrediblecharts.com/userscripts/forums/board-profile.plx?action=view _profile&profile=hershy-users
Buying on down days in an up trend is a valid tactic. Quite often the trades that are the hardest to take, are the best ones.
http://sttc.net.au/~stever
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stevo
Member
Username: stevo
Post Number: 327
Registered: 01-2003Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 11:21 pm: |
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CB
As a position "trader" I take a longer term view. I don't quibble over a few cents or even a few percent. I always set exit points, along with how many and roughly at what price, before I buy. There are no decisions to be made in the heat of the trading day.
Getting very specific: I actually hold BDG at the moment. Weekly average true range on this stock is around 15 cents. Assuming that you want to hold it longer than a week I would be setting the stop outside this range. Shorter term traders would use a different strategy, but if you want to position trade I would suggest a stop that is only 8 cents from the open is far too tight. Even a "typical" moving average stop will give a lot more room that 8 cents. Last week's close was at $1.905, that was only 3 trading days ago! So if you are not a day trader you have to give it a bit of room.
Market depth only tells you the "advertised orders". How many traders are waiting in the wings? If I have a largish quantity I want to get rid of I don't advertise the fact. I sometimes break the trade into smaller parcels to get out. the same goes for the buy. So don't get too excited by market depth, there will often be a lot more orders pending in the wings just waiting for the right opportunity.
With regards to trading psychology I think that the best thing is to have a strategy that you know works and just follow it. I need to know exactly what I am doing and when, no hesitation no questioning. If you are not 100% sure that the strategy works don't trade it; there will be an element of doubt calling you to override you strategy. Tie yourself to the mast and sail past the Sirens. Even better place the trade and then turn the computer off.
stevo
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dug
Member
Username: dug
Post Number: 682
Registered: 07-2005Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 11:35 pm: |
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Hi again crow60,
I check how far others are ahead,in profit.Especially from the 6month perspective.
Example-BDG is up 100% less than 6 months.Volume spikes in October at $1.10/20 haven't sufficiently played out for my figuring.
So it's got away.Have to find something else or wait for a retrace.The recent one around 180 just not good enough so If I choose to wait on BDG may as well use the time to find out about it.Oz Gold Production Cost,JORC reserves,stuff like that.
I know you realise,crowboy that sabre exortations to buy,Buy,Buy NOW are most likely because he already holds BDG.Resist the clamour unless you have reasons solid in your plan to Buy.It's so much more satifying when Clamor rings AFTER you buy than During.
From yesterday's NR4 [da list ]I'm getting keenish on AGC[Agincourt]It's gold costs and grades are only so so but it's chart has Eye Appeal enough to price check it for the next coupla days.
cheers,
jr
Dig for it.
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ingot54
Member
Username: ingot54
Post Number: 1057
Registered: 05-2004Rating: N/A
Votes: 0
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| | Wednesday, January 25, 2006 - 11:58 pm: |
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Stevo
Nice post - good advice.
Having moved to longer-term trades, I appreciate the wisdom of your words.
With your method of setting contingencies, sleep comes much more easily.
Keep Smiling
Trading style :Short Term and CFD's predominantly
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ken
Member
Username: ken
Post Number: 346
Registered: 04-2003Rating:
Votes: 1
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| | Thursday, January 26, 2006 - 01:14 pm: |
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Hello Crowboy,
I concur with stevo particularly. A few points others haven't touched on -
1. How big is your position size? If you are scared of a 4% retreat do you have too large a position? You should only be able to lose max 2% of your capital at the stop loss point, and I use less than this. For example, 10% stop loss means that each position can only be max 20% of your capital, even if it is on CFD's. There are lots of posts throughout the forum on position sizing - it is what keeps you in the game.
2. If your stop loss is at x price you should not worry if the price falls towards it. You only have to be concerned if it is broken, and that concern is that you get out according to your plan. This might be an immediate exit, at the close or at the open the next day, which I have found best through testing.
3. Have you tested a large number of gaps and found that these are profitable trades? If not, don't use it in your system, especially if your system is just a suggestion from the forum. Just because it gaps up on open, doesn't mean it will appear as a gap at the close.
4. The 2.26 price you saw before the open is part of the opening auction. It does not mean that someone wants to pay that, but they are using that to ensure they get in at the open. CFD marketmaker providers don't allow you to participate in this phase of market activity.
5. I would suggest you start on direct shares rather than CFD's - it is harder to make money on CFD's as you are competing against another trader (the marketmaker) and paying interest, as well as the system being skewed against you in many ways. If you are relying on CFD's to be able to buy more positions, don't!!!!! You will go broke for more than you own. Make sure you can make money consistently on shares before attempting leveraged instruments like CFD's.
6. You shouldn't be thinking during the day about what trade to enter. You (we all) get too emotional if deciding during the day except if it is an evaluation to see whether the stock meets pre-defined criteria. Plan your trades before the open and implement if your criteria are met, and only then.
Regards,
Ken
Trade with the trend, not against it.
The trend is the direction of the 22ema line (Elder)
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