This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

When I was switching anti-virus programs this weekend, my computer was infected. I guess it was already there, and it didn’t show up until I removed the first program. I’ve been contemplating making the jump to MAC for some time, but one of the obstacles was finding a charting package. I did find trend soft. I open to suggestions for a reliable, and hopefully cost effective alternative.

It may take a few days before I have everything up and running. I will post in the VO when I’m up to speed.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

If a barely legal teen dressed in a Catholic School uniform performing a striptease, offends you, then don’t visit MtM: Rated R. Out of respect for the other contributors at MtM, I decided to post it somewhere else.

Its my first post, and I really don’t know how often I will update the blog. It will host a similar collection to what I had at what was formerly known as Tail of the Tape. I post what I like, and that happens to be what appears (I stress appears) to be amateurs, and not professionals. It won’t be near as graphic as Vicotoria’s box, nor have the glossy pics featured by the Trading Goddess.

I may be infringing on the copyright of Move the Markets, so that issue may have to be addressed as well.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

Man, I am fried. Glad it’s the weekend.

After making the video, I remembered why I didn’t get into the ES move right after my stop-out. I actually *did* try, but I tried to get in at the bid with a limit order. And, it ran away from me without filling. I should have just gotten in at the ask like I normally would, but I guess I wanted a good entry price after the stop-out. That’ll teach me! Had I gotten filled, I would have had an up day in ES, so it’s really not as bad a day as I remember it, I guess. I’m just tired.

Watch this post's video on Youtube

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

-3.6R today. 7 trades, 7 losses. It was a low volume choppy day, and I pushed for trades instead of trading good setups that I saw (because I didn’t see any). I’m not practicing what I’m supposed to be practicing anymore, I’m just starting to get back into trading as usual. I need to get back to focusing on my plan, and working the foundation first. The funny thing is that I’m not in despair over these results. I’m handling it quite well, actually. I think that is a victory for my new mindset–being okay to lose, deep down. Not racing anyone else or even myself. More introspection to come shortly on my Seven Step Plan page.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This article goes way beyond the normal positive thinking bull****!

Btw, for anyone interested in a low cost alternative to get in better shape, check out kettlebells. I’ve been using them for a couple of months now, and its pretty sweet - burns tons of calories, builds your arms, strengthens your core, and have even noticed that I don’t get winded as easy if I need to make a mad dash for the window! :-)

Mike Mahler writes an interesting newsletter that goes beyond your workout routine.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

I linked yesterday to a chat transcript that outlined a couple of easy trades. Yesterday, oil rallied in the early afternoon. This morning it gapped up, and completed a 5 wave rally. It formed a double top, and broke a steep trendline. I went short.

The dotted and dashed lines are areas that I thought might prove to offer support. I marked on the chart where I entered, and moved my stop. I was hoping it would fill the gap, but the outside bar (green) at the lows shook me out. That’s it for me today. It will be interesting to see if that was actually where it reversed, or if it trades lower.

Update: here is the chart from the close of the session. Obviously oil continued to fall, so that was a missed opportunity. The same pattern appeared again at the end of the day. The only variation from the 3 humps pattern is the double top. That adds another element to confirm the pattern as well.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

After my experience with HOKU this morning, I thought a lot about pre-market trading. Spreads are wider and liquidity is thinner. You have to trade limit orders. Why trade pre-market? Because it can be great if you can get in ahead of the general public on something that runs wild at the open. Here’s some thoughts I had:

Before the open, some traders have access to trade things that are moving before the “general public” has a chance to bid for stock. Joe Six-Pack might give a buy market order overnight in AAPL after he reads some news, or sees an impressive run the prior day, or his newsletter says to buy, or whatever. His order waits until the open. If there’s just Joey-6, nothing much happens–order filled. However, if Joe and his other thousand buddies all decide the same thing, there will be a big backlog of buy orders, all to be filled at market. There may be some sellers on the other side that decide Steve Jobs is the devil. They probably won’t be exactly the same amount, share for share. What now?

If there is a specialist involved, they will have to decide on an opening price that best balances the supply and demand. But who wants that? There’s more transaction money to be made in wobbly prices. They will “try” to get it right, but most likely they will under- or over-price the open. Even if they do honestly try to balance the orders, the likelihood that they will get it exactly right to satiate all buyers and sellers is slim. So we expect some imbalance. Even if it somehow gets all matched up, the open brings a flood of new market orders from brokerages and other traders that didn’t have their orders in the market already. This will lead to price movement one way or the other at the open. Supply and demand dynamics change because the crowd has changed. And there’s no way good way to predict which way it will go–at least that I know of. Educate me if I’m ignorant!

If there’s no specialist involved, but just electronic market makers and other ECN participants, then my thought experiment is different. There’s no order backlog. Pre-market and post-open trading differs only in terms of operating hours of most brokerages and market participants. Fewer traders in pre-market means lower liquidity and wider spreads. There’s no specialist to guide prices, just the pre-market “smart money” traders (and me). These few participants wage their battle of supply and demand, with the fallout being price ticks. At the open, the same flood of market orders hits as above, and a new crowd of people joins the scene, altering the supply and demand dynamic, as well as the liquidity and spreads. They bring their own buying and selling pressure to the mix, which could be aligned with the pre-market traders, or it could not. Again, no edge that I know of.

Because you don’t know what is going to happen at the open in either case, specialist or not, I believe it is foolish to enter just prior to the market open as I did on HOKU. The pre-market supply/demand battle has already played out, and the new reinforcements for both sides are about to arrive on the scene. By taking your position before the open, you’re essentially walking out into the open in the middle of the battlefield with your bayonet, ready to defend your position, while the tank divisions are about to come over both hills. You’re probably gonna get blasted.

When would you want to trade pre-market? I can think of a few situations. One, where an overnight trade moved against you (or big time in your favor) and you want to get out at the price quoted, before the market opens and you could get massive slippage. The other is if there is an observed supply/demand imbalance early in the pre-market session, whether caused by overnight news, trader activity, or whatever. Look at my chart on my CBAK trade from 9/26/07:

At the start of pre-market trading, there was a gap, followed by an “OR” breakout. If you were watching then, you could have bought at about 8:45 ET and gotten a jump on the situation. There was a big cushion (+2R profit using the OR low as the stop) by the time the open came, and demand had not let up yet, so you could afford to wait and see what the open brought. The big buffer let you dig a foxhole out of the way of the approaching tank divisions, as it were, and it already looked like your side was going to win. Much better position to be in. Then you sell into the opening pop, after the momentum slows and bank coin. (+6R for this trade by my eyeball). Either way, there’s no edge to getting in just before the open. That’s just dumb to me.

Get in at the front of the pre-market session, or wait until after the open. Don’t be grease for the treads of other trader’s tanks. Comment if you agree, disagree, have supporting or contradicting ideas!

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

I couldn’t hold on as long as I would have liked, but I made a few bucks. Yesterday, I stuck to my plan, and took two large losses playing the harami setup. It made me think about the reward versus the risk I was taking.

Last night I started searching for different articles on trading breakouts. My reasoning is that if I’m going to take such large risks (.30 to .40 on each oil contract), then I need to have the opportunity for larger gains - thus trade breakouts. However, in the past, I haven’t faired so well.

Here is the link of the chat transcript that I found. Anyway, I took one trade. While I was waiting for it to setup, I surfed the net. Its easily recognizable, and only time will tell how profitable it is.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

My results today were not as good as yesterday. The most important thing is “Did I trade well”? For the most part, I did. My style this morning did not match market conditions, but the trades were technically valid, even though they lost. I chalk it up to lack of experience rather than mistakes.

As I talked about in the comment on Zoomie’s post, I planned to rotate through several styles today that I am familiar with: Momentum breakouts at the open, Gappers at mid-morning, and then managing the open trades and watching for StreetSmack shorts for the afternoon. I entered HOKU a few minutes before the open, and it promptly ran to my stop after the open. I should have waited until after the open, because it never breached the pre-market high. Yesterday in CBAK I pounced on the open because the price started to bolt above the pre-market values. I got a bit greedy in HOKU by trying to get ahead of the market, I think, and paid -1R for it. I have some thoughts about this that I will relate in another post. Bottom line: no more pre-market momentum trades for me, at least not just minutes before the open.

Well, I tried to buy momentum breakouts twice more, in CDS and SCON, and they also ran to my stops. Choppy low volume day, and there was no more buying pressure this morning for these already extended runners. So those trades put me down to a total loss of -3.5R. If the day had been right, these would have made money, and I used sensible entries and stops. It just wasn’t a day to buy momo breakouts, at least not on the names I was watching make new highs.

Next, I looked for gappers at about 10:30 ET. Saw MU break the OR high after a strong green candle, so I went long. MU went sideways for the rest of the day, and I scratched out at breakeven:

Last trade was supposed to be a Jamie style trade in JRJC, but I missed the break of a base by 5 seconds while entering my order. I didn’t want to chase, but then I did when we broke the OR high, retested and got a new buying wave. It was the right thing to do after my failed breakouts this morning, even though it would have made me more money in this instance. Just after entry, I had a lunch appointment I had to go to, so I left the trade on with my stop in place, thinking it would take a few hours to reach the 138% fib. Nope!

After I got back and saw I missed out on +4.5R, I tried to fine tune my exit and salvage what I could. Here’s a 5 min chart I was using:

I was watching my OBV / Tick chart, and it was very helpful today. After the peak, I saw way more volume coming through on downticks than on upticks–More bulk selling pressure than buying pressure. It led me to be very aggressive in protecting my profits, and it’s a good thing I did, since it tanked precipitously after my exit. Here’s that chart:

When I made my trading decisions:

And after:

And another look at the entire day for context:

It would have made a great short, but I didn’t think of it in time and also didn’t have any shares available anyway.

So I’m pleased with the technical execution of my trades, and my strategy (system choice) needs improvement. It’s so much less stressful learning how to trade without racing myself. Trading smaller, trading setups I see rather than “looking” for a trade and forcing one on something random, following my few systems I am comfortable with. No boneheaded scalps or revenge trades. Good day for me. Oh, I finished down -1.9R for the day! And I can accept it. This is great practice for the first step of my Seven Step Plan–trading well is most important, not being green or up or whatever for the day. Trying to chase the money just screws you up more. Trade a good system well and the money will follow.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

I’ve got more social obligations than normal this week, so no written commentary. Just watch the video and be happy with that…

… and stop learning chinese!

Watch this post's video on Youtube

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

Here’s how you could have turned $100 into a billion in 10 years.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

I have been very busy with family stuff. I may also start up a business as a side venture. I didn’t want to at first, but I plan on taking less trades and starting a business may be the perfect thing to keep me busy while not trading. I will see. I wasn’t looking for this business opportunity, it was just kinda thrown at me. It involves imports from Columbia to Mexico, then onto the USA…..kidding of course ;). I feel guilty not posting my losses the past week. Overtrading has been the key problem. I have solved that problem by planning to take 0-2 trades per day in the future. Over the next year, if I do that, I will make plenty of money with a lot less stress……A.K.A. drawdown. Oh, and I will have time to post my trades ;). The fact that my smaller daytrade account is up 21% in 2 months, with less than 3 trades per week, helped me make this decision. I wish I could trade more, but it is not condusive to my style.

GM:

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

I took 8 trades today. Sounds like a lot, but they were all good trades, even though only 4 were wins. Not a single boneheaded play in there! I accept my performance–I didn’t bank coin like many others, but I traded well, so I won the battle with myself. I also pulled down +3.47R overall (about 1.5% on my equity), which follows when you trade well and get a bit of luck. Since trying to accept myself where I am in trading, I’ve been racing less, been less desperate and traded better. Step 1 of my Seven Step Plan is helping me so far. :)

Here’s a few charts:

I traded a Muddy play at the open in CBAK, Long:

It was up big in pre-market, along with anything else Chinese today. At the open, the bid rushed the ask at $6.34, and I bought with a stop at $6.22. CBAK took off, hitting $7 within 5 minutes. I sold half at $7.14 when the move stalled, and held the rest at breakeven. Well, the second wave didn’t come, so I was stopped out at my entry, but I still made +2.1R on the half of the position I took a partial on.

I’m liking the idea of trying Muddy plays right out of the gate, while I wait for the gappers to set up, which can take a couple of hours.

I also shorted PLCM as a Jamie-style Gap trade:

After the 4th bar closed weak, I shorted a break of that low. I had a bit of space before the OR low, so I felt okay taking the trade. Then it just got stuck at 25.50. Took a partial at the OR low, and then waited all… day… and covered the rest at the close. +1R overall.

Four more uneventful scratch trades, and then somebody called Richard, who told him to buy Bear Stearns, or something. I missed the whole run up, but it was so parabolic that the ghost of StreetSmack (who is not dead, but when he finally is, he’ll send it back in time to visit me today) told me to short the sucker.

Look at the 15 min:

First Attempt:
Got stopped out on a new high. -1.2R (but tiny position)

Second Attempt:
A few scary moments and then boom goes the dynamite.

Covered half at the 38% fib level when it started to bounce. I got whipsawed out of the second half, and it went on to hit my target at 122. Oh well, still a good trade! +2R. Would have been more, but I only kept my first entry on here, rather than piling on in like a normal SS short play. I wasn’t overly confident given the huge short interest in financials.

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

2 Trades today… 1 win and 1 loss. Win was over 3x bigger than loss, so yay. I’m in a hurry, so that will have to do for “insightful commentary”.

Watch this post's video on Youtube

Better performance from me today… I tried to be extra aware of the fact that I’ve completely changed the look and feel of my charts. That disorients a trader like me, that trades based on feel, so I need to allow some time for my sort-of subconscious pattern matching to come back up to speed.

3 Trades Today… 1 on the ES, and 2 on CFC.

In the video, you can see that I am trading the eotpro.com indicator set, and am evaluating how well they apply to stocks. So far, it looks like they apply pretty well, but it’s early yet to be sure. There are clearly differences in the way stocks move and the way the futures move, so I wouldn’t be surprised if I need to make some adjustments.

I am also using the signal to noise indicator that I’ve been writing about. I think it works pretty darn well. You might say, “Richard, can’t you see when action is too noisy just by looking at the chart?” And, the answer is that, I usually can, but the main use for it is not on a chart at all. It’s on my TradeStation radar screen:

I’ve put the SNR indicator in the third column. This tells me at a glance which of my watchlist stocks are tradeable at any given time. Really cuts down on the amount of chart-flipping I need to do, especially during the lunch hour when everything is usually pretty choppy. Very nice.

Hope your day was good!

Tradestation annoyance of the day: I love the matrix… I’ve never had an interface like that before, and I really like the visceral feel of moving around orders. But, for futures, Tradestation doesn’t tell you the avg price of your current open position, which is what I want to know during a trade. Instead, it highlights the avg price of all your positions for the whole day. I wish this were a selectable setting….

Watch this post's video on Youtube