Do Or Die

Yes Kidpwrtrader, but I also mentioned that it is for the sake of illustrating the 'edge' or advantage sector rotation provides. People tend to invest in broad market indexes- sector rotation through ETFs definitely goes better than that. But you are one step ahead- tracking individual stocks and not just sector indices. So if you have found a good stock, it's better to hold it unless it hits a trailing stop-loss, or it nullifies the premise on which you invested in the first place. BTW I do not mean trailing stops similar to short-term trading; when we buy a stock for gains over 100% a 30% trailing stop should be good as well. Monthly ETF rotation is for people who cannot afford more than 30 minutes per week or who are absolutely new to stock market.

Kidpwrtrader, I'm a little confused by your statement... canslim is not that effective if the stocks are rotated every month, it is used for investing. Regarding resources for research- I cannot recall any. In any case, each business cycle is different in form from the previous one, so theory may not help. You must be tracking stocks and sectors performance, that should help much. BTW Piotroski Score may be of interest: Piotroski Profits - Forbes.com The Piotroski Score

I'm using trailing stops for longs because of indications mentioned in above post.

Seems like you missed an attachment.

Even so called 'system traders' may not be free from all bias. For example, most people who play around systems tend to refine/improve ideas and indicators which are already available on internet. Few go an extra mile to develop a system from scratch. This shows Availability Bias.

Never took it as contest; if its a contest I give up. BTW shortly has a discretionary connotation which depends on my interest level

It's a very good time to trade stocks in 3-10 day holding period.

Question like these will fit well in this thread I Think I Made a Rookie Mistake....Help? Am I Doing This Right? Seasonality and Reversals Off of Ytd Lows

A friend in NYC tells me he has never seen the city this way since he moved some 20 years back. Middle class is already screwed up with economy, and here comes Irene.

Look at the irony, the apparent genuine advice turns into a shady bait:

Whenever a member praises something too much without bothering to reason why it is so good, shady selling is the first thing which comes to my mind. http://www.traderslaboratory.com/forums/trading-videos/10648-sam-seiden-understanding-exact-process-behind.html

I can suggest for mid-term trading, my relevant threads are: Concepts in Technical Analysis. Relative Strength - Internal Relative Strength Basic Sector Rotation Using ETFs Trading Journals- Some Information And Downloads Introduction to Understanding Volatility

Beginners can post here any list of stocks for which they want overview. Members who have contributed openly in the forum can give suggestions.

People in standard finance are rational. People in behavioral finance are normal. —Meir Statman Behavioral finance tells us how biases affect individuals and patterns in crowd psychology. The foremost thing to learn from behavioral finance is what kind of biases effect you as a trader and how to avoid them. As mentioned previously, the book Behavioral Finance and Wealth Management by Michael Pompian does a good deal in articulating the biases. When you begin to read about the description of biases, it may initially look academic and theoretical. Well, studying biases can go a long way further than telling yourself 'don't be too greedy, don't be too fearful'. Reminds me of another good book called 'Beyond Greed and Fear'. Practically, the best way to control biases, is to understand which effect you in the first place. Again there is good amount of information on how to deal with bias but the most simple and effective way can be maintaining a Journal and writing the appropriate bias every time you make a mistake (Trading Journals- Some Information And Downloads). Over a period of time (say six months) you will have a good understanding of your weaknesses, and being aware of them is the first step in finding a solution to eliminate them. The other important thing I would like to mention is that most of us tend to have a different research methodology, different trading style or different personality type. So there cannot be a generalization; each one has to learn about his weaknesses from the mirror (journal). ---------------------------------------------------------------------------------------------------------------------------------- Overconfidence As the name suggested, it is the irrational faith in one's skills, methodology or beliefs. For example, you see a certain chart pattern and make a maximum leveraged trade, even though you understand that any chart pattern cannot predict market with certainty. Trading excessively after a winning streak also shows overconfidence. Cognitive Dissonance It means finding excuses for something which makes you 'uncomfortable'. For example, jumping from one indicator to another when you face losing trades; or continuing to trade in stock even your trading methodology does not gives you a positive expectancy. Availability Bias It means being biased to information which is readily and easily available. For example, people begin to trade using RSI without understanding the internal relative strength; that is, RSI is most talked about on forums so start using them without rationally researching it. Being affected from attractive advertisement or intelligent sounding articles (including this one!) without due diligence also signifies availability bias. Self-Attribution Bias It means giving yourself unwarranted praise for outcomes which may just be an outcome of chance. For example, people make money in a bull market through buy and hold and start begin to believe on their trading acumen rather than the market regime which favors their trading style. Conservatism Bias It makes people cling to a forecast or view- also results in herd behavior. It's not just about buying when everyone else is buying; a good example is using the indicators which are most talked about on internet. Self-Control Bias It means taking short-term decisions against what you understand rational and which conflict with your goal. For example, you finalize a watchlist of stocks and decide to stick with it. However, you may get tempted to trade a 'hot' stock. Optimism Bias It means painting a rosy picture for yourself even when common sense does not approves. For example, making 2K a month through full-time trading and congratulating yourself; or neglecting proper trading costs in your backtested strategies. Confirmation Bias It means to seek out only information that confirms their beliefs about a trade that they have made and to not seek out information that may contradict their beliefs. For example, marking only bullish chart patterns once you have bough a stock. Loss Aversion Bias It means trying to comfort yourself emotionally by not accepting your losses or mistakes. For example, widening your stop loss in losing trades or selling winners too early. Recency Bias It means giving undue weightage to recent information. For example, buying stocks because of sudden dip in gold or extrapolating a price pattern. Regret Aversion Bias It means undue avoiding of situations which can make you regret (being too conservative). For example, not trying unconventional trading strategies or stocking to a group of stocks for too long.

Read here: How HFT Has Changed Tape Reading. Too much discussion and you get to see all perspectives... drop a comment too!

Welcome on the questions. The 'awesomeness' of the formula is in the fact that it dynamically weights each component based on recent volumes. Consider a case: suppose you kick out the 5 stocks with least weight. Now suppose heavy volume comes in that discarded stock- because of 52 week high, earnings or whatever. In this case it will drag Dow along with it up or down, but you will miss on this significant information. Many pro traders use maps for visualization- go ahead and design you own. Should be easy since you are alreadt acquainted with macros and there are lot of resources on net.

This is a great formula! it tracks performance of components and also weights recent volumes. I would suggest do not drop any components... just design a custom map for components which uses similar measures using bar range and volume. use the map as well as TVI.

Updated chart: See the performance of sectors last week- the defensive sectors underperformed the market (or the leading sectors out performed). This indicates value buying at lows. Ticker Change in past week XLB 6.03 XLF 5.28 XLI 6.18 XLK 5.68 XLP 2.1 XLU 1.88 XLV 3.9 XLY 6.08 The chart for mid-term trading indicates indecision- there is no clear direction. There has been support established as I anticipated in previous post. Also the price of Gold dropped very sharply, and will be curtailed now because of margin requirements; and gold has negative correlation with stocks.

I've heard about trade value index with reference to NBA only. I did a google search and could not find the maths formula representing it. Anyways seems to me you are using the concept similar to market breadth. That is, if all components are showing strength then there is momentum in YM until it peaks out. Instead of dropping components I will suggest to use a heatmap for ALL 30 components (S&P 500 Map Heatmap ) or a similar map 'trend strength' which I posted in the link mentioned.

If your formula puts more weight on certain components, pick the top 7-10. If the formula always factors the movement of all components equally try picking the top 15 which have most weight in Dow; using less than 10 components may not work. This is just my wild guess because I have no clue about what information the formula is extracting.

Comparative Relative Strength is when you compare the performance of one ticker against another. It is the general term for sector strength comparison: http://www.traderslaboratory.com/forums/technical-analysis/10189-relative-strength-2.html#post126645 For example if you see BAC gapping up 10% and make a conclusion that it will drag the financials upwards with it. OR if you see financials showing extremely weakness you make an estimate that they will drag the entire market down. What makes you track ALL DOW components instead of the DOW itself?

I was asking about your methodology. Instead of watching the DOW itself, you watch ALL individual components, right? If you're using comparative relative strength as suggested by poster before me, your choice of components should depend upon those related to your method rather than which have more weighting in DOW.

Which components are you currently using? the precise choice of stocks will depend on your current methodology. Also, how exactly do you monitor it?

DJI Components Overview: Trend Strength refers to mid-term trend (similar to 50 day moving average) RS Internal refers to immediate expected movement RS (S&P) refers to how well the sector is performing relative to overall market -100 means extremely bearish and +100 means extremely bullish

Some changes: I found a problem with my earlier normalization method and rectified it (has no change on overall view) Added some colors for easier visualization Would like to add peer group comparison (currently its only with broad market) Would like to refine internal rs