Two of my StockTickr watchlist stocks hit their prices today, and I took a trade in one of them. Further, I held it to the close. I think this may be the first trade I’ve ever held for more than 3 hours. It’s kind of an anticlimax, though, since I could have gotten the same profit by exiting the trade in the first 20 minutes. Even though it didn’t run, the important thing was that it had a chance to run.

The stock is Grant Prideco, Inc. (NYSE: GRP). Here is the 10 minute chart:

The sloppily drawn arrow was my entry. That horizontal line at 45.05 is the R2 pivot point. Starting last week, I’m sticking with pivots on my charts on flat days, and leaving them off when the markets are moving. Since the 45 level was also resistance on the daily/weekly charts, it was an especially good prospect above that level.

The other trade that I could have taken was Apache Corporation (NYSE: APA). It pushed through my 70 price in the opening minutes, and I passed. I don’t like to trade the first 30 minutes. That was a good choice, as you can see, it fell sharply before long.

… However, it did set up again, and I chose to pass again. The pivot point at 70.31 bothered me, and it had acted as resistance early in the day. As it happened, APA did eventually push through that 70.31 level. Oh, well!

I took Akamai Technologies Inc (Nasdaq: AKAM) off my watchlist today, as it’s had a nice run from the time it hit my target last week.

Traffic Boost
My blog got a nice boost of traffic last night, primarily because Trader Mike linked to one of my stories. Thanks, Trader Mike! And, if you saw the blog for the first time yesterday or today, I hope you stick around. I’ve got lots of articles in various stages of completion.

Stocks Mentioned In This Article
Stock	Links
GRP	| |
APA	| |
AKAM	| |

[EDIT: this scan has since evolved, and is now posted weekly to the Stock Market Scans Area ]

This week’s results from my stock screen to help me identify which stocks are worth the most attention. As with last week, here were my criteria (the only thing different this week is that I now take the top two values out, rather than just one):

• Stock recently trading between $10 and $80. Below $80 I can buy lots of shares. Below $10 tends to get dangerous, in my opinion, if they also meet the intraday range criteria that I’ll get to in a second.
• Stock typically trading at least a million shares a day over the last 10 days. I define “typically” as the average of the volumes with the two highest values taken out. This keeps a short spike from making a stock look too good.
• Stock typically trading across at least $1 intraday over the last 10 days. That is, the average of (high - low), with the 2 largest values taken out. As a daytrader, I don’t care about the ATR or the close-to-close range, since by definition I can’t capture overnight gaps. This way, I find stocks that are moving during the day.

This yields about 250 stocks across NYSE and Nasdaq, so I take that output, and retain the top 50 in terms of their daily range. That is the list below. I plan to post an updated list every week. If you think different or more criteria would be better, just say so and I may make adjustments. The only goal is to find stocks that are good for daytrading–beyond that anything goes.

If you are interested, it’s written in haskell and runs on daily data from EODData.com.

I’ve looked at a few free web-based stock screens, and I couldn’t find any that let me filter on criteria like these. Maybe I just never found the right one, but most of them seem to like to filter on P/E or RSI or 3-Month Volume. I just want liquid stocks that move intraday!

This Week’s List

“Ok, you wanna go up? Fine! Let’s go up!” It was December 29th, 2005, and I covered a losing short on Energy Conversion Devices, Inc. (Nasdaq: ENER) for a loss of $166. I had other losing trades in motion on Alkermes, Inc. (Nasdaq: ALKS) and Under Armour Inc. (Nasdaq: UARM), and the day was running out of trading hours. I needed to recover, and fast.

This is the second installment of the Evolution of a Trader series of articles. It’s a series about important learning experiences I had while developing as a trader. I spent a lot of money on these lessons… I hope you don’t have to! If you are new to the series, you might want to check out the introduction article, and the first installment.

Trading Loss Recovery Tactics

Continuing with the story from the first paragraph, I didn’t want to finish the day in the red. ENER had turned up as soon as I had gotten in short. It was especially hard to watch, because I had already pinned my hopes of making up for my other losses on this ENER trade. It wasn’t going to work! So, I reversed my position and took a $166 loss in the process. “Fine, let it go up,” I thought. “At least now it’s going in my direction.” Not only did I reverse the position, but I bought 5 times as many shares as I had sold in the short position. I should hardly need to tell you that it promptly started falling. I lost an additional $669 on the long trade.

It’s natural to want to end every day in the green, but like many beginning traders, I had all the wrong goals, and took all the wrong actions. That ENER fiasco was just one example, and unfortunately there are many in my early career. Here are some things I’ve done in the name of loss recovery, at one point or another:

• I held on to a winning trade too long because it had not yet made enough money to cover an earlier loss. “C’mon… Just a little more… I have $500 losses to make up for…” This line of thinking creates an irrational tie between the performance of one trade and the performance of another. It causes you to ignore your trading plan, and can not only reduce profits, but even turn winners into losers!
• I jumped out of a winning trade too early because it had made enough money to cover my earlier loss. “I can’t risk going red again for the day.” This is a variaton on the above irrational thinking. If the trade is still good, don’t alter your trading plan.
• I overtraded to make up losses by the end of the trading day. “This isn’t the best setup, but it’s almost 3pm, so…” If you get fixated on getting back into the green by 4pm, desperation can make bad setups seem good.
• I traded too large a size so that a trade’s likely reward would cover my losses. “Let’s see… I need to make $500, and I can maybe get 20 cents… so I’ll buy 2500 shares.” That’s ignoring the proportionally larger risk, of course. I don’t have to tell you how this turns out, do I? I did this in the ENER example above.
• I traded for revenge. “Revenge Trading” is when you trade the same stock that you lost money on, but you are so focused on “beating” the stock, that you lose some or all of your trading discipline. The hasty long/short reversal from the example is a kind of revenge trading.
• I associated new trades in my mind with the hope of making up my losses. From the start, this puts emotional ties on the trade, and it exacerbates all the other items on this list. Any book will tell you that “hope” is a four letter word in the markets, but I bet every trader in existence has fallen prey to this illness at some point in their development.

I’m sure a lot of aspiring or beginning traders will read through this list and laugh. Of course they would never do those things. When you read them in a list, they do seem like stupid thoughts to have at all, much less act upon. But, when you are down thousands of dollars, and you have bills to pay, and you know that so-and-so is going to ask you how the day went in a couple hours, and they obviously already think you are an idiot for trading stocks in the first place, and you’d really like to impress them… well, somehow your brain manages to blind itself to anything but the possible upside of plans like the ones above. If not, you are luckier than I was! On the other hand, if you do find yourself having thoughts like these, I hope they’ll seem familiar from this article, and you can avoid my mistakes.

The True Nature of Recovery

Eventually, I had a revelation. “Recovery” is not an action that you take. It’s not a course of action you can plan. It doesn’t even have anything to do with your account balance, or whether the markets are open. Recovery is a state of mind.

Specifically, it’s the state of mind you were in before the loss. Think about it… If you have a positive expectancy (and a reasonable win rate), you will make back more money than you lost before long. At least, the odds are overwhelmingly on your side. And you don’t even have to do anything special. The only part of the bargain you have to hold up, is you have to trade the way you did when you measured that positive expectancy. When you focus on the loss, or attempt to take an action that you think of as “recovery,” you are making adjustments that put you in a state with unknown expectancy. The type of changes a beginning trader is likely to make will almost certainly lower his or her expectancy, if not make it negative. And off they go down the spiral of further losses and more urgent recovery “plans” and “attempts.”

In Jack Schwager’s The New Market Wizards: Conversations with America’s Top Traders, Linda Bradford Raschke says “It never bothered me to lose, because I always knew that I would make it right back.” If you measure your performance, and you have a reasonable system with a positive expectancy, you could make the same statement.

So, in a very zen way, the moment you stop trying to recover is the moment you will succeed. I can now say I’ve recovered from my latest loss without having made back a dime yet. Sometimes I need to take a walk. Sometimes I need to take the rest of the day off. I don’t trade again until I’m mentally back to where I was, pre-loss. Over time, it has gotten much easier to get there.

An Aside: Mental Discipline

A lot of the pitfalls that Type 1 and early Type 2 traders fall into really boil down to a lack of mental discipline. The thoughts I listed above may lead to counterproductive trading behavior, but they are all rooted in perfectly natural human emotions and dispositions. For me, they key has been to stay aware of my thoughts. That way, when I have counterproductive thoughts, I can recognize them for what they are and dismiss them. They still pop into my head today when I’m trading in the red. For instance, during my trade on United States Steel Corp. (NYSE: X) this week, I found myself watching the dollars of profit, waiting for it to surpass my earlier loss on CSX Corporation (NYSE: CSX). I quickly noticed and forced my attention back to the quality of the price action. Problem averted.

Reading trader blogs, I’ve noticed that several of us are into meditation, and I don’t think that’s a coincidence. A lot of people think meditation is for relaxation or spirituality, but first and foremost it’s about mental discipline. At the beginning, it’s actually really hard work! Being able to observe your own thought stream passively, and stay entirely focused on one thing for minutes on end, are excellent skills for any trader. I recommend that all traders try it.

Summary

That number on your trading platform screen isn’t labelled “Profit/Loss/Drawdown/Recovery,” is it? Of course not. Actions you take only result in profit or loss, plain and simple. Everything else is really just your mental picture of your equity’s health. If you let that picture alter your trading decisions, you are entering a zone with unknown expectancy, and will probably suffer for it.

Stocks Mentioned In This Article
Stock	Links
ENER	| |
ALKS	| |
UARM	| |
X	| |
CSX	| |

A really light month, trading-wise. First and foremost, recall that I was ill for the first two weeks of July. So, this was more-or-less a two week month for me. And, I just have not seen many trades I wanted to take over the last two weeks. As I mentioned in my weekly review post, I will be doing some serious chart review this weekend to see if the trades aren’t there, or if I’m just not seeing them for some reason.

On the other hand, 6 of my 7 trades were winners, so it may really be that I’d rather focus entirely on getting more profits out of fewer trades. I mean, at 1% R, it only takes 8.4 R a month to have a 100% return for the year, right? I am close to that with my lowly 7 trades.

Here are the stats for July:

I’m also not happy that my biggest winner was only 2 R this month. I’ve supposedly been working on not leaving money on the table, but I haven’t seen any results from that effort, yet.

Here is the R P/L chart (click to enlarge):

My records show three trades from early July that didn’t make it into StockTickr, as I didn’t have StockTickr quite as embedded into my workflow as I do now. Next month’s report will be completely inclusive.

I’ve started making these posts because I enjoy the performance reports I see at ugly’s blog so much. I wish all active traders would share their performance, and their thoughts on their performance. It helps traders who trade in isolation (like me!) to understand what the climate is like. For instance, is everyone else trading 100 times a day, or has everyone been trading lighter lately? That helps me understand my recent undertrading in context.

Wow, another really really slow week for me! Only 3 trades, just like last week. I am going to do some serious analysis this weekend to see if it’s me or the markets. On the other hand, the trades I do make tend to be winners, so I may come to the conclusion that my trade frequency is just fine. Either way, I’m still also focused on getting more profit out of my winners than I currently get. Here are this week’s stats:

Dow up 116 as I write this. As you can imagine, not much on my watchlist is getting closer to my entry points right now. Maybe this is just the “up phase” of the day, and this afternoon will be more exciting.

Whether I end up making trades today or not, I will post my weekly summary later tonight, as well as my review of July. I am going to consider July over today, because I’d like to do these reviews at end-of-week.

On Summary Chart Distortion

Akami Technologies, Inc (Nasdaq: AKAM) did press through my 37.40 target, briefly running up to 37.73 before turning around. I didn’t take the trade, though, because there wasn’t a lot of volume behind the move. I wanted to see it bounce back off 37.40 for confirmation. Instead, it fell right through and hasn’t looked back up.

But, while that’s disappointing, the silver lining is that it makes a good example of how daily and weekly charts can be misleading. Lets say the price never recovers today. The weekly charts will still show a new 52 week high happening this week, even though it was just a nothing fakeout move. Do you want your trendlines to be skewed by two minutes of anomalous price action? I don’t! Here’s that weekly chart… see how the three recent peaks seem to be going up?

Some people ignore the wicks on the candles when drawing trendlines and support/resistance lines. In my opinion, that’s just as bad, if not worse. Consider that this weekly chart would look exactly the same if the stock had stayed up at 37.73 for most of the volume Monday through Thursday, and then dropped down to the weekly close in the final minutes of trading today. There’s obviously a big difference between that scenario and the one that actually transpired. So, both blindly observing and blindly rejecting chart extremes would appear to be a mistake.

The only way to tell if chart extremes are significant is to drill down for more detail on those areas of the charts. In this case, going to the daily charts would reveal that it only broke out on Friday.

Then, going to the intraday chart would show the move only lasted a couple minutes on low volume. It’s more effort to do this , but it pays off. Here’s the 5 minute chart. See how it can’t even stay above 37.50 during a single 5 minute candle? Yet, I’ll point out again, it had the same effect on the weekly charts as a sustained four day move would:

This kind of distortion also happens intraday, if you think about it (and, frankly, even if you don’t think about it!). Say you are looking at a 15-minute chart and see a hammer candle. Did it hop up from its lows at the last minute on no volume, or did it grind its way up from the low over the last 10 minutes on consistent volume? The 1 or 5 minute charts will help you discern which case is which.

Here’s the vaguely relevant tinfoil hat portion of the post… All I know is, when I’m watching charts, I see tiny bursts of activity just before the 15 and 30 minute candles close sometimes. When I’m feeling paranoid, that makes me wonder if some of the MMs and Specialists play games with the prices to manipulate how the charts look. That way, people that pull up 15, 30, or 60 minute charts will think they see some bullish pattern that was actually a last-second fake-out move. I suppose a more rational explanation would be that my chart service is not 100% in synch with every chart around the world, and people making decisions on their thirty minute boundary looks like activity just ahead of my thirty minute boundary.

Stocks Mentioned In This Article
Stock	Links
AKAM	| |

Early on, it looked like I might break through my undertrading barrier today. Several of my watchlist items were sending me alerts. But, as it turned out, most were not tradeable. Let’s see ‘em…

First, National Oilwell Varco Inc. (NYSE: NOV) gapped through my target of 64 on the open. If it were a small gap I’d consider my trading options, but it had gapped all the way to open at 65.50, and approached 68 within the first 20 minutes of trading. So, so much for NOV… I’m noting now that it closed at 64.20, so if it bounces off 64 tomorrow I may get in. Then again, it may be trying to close that gap…

Next, Ceradyne Inc. (Nasdaq: CRDN) tapped the highchartpatterns target of 50, but didn’t trade in a way that triggered the trade. It made a couple half-hearted tries to re-reach 50, but gave up by noon. So, again, close, but no cigar.

Next, Garmin Ltd. (Nasdaq: GRMN) fell through highchartpatterns target of 95, and triggered the trade. However, it fell so fast my order did not fill, and I’m convinced I would have been screwed on a market order in that action. So, I had to sit this one out. That’s a ten-minute candle, where it falls from 95.65 to 92.07 and climbs back to 94.12. That’s volatility!

Seeing that Akami Technologies, Inc. (Nasdaq: AKAM) gapping up, I changed my view of it from short to long, chosing an entry point above 37.40 based on the weekly charts. When I was out at lunch, I got the email that said it traded at my price. Man, I could not get a break! But, I checked with my blackberry a few minutes later, and saw that it had already fallen to 36.20 again. So there wasn’t even a trade to miss! What a frustrating day! But, I’ll note that it closed reasonably strong at 36.83, so any kind of healthy follow-through tomorrow has a chance to get me into the trade.

So, after I got back home from lunch I made one trade, in United States Steel Corporation (NYSE: X). I got 1.5R out of it. You can see my sloppily scratched blue lines marking my entry and exit.

Unlike yesterday’s 1R loss scenario, I tried to be very aware of whether I felt a need to take profits, or if I feld that the trade was turning against me. You can see that the exit candle closed near its high (I think these are called Doji’s when they close at their open prices, but I don’t believe in the named candle patterns intraday). So, when it was steadily climbing, I decided the stock could reverse. The markets where positive/negative/positive see-sawing in the afternoon. Eventually, you can see that the stock made lower lows by the close, but I would have stopped myself out at breakeven before that, in the candle after my actual exit. So, I am pleased with my choice.

I hope everyone had a good trading day!

On Pivots
After seeing a note yesterday on Trader-X’s blog, I was reminded that I have been meaning to see what pivot points can do in sideways markets. I had read about a pivot strategy for flat markets in a book a few months ago. So, last night and during today’s session, I kept the standard pivot points overlayed on my charts. At first glance, it does appear to be uncanny the way they line up with the actual price action. I know the formulas for the pivot levels, and I can’t think of any reason why they hold so well. One explanation, obviously, is that enough traders use those pivots to make them a self-fulfilling prophecy. Another explanation, is that my eyes are drawn to spots where the prices and the lines match, and I unconsciously ignore all the places where there is no correlation whatsoever. More investigation is needed.

Stocks Mentioned In This Article
Stock	Links
NOV	| |
CRDN	| |
GRMN	| |
AKAM	| |
X	| |

If you look up at the bar under the “Move the Markets” title, you’ll see a new button beside the “home” button. It will take you to an annotated list of blogs I read. I read a lot more than this list, but I want to keep the list down to the ones I enjoy the most.  I’m a big fan of books and journals with annotated bibliographies.   So, rather than a bare list, I tried to give a couple sentences about why I enjoy the blog in question. Hopefully it will help you decide whether it’s worth a look.

If you are too lazy to look upward at the links bar, here is the link to the page..

[EDIT: Please go to my software page for the newest version of this plugin]

I wrote my first WordPress Plugin today! It adds a table to the bottom of every post that talks about a stock, with links to their Yahoo, Google, and StockTickr pages. So, for instance, since this post mentions International Business Machines (NYSE: IBM), you should see a table at the bottom with IBM in it. It keys off that parenthetical expression.

Other updates are on the left sidebar… I put a recent comments section, and my StockTickr feed. Also, I think the site renders decently on all common browsers, now. I know there are a few cosmetic glitches if the window is too small, but it’s completely readable now as far as I know. Please let me know if you are having any problems.

If you want to use the plugin, you can download it from this location. Just put it in your wp-content/plugins folder, and activate the plugin. Whenever you mention a stock like so: (Exchange: SYMBOL) in your post for NYSE or Nasdaq, it knows to create links. If you don’t like that format for your posts… you can always put an html comment in the post like <!- - (NYSE: CSX) (Nasdaq: SUNW) - ->, so that part won’t be visible, but the table will still get generated.

Stocks Mentioned In This Article
Stock	Links
IBM	| |
CSX	| |
SUNW	| |

I guess 100% win rate is too much to ask for!

This morning both CSX Corp (NYSE: CSX) and Nutrisystem Inc (Nasdaq: NTRI) hit my price targets from the weekly charts. I didn’t take the NTRI trade, because of how quick and wide the drop was… it fell from 53.60ish to 51.01 in less than 2 minutes, and my price target was 52.56. Not for me!

CSX, on the other hand, had a much more graceful, controlled-looking drop, and hit my 60.10 target from the weekly charts around 10am EST. This looked much better to me. Here’s the 15 minute chart, and I must say it looks less appealing to me now than it did then:

… but you have to imagine it when that third candle was not yet closed! When it was red all the way to 59.70, the picture looked more rosy.

Now we get to the funny part of the story. (Not ha ha funny, but still… ) Normally, I would be extremely pleased with a 60.10 to 59.70 drop, and taken my profits. But, if you’ve been reading the blog, you know that I’ve been lamenting the amount of profit I leave on the table this way. So, I’ve been trying to be more of a “hold-to-the-close” kinda guy. So, when I got that nagging feeling that I should get out, this time I stopped myself. I thought, “You are going to miss out on another point of profit. You’ll be kicking yourself, yet again. Stay in the trade, and make your blog readers proud!” Here’s a free tip: Whenever you are thinking about a trade in terms of who will be proud, just get out!

You can’t see it on the 15 minute chart, but it got back up all the way to 59.90, and then fell back to 59.80 again. I thought that was a good sign. A 20-cent pullback and now we’re heading back south. Which is why I actually sold some more of it. WHAT? That’s right. Part of a trade management strategy I’m trying out is to increase my position after the first pullback of a winning trade. There’s more to it than that, but I’ll write that up sometime this weekend. Anyway, was that a bright thing to do? One trade is not enough to tell, really. It certainly didn’t work out in this case!

The third candle then closed back up at 59.94, which doesn’t quite make a hammer, really, but it’s still not very bearish looking. It was at that point that I got a second nagging feeling I should get out. This is when that internal argument starts. I don’t know if all traders have these, but I always have. Today, it goes something like this:

Before I had too much time to sort that out, it pushed well above 60.10, and stopped me out. Luckily, even Stupid Me always honors the stop. Full 1R loss, though, when I got nervous about the trade in time to break even. That doesn’t feel right. But, I’m torn…

You see, the whole premise I’m operating under this week is that my gut takes me out of trades too soon, too often. In this case, staying in the trade meant a loss. In lots of trades over the last year, staying in after I wanted out would have meant windfall gains. I think I need to work harder on differentiating when I have an impulse to protect gains (which I should suppress), and when I have an impulse that says the trade is turning bad (which I should honor).

If CSX had turned around at 60.09 and gone on to make new lows, would I be writing this exact post with the “Smart” and “Stupid” labels swapped? Hmmm…

No, definitely not. It would have been an early victory under the trade management idea I’m trying, which would have felt good. But, some of the thoughts I was having were counterproductive, no matter what the outcome turned out to be. First and foremost, thinking about how much more profit I had a few seconds ago is never a good idea. I don’t know if I will ever completely stop those thoughts, but over time I learn to ignore them faster. Like, on losing trades, I’m ashamed to say I still occasionally have an urge to double down. I’ve learned my lesson on that, though, and just immediately put it back out of my mind. It amazes me that I still have that thought, though. Human nature, I guess.

Even though I’m torn on this case, I’m going to go ahead and categorize this as “Mistake” in the blog. That way, I’ll be sure to re-read this later when I’ll no doubt know more than I do now. It’s a shame my winning streak is over, but no winning streak lasts forever. A week and a half is actually a pretty nice run. It would be nice if another opportunity popped up this afternoon that could leave me green for the day, but losses are part of trading. I can accept it either way.

Stocks Mentioned In This Article
Stock	Links
CSX	| |
NTRI	| |

I put a bunch of new entries in my stocktickr watchlist this morning, all off scans of weekly charts. So, it may be a few days before they become viable, if they do. Either late tonight or tomorrow morning I’ll update that list, and add anything I can see from the daily charts.

A Matter of Scale
Does this ever happen to you? I’m clicking on Trade-Ideas alerts, to pull up the corresponding charts, and I spot this gorgeous looking drop. Just a nice smooth trend with gentle pullbacks going down all day. But before I go shopping for private islands, I glance over at the prices. That’s when I realize that, even though the candles moved from the top of my screen to the bottom of my screen, the drop only covered 15 cents, total. My trading platform “helpfully” adjusted the scale to use the space I had given it.

It can be mentally tricky, because if I asked for GOOG next, its daily range would fill the same space. Since charts look realistic at every scale, this kind of thing can easily fool you. To some degree, you can accomodate a smaller range by buying more shares, but there are limits to that.

At least, the way I trade, I can’t get into a stock without looking at the day’s trading range. It’s part of how I calculate my stop. But I have no such safeguards for volume. And, today I was fooled by… wait for it… volume! It’s my fault, of course. I can’t blame my stock charts for picking a scale that fills the space given to them. But, when I saw this on Quality Systems Inc. (Nasdaq: QSII):

… I thought it looked like a pretty good entry. It had fallen on relatively high volume, then had a little bounce, and was making new lows again. So I entered a short order. Then I noticed that my order was taking a long time to fill. Then, I saw the spread getting wider. Then, I noticed that the tallest volume line in the above chart only represented 6000 shares! Eek! Suddenly that spike looked an awful lot like the volume chart was giving me the finger. I cancelled my order and covered the shares that did fill for break-even.

Now, before you write me off as a complete “shoot-first, ask questions later” idiot, I did check the avg volume on yahoo finance last night. It says 436k. Not as high as I like, but not bad. But, if you look at the historical data, you can see that the number’s only that high because two days in June traded millions of shares. It turns out that, some days, this stock doesn’t even trade 100k! That’s why, for my top 50 list, I remove the highest volume day from my average, so anomalies like that can’t throw the average too far off.

“Hey,” you might be saying, “I thought you were only going to watch the million+ volume stocks on your top 50 list this week.” That’s true, but I’m also watching stocks on highchartpatterns‘ newsletter. I should note that I was trading their stock, but not their system. I picked a different entry than they did, since my entry looked good to me at first glance. They didn’t take the trade (the price never got low enough for them), and they are always preaching about volume in their newsletters. Good for them, and shame on me! Anyway, I’m glad I aborted my entry. The stock turned and went back up for most of the rest of the day.

Stocks Mentioned In This Article
Stock	Links
QSII	| |

I ended up spending a lot of yesterday and today tweaking the website design, though IE6 users no doubt have noticed that I still haven’t been able to make my layout fully compatible with their browser. I’ll continue working on it tonight.

However, one nice thing about today. As I predicted, a strong market allowed Anheuser-Busch Companies Inc. (NYSE: BUD) to push through 47. Unfortunately, it ran out of steam shortly afterwards, and only made it to 47.20 by the close. Still, I’ll take 20 cents of profit on a long position any day in these crazy markets! That was my only trade today.

Hopefully I can put this IE6 issue behind me by tomorrow, and I can focus on taking more trades (although I’m kinda enjoying this 100% win rate thing… maybe I can make it two weeks?).

Stocks Mentioned In This Article
Stock	Links
BUD	| |

So, this is the first step in the new site design. I think it looks attractive. It’s a modified version of a theme I found out on the net. It would be embarrassing to tell you how long I played with the color scheme, before eventually going with the one from the original theme! This morning I’ve discovered that IE6 doesn’t display it quite right if your browser window is too narrow. Browser compatibility issues are really a pain in the neck! I’ll work on that tonight, and sorry if it inconveniences you today.

Well, the markets got off to a strong start this week. Dow still up 139 as I write this. Just about everyone I know is waiting for it to fall back apart…

Edit: I really like the 3 column setup, with resizing content area. I think it’s the “right” thing to do. So, when I noticed IE6 didn’t like my first attempt, I spent a lot of today completely redoing the css for the columns. I used a site I found that claims its code works all the way back to netscape 4. It wasn’t easy to switch it all over, because of the way it wants the divs to overlap. However, now when I go back and try it on IE6 it’s still broken! That’s not fair!

Not a lot of trades made this week. Too few, if you ask me. Since I was ill the first two weeks of July, there really haven’t been all that many trades this month either. But, I think I am hitting my stride on the new workflow I’m trying out (I discussed that here, if you missed it.). I am going to start expanding the number of stocks I run my support/resistance scan on, to hopefully generate more trade opportunities.

Stats for this week:

I will try to get into the habit of posting these every week, and every month I’ll post a P/L chart. I don’t think a P/L chart would be all that interesting each week, but if you’d like to see one I can post it weekly, as well. All the data and charts come from a stocktickr report, so it doesn’t take any time to post, really.

In addition to the Evolution of a Trader series, I’m going to start another series of posts, where I examine a technical indicator in detail in each post. I’ll explain how it’s computed, how traders use it, and what the values are thought to indicate. When it’s an indicator I use, I’ll give examples of how I use it. Of course that is only one perspective. If you use an indicator in a completely different fashion than I do, please say so!

I’ve wanted to put aside the time to do this series for a while, for two reasons. One, I think a lot of traders (especially Type 1 traders, but many experienced traders as well) put indicators on their charts and use them without any deep understanding of what they mean. They know that value X supposedly means “oversold,” but do they know why? Do they know if it realistically means oversold on tick charts just as well as weekly charts? Do they even know what “oversold” means? If they read this series, they will. Second, when I was putting together the framework for my backtesting software, I had to get to know some indicators well enough to write the code tha computes them. I found that this increased my understanding of them dramatically, and writing this series will give me an excuse to spend more time thinking about them in depth. So, I think we will all benefit.

I’ll be starting with Moving Averages, RSI, and MACD, as these were the first ones I learned about as a trader. [EDIT 2007-01-22: I didn't end up following this plan!] I used (and mis-used!) these exclusively for probably a year before branching out into more exotic indicators. Once I get through those basics, I want to discuss why technical indicators may be totally useless to you, and why, on the other hand, they may be indispensible to you. Sound intriguing? I’m just glad I’ve got a couple weeks to figure out what I meant by that! Just kidding…

Maybe there are indicators you are curious about, and you are now thinking to yourself, “gosh, it would be nice if Richard would do the legwork of researching and summarizing it for me.” Just ask! I’ll add it to the list.

References

Can’t wait for me to get around to writing about an indicator? Here are two sites that I think are nice references:

• tadoc.org Technical Analysis Documentation
• FM Labs Indicator Reference