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Tuesday, January 31, 2006

TRADING FOMC DAYS

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Jan 31 2006
I played the YM's off of the fed rate decision, it bounced up quickly from shorts covering followed by a massive sell off even into the AH catalyzed by GOOG missing estimates.
I was +$250 before the announcement, and I was short at 108920, I waited threw some heat, all the way up to 10940, and then it started to decline as expected. I should have shorted once it came over the top, but I was feeling the heat so I decided to sell just under 10920 for a small profit, then the stock made a blip for a second off my cover and then it decided to drop another 60 points to the close and then another 20 points into the after hours. I was holding 2 cards at 10920, If I would have held to 10860, that would've been 60 points or $600...Well the stock slowed at the close, and I thought it was oversold, but I was hesistant to buy, but I took the risk, and it didn't happen, it dropped 40 points on me and I lost $200 from not keeping my stop loss. If I started out flat before the buy, I would have sold for the loss sooner, but I made some money, so I didn't feel as bad when I gave it back, so I allowed a larger loss to try to wait out the heat, but it got to much for me, and I sold for the 40pt loss, it turns out it dropped another 20pts afterwards, good thing I finally got a clue to the trend. I knew the trend, but I wanted a pop to sell at a lower loss, but it never happened. As soon as I sold, I shorted and made back another $20. The next day the YM went to 10985,,,,85pts above my 10900,,,,CRAP......
I will put together my analysis of the YM's and master it,,,using day ranges, key events, support/resistance, earnings annoucements, pumps/dumps, trend analysis, economy, market sentiment, oil price, war situation, and trade on the trend.

RULES:

Keep a stop loss, Keep a stop loss, Keep a stop loss.
LET PROFITS RUN!!!
TRADE THE TREND!!!!!!!!!!
Trail the profit when you have it.
Look for trends by 15-20pts move in one direction, normally 1-2hrs after the open.
Only trade where you are most profitable,,,NEVER AT OPEN OR CLOSE unless there is a trend.
TRADE ONLY TRENDS!!!!!!
If your trade isn't in the green in 1 min, you probably screwed up.

Friday, January 20, 2006

trading in pairs

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Trading without a plan will empty your wallet very fast. With a plan, you can make sure your not screwed as fast as if you didn't have one. When day trading fast moving stocks, use LIMIT orders. Put your order on the same side as the primary trend of the stock and the trend of the markets. Use the tick and trin indicator (tick nyse or trin nyse) for advance/declining issues. PUT IN THE STOP LOSS ORDERS AND LIMIT ORDERS IMMEDIATELY! Set up your bracket order defaults for the stock your gonna trade ahead of time. There is too much stuff going on at once to monitor many stocks. Stick with a couple you can make money on and follow them closely. Trade if its got a trend.

Wednesday, January 11, 2006

TRADING STRATEGIES

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Day trading strategies-
Small cap intraday range strategies- Requirements: Stock trades between $1-10. Avg. daily volume 500k+. Intraday price deviation from open must be an avg. of 5%+. The strategy is to know support and resistance zones which keep the trading range intact. You must place your trade on the side of the current trend. You must watch for news during the day. You must study the last sale screen for the previous couple of days to understand how the major players are trading the stock. Look for block trades that are keeping the stock down or driving the stock up. Know how the primary indices are trading. Scan the message boards and get the primary opinion from clearstation, stockta, and stock consultant. Make an estimated price entry, price objective, and a protective stop loss. Calculate the amount of equity you wish to risk and what the commissions will be. Be patient and execute with confidence. Buy into the stock in pieces, not all at once. If your initial guess was right, and your trade is following the trend, buy some more. As you start to reach your price objective, start to sell some of your holdings, and then when you have decided there is a reversal, sell what you have left.

Tuesday, January 10, 2006

TRADING RULES

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Stock Trading Rules-

Only trade when you have an attainable goal and a stock setup with a plan.
Always use a protective stop loss, and never move your stop loss away, only tighten.
The closer you get to your days profit goal, tighten your trailing stop.
If you are wrong about your trade, get out, and don’t re-enter until you’ve re-evaluated why you were wrong.
Never execute a trade without 100% confidence in your stock setup.
Never trade on margin until you know WTF your doing.
Keep a journal of all your trades to review your strengths and weakness'.
Categorize the type of trades you do best in and worst in.
Don’t trade until your system has proved successful through paper trading first.
Keep track of how many hours a day and week you spend studying the market.

THE GAME PLAN

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Long term view of stock-
Stock Name:
Stock symbol:
What market it trades on:
What the company does:
Why would john doe buy into this company:
Why would john doe sell into this company:
Market Cap:
Short ratio this month:
Short ratio last month:
Short ration trend:
General Fundamentals:
P/E:
News:
Pending news:
Primary long term trend:
Intermediate trend:
Short term trend (up/down/sideways):
Long term Average Volume:
Short term Average Volume:
Dow S/P Index primary trend:
Current Price:
Moving Average:
Long term Average trading range:
Short term Average trading range:
Overbought/Oversold:
Long term Support levels:
Short term Resistance levels:
Average price deviation from open:
Average % deviation from open:

Day trading stock setup-
8 day trend:
8 day High/Low:
8 day MA:
8 day Volume trend:
8 day chart trend:
Yesterdays OHLC:
Yesterdays price movement pre-market/market/after hours:
This mornings pre-market price movement:
Real time market depth:
Block orders on up/down ticks:
Message board activity:
Clearstation buy/sell opinion:
News within the last 5 days:
Pending events or news:
Trading style to be used based on analysis:
Reason for Entry:
Initial Stop loss price:
Target price:
Estimated entry point:
Estimated Exit point:
Amount of Equity to risk:
% of total equity being risked:
Estimated commision:

Stock trading results-
Stock Symbol:
Results W/L/draw:
Time/Date trade executed:
Long/Short:
Share quantity:
Share dollar value:
Bought price:
Sold price:
Time/Date of closing position:
Reason for sell/cover:
Commission:
Gross income:
Net income:

Trading is not that complicated

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No matter what the stock, once a bullish trend is initiated at moderate growth, you have a high probability that trend will continue. Don't be afraid to jump on board the next day, because most trends perpetuate. You may want to look for the low the next day and make sure the trend is moving in your direction by making sure there are higher highs or higher lows or even best, both. If the stock climbs too fast in one day, like 15+% for small caps, 8+% for mid caps, and 4+% for large caps, you should keep a tighter stop loss and watch for a slow in volume and resistance areas which could trigger the stock to drop drastically away from you.

Trade highly volatile range plays with small percentages of total capital, or trade less volatile range plays with a great deal of equity on the line and use tight stop losses on both trades.

Use case studies to learn from. For example, bird flu hype and the appearence of NVAX CEO on CNBC made the stock go vertical 30+% in one day.

Follow what happens to the stocks Cramer pumps, what happens after the key event or catalyst, and how long does it take for a dump. Cramer can make a stock move 5-10% AH and the stock moves even more the following day. It must be nice to be Cramer, you can pump any stock you want without getting into fundamentals, just blabbering about how its a hot stock and he instantly gets 5-10% on whatever he taughts.

Read the tape, follow the block trades, look for momentum.

Follow crazy percent gainers for the day and how long they take before they return to pre-event levels.

Edu-Caution

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Trading is like science. There are four keys to being a scientist and discovering something.

1. Make an observation that you find to be of interest.
2. Formulate a hypothesis about that observation.
3. Test your hypothesis.
4. Draw conclusions from your hypothesis, refine it, and repeat the expirement until your hypothesis proves statistically valid and can then be formed into a theory.

Stock examples:

1. stock X has been trading between $35-40 for the last month and the market is bullish.
2. If I buy the stock around $35 and wait it should go up to around $40.
3. You buy the stock at $36 and you wait and it goes to $38.
4. You were right about the hypothesis, and you repeat your experiment 100x and you were right 75% of the time making your hypothesis statistically valid.

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