Friday, February 29, 2008

Traders getting the Sh!T kicked out of them


I suspect TraderFeed is getting high traffic right now as I'm noticing most traders are getting there accounts beaten up from all the chop that's occurred over the last 6 weeks.

Traders facing frustration-

Trader Mike
Dinosaur Trader
Stewie
Retard Trader

In other news DT is taking a break from blogging. I checkout DT's blog everyday to see the performance of the Virtual Office Traders. These last 2 months have been very difficult to trade. After my big loss in January I went through a period of depression as I predicted, caught the nasty flu that was going around and was sick for 3 weeks.

Trading with a smaller account is much harder and it forces you to stick to your stops or else you will blowup quickly. Since the start of the year I've been learning how to code with the goal of being able to backtest and make an automated trading strategy. I've got some new ideas I've been researching involving Pair trading. The focus of my new trading ideas is not to make an ATS based on a candlestick formation or some variation of indicators that tell me when to buy or sell. My trading idea is based on statistical deviation between a pair of stocks/indices/bonds with a focus on scalping and short term holding periods of 2-10 days.

I know many professional traders base there trading decisions by comparing different indices/sectors/stocks. We look for divergences and deviations between stocks that have a high correlation with one another and try to correct any miss-pricing between stocks/indices.

Some traders use a market opening order method in there trading. Premarket these traders scan for stocks/sectors that are gapping up or down and look for accompanying stocks that should be affected by the gapping stock/sectors.

There are many trading strategies out there to choose from. One thing that I think many traders lack is confidence and friends that help them in their trading decisions. Wouldn't it be nice to hear the opinion of another trader before you make a trade in case they see something you don't and warn you of something you don't see? I remember Trading AAPL back in January and I was long when it was tanking hard. I was a deer in the headlights not wanting to take the huge loss that was mounting and Stewie asked me where my stop was and I said something cocky like "$0". At the end of the day I had my worst stock loss ever and had lost $10,000 on my AAPL long by being a dumbass that didn't listen to another trader trying to help me out. If you have someone that is trying to help you out, please listen to them, because it may help you and it can't hurt. Also trade with a plan before you make each trade. The #1 reason I've lost so much in trading is from trading without a plan.

I'm open to sharing ideas, working with other traders, and making new friends. My email- highprobabilitytrading@gmail.com

4 comments:

eddie on 10:22 AM said...

Its very interesting how some traders trade a relationship between indices, common stock, and bonds. Could give an example of something like this, and do you of any books or sites that offer some explanation of techniques. thanks.
By the way, I was play APPL right before mac world, with some calls. Another trader at trading academy online where i was trading, told me to dump my calls. Needless to say he saved me thousands.

ainkurn on 11:58 AM said...

this year has been extremely tough up to this point. like you said, there are lots of traders out there that are having trouble in this market including me. I have had to put myself on Trading Probation for the last two weeks. Like you, I had been trading without a rigid trading plan in place. Stewie has really helped me this past month along with a lot of other traders especially from WallStreak.com.

Being that I trade with my brother, I do have the luxury of letting another trader eye my trades and offer a second opinion. It would be nice for everyone to be able to get confirmation or opinions from other traders out there. Keep working on that trading system and come back strong.

HPT on 9:29 PM said...

Hey Eddie,
An old post related to pair trading of mine is-

http://highprobability.blogspot.com/2006/06/intraday-variation-to-pairs-trading-my.html

also checkout

http://www.sectorspdr.com/correlation/

http://market-topology.com/

http://www.pairtrader.com/index.php

Sloof on 10:17 PM said...

HPT,

I sympathize with your AAPL loss because the exact same thing happened to me. I lost 3k (which was ther remainder of my 5k account) being long in AAPL calls during both Macworld and the earnings report, trading without stops because I was fed up with getting stopped out all the time, and figured I would "eyeball" it.
Going down in flames all the while thiking a big rally was just around the corner. Huge lesson learned-- not sure if I will ever able to trade again as my account is pretty much gone and right now I don't want to put good money after bad.

Marvin (HTGR - Hope To Get Rich)

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