40draws

I had a long post ready to go, and it was wiped out when my anti-virus did an auto update and restart. Normally not a problem, because I am not normally on the computer typing anything this time of night (that's why I have the update scheduled for this time of day). But I do not have it in me to re-type it as I not a typist to begin with. Thank you for your essay on the trading journal/trading log. I keep a journal and log which are written out long hand. To re-cap today's trades: First trade was a loss. All my fault: I tried to game the trade by entering early, i.e. entering without price having tripped my trigger. Price never did trade at my trigger level and instead made a beeline for my stop loss. Result -18 cents/share. This is not the first time I have done this. I would like for it to be my last, but I doubt it will. Something that I need to work on. Second trade: A late entry (again, like yesterday, I needed to use your WTF light volume pause to get in on the move): I have been using 1 and 5 minute charts, but today I was able to trade from my office, so I was able to chart off the computer instead of my phone, and I got to use a tick chart for the first time. It was pretty zippy and it will take a lot of getting used to. It did have the benefit of allowing me to eye a demand line break which got me out with 51 cents of a 54 cent move, which proved to be the high for the day. I would not have made so nimble an exit if I had been using either then 1 or 5 minute chart alone. Result +51 cents/share, for a 33 cent/share profit for the day less commissions and fees. I would like to post a chart that I did not trade today. This is the 5 minute chart of REGN, a stock on my watch list of day trading candidates. First, I did change the aspect ratio of my charts per your suggestion from yesterday. It certainly makes the retracements much easier to see and to put into the context of the day's trend. Thank you for that suggestion. Yesterday I mis-identified a Hinge. Today, I think I nailed one on REGN. I "paper traded" it as this hinge did not develop after a gap outside the previous day's range, which is what my set-up is - kind of a combination opening range breakout when the breakout is preceded by a hinge. My paper trade would have had me in at about 136 and out on a demand line break (not shown) that should have seen a fill in the 138.80 - 139 range. Anyway, a simple question, and I'll say goodnight: Is this or is this not a hinge? Thank you for you help.

Hi DbPhoenix, Thank you for your detailed response. That should prove to be an especially valuable piece of information, and I am adding it to my little "cheat sheet" tonight. That helps a lot, as I was a bit unsure how much to read into fluctuations in volume as price continues with the trend. That would have helped a great deal with today's second trade, which I will get to momentarily. I will do a search and read and study your examples of supply/demand lines. I have no problem with the concept of "selling short," and I understand what it means. But right now I am not comfortable with my ability to execute and manage a short trade. That is one reason I like the opposite way ETF's - when the general market is below its opening price, I do not take long equity positions. The short ETF's are a good vehicle for me to possibly participate in a down market on a down day without having to find common stock to short. Someday, I may add short selling to my plan, but for now any short type trade will be had by being long an ETF that rises if price of its index declines. I've added those materials to my to-do list. Thank you for pointing them out to me. On to today's trades. I won't say much about the first trade other than the only thing I did right was to keep to my planned stop and get out quickly. It was a gap down, and I bought it. Buying gaps down is NOT my plan. I have seven trading days under my belt now, and today's first trade was my third real mistake. Thankfully, the first two real mistakes taught me the importance of sticking to my planned stop, so the loss was small, and a fortunate fill on the exit left me with a loss of 13 cents + commissions & fees. All of which would be more appropriate to a journal than a discussion of Hinges, so I'll move on the second trade and final trade of the day. Here is the chart (I hope it is of a more viewable size than yesterday's attempt) The hinge develops following a gap up opening. I did not manage an ideal entry at all. I was managing taking my loss on my first trade when this moved up out of the hinge. My entry was at the market and filled at 58.30 inside the green oval. I would likely have missed this trade completely but last night I read a post of yours where you called this your WTF entry - no pullback, so WTF you gonna do, miss the trade? Anyhow, I bought and everything went nicely. At the high, I was up $1.31/share. Here's where things got sporty, and this is why I say your suggestion to use supply/demand lines to time exits is going to get some study tonight and over the coming days. I missed the rising volume on the third bar after the top, and then the falling volume on the small bounce. At this point, I was expecting an orderly pullback and then a resumption, at some point, of the rising trend. Well, long story short, I held it and held it, missing several clues along the way. The price action at the two blue vertical bars was what finally got my attention and I started to suspect that all was not well in Mudville. I finally exited, at the market, when volume evaporated on the bounce in the blue oval. My fill was 58.83. So a +$1.31/ share gain at the high was reduced to a +$0.53/share profit. For the day, I finished +40 cents/share less commissions and fees. As a final aside, today I realized that a limitation to a web-based trading platform is that I cannot easily manage multiple orders for different stocks simultaneously. My broker has an Active Trader platform that I will be trying tomorrow or Thursday, so my trades will probably be put on hold until I learn the new platform. I'm not sure I can even access the active trader platform from my phone, so that may be on hold until I get a laptop with mobile broadband that I from which to trade. Again, a better subject for a journal, but I am thinking out loud and it is sometimes better for me to just complete the thought. Thank you for your helpful attention.

I'm very new to the trading business, but I have been supporting first myself, then both me and my wife, and now my family since I was eighteen in my own business. I agree with you 100%. I have been reading through this and another trading forum, and I will say this: There is a lot of talk about the need to treat trading as a business, but there is little practical acknowledgement as to what exactly one should demand from a business enterprise. The purpose of a business is to generate an income. If you can't generate an income, then you need to get out of that business and into one that will allow you to generate an income. It seems many people have a difficult time succeeding in this business. I wonder if a large part of that difficulty is that they have not planned for how to take money from a trading account to "Hip Pocket National Bank." A trading plan is one thing, but it needs to be a part of an overall business plan. The business plan should set benchmarks for success. A key element would be a plan to draw money from your account to finance your life. From what I have read here and elsewhere, quite a few people would not honestly be able to answer the question you put to them: "Why are you trading in the first place?" It would seem that for many, making a profit sufficient to fund a decent living is not the primary goal of trading the financial markets.

Sorry about the chart, I try to get a better size next time. I didn't realize I had cut off the volume bars and also the symbol. This is TWM, an ETF that tracks the Russell 2000. This stock goes up when the Russel 2000 goes down.

This seems as good a place as any to hide. Here is a 1 minute chart of my only trade today. The lines are my poor attempt to try and show what I thought I was witnessing at the time. I trade and chart from a smart phone, and I so I could not draw these lines in real time even if I wanted to. Also, I cannot get a one minute chart on my phone, so what I was actually watching was a five minute chart. The one minute chart in hindsight certainly makes the "Hinge" more clearly defined than it appears on a five minute chart. But when the market was open and price was moving, you could still "see" the "Hinge" unfold on the five minute chart. The stock opened higher than it closed on Friday, and there was a good amount of activity in the opening minutes. Then price got choppy, and again, I am assuming that it formed what I take from the examples I've seen here to be what participants in the Wyckoff forum call a "Hinge." I may very well be wrong. Price was choppy, but the activity fell considerably, as you can see what I understand Wyckoff to be referring to when he speaks of a "volume dry up." I suppose I should have bought closer to the bottom than I did. The low was 28.53, but I entered when price crossed above 28.63, which was the halfway point between the low and the high of the session at that point. I entered at the market, and my order was filled at 28.66. A rally commenced as price traded above the "Hinge," and all was well until I noticed that price was still heading higher, but volume and the pace of the trades was starting to fall off. Not in and of itself a big deal, I suppose, but then price hit what turned out to be its high for today at 28.98, and boy did the trading get active as price dropped from 28.98 to 28.88 in just a few miunutes with lots of volume. The next rally lasted all of three minutes on quiet turnover and then suddenly again there was lots of activity and volume picked up and at first price seemed to be resuming its upward movement when it suddenly and quickly slipped back, giving up all but a few cents of the three minute bounce. I exited at the market and my order was filled at 28.91. Price went sideways in a narrow 2 cent range after my exit and volume and activity seemed to cease, before a long slow drift lower set in. When I bought it I had hoped it would trend higher all day and I'd go along for the ride, but it was not to be, and after my exit, it drifted lower most of the day, trading down to 28.54 (one cent above the low of the hinge), and then bouncing a while to close at 28.67 (one cent above where I had bought it). I hope it is ok that I posted this here and that it fits in with the topic of this discussion.

This is impossible. In six months, this is either working for me, or I pull the plug. Let's call it a "stop loss" on my pursuit of trading in stocks as a profession. Now, if in six months this isn't working, and instead of stopping I decide that I am going to drag this out for six years, then yes, all of the above could possibly come to pass. But it would be irresponsible of me, and in my opinion, plain crazy of me to continue to bang my head obsessively against the wall insisting that I was going to "make it as a trader" in spite of clear and compelling evidence to the contrary. This message board community seems to be populated by a good number of such "head-bangers." I appreciate the time and effort you put into your response to me. I would respectfully point out that many of the issues you raise are non-issues for me and were covered in earlier posts of mine, e.g. I am my own boss, and I haven't had a boss since the last one fired me when I was eighteen. That was 26 years ago and I was 18. Based upon your post, I could say to you the same thing to you that I said to another individual who responded to me yesterday: I thank you for your concern. But I think that your response is perhaps better intended for you and your situation, rather than mine.

And from discouragement to outright attacks: The "Its" referred to is me, of course. And my favorite: I am, of course, the "you" referred to by the "your (sic)" - apparently this individual considers the self-educating trader an affront to the mentoring profession. Certainly not the responses I would have expected when I first chose to participate. Especially as I have not claimed to be a succesful new trader. My fault is that I put what is effectively a "stop loss" on my attempt to learn to trade for a living. At six months, I am either clearly on the road to success or I am out. It seems as though the majority have chosen to let their losses run.

I assume you're directing this at me, and I don't know why, unless you're a trading mentor who sells mentoring and training services, and the idea of someone teaching himself to do this is bad for business. Whatever the reason, you obviously have not read my posts. I am learning from other traders, primarily Richard Wyckoff and Humphrey Neill. Again, had you read my posts, then that is information you would have known.

I did post and re-post a list of the ones I found to make sense to me. Of course, the fact that they make sense to someone who knew nothing six weeks ago, and may now only think he knows something, should give you or anyone pause in taking up a book or method on my recommendation. I considered your request that I names the books I didn't like, and after some thought, I'd rather not say. After all, to be fair, posting those titles would imply that I was making a critical judgment on their value, and I am not qualified to say anything other than the books I've listed above "made sense" to me, while others I've not mentioned by name left me unclear, uneasy, unsure, at times a bit baffled, and at others completely confused. That likely says as much or more about me than it does about them.

Hi goodoboy, Here is a list I posted earlier: The Jeffrey Little book is a basic textbook, e.g. what is a share of stock, how Wall Street works, the role of investment banks, etc. The Wyckoff and Neil books are similar, in that both explain price movements in terms of the relationship between price and volume. Neil is not an advocate of day trading, whereas Wyckoff presents it as a potential way for someone to make a profession out of wall street operations alone. In adition to these two books, I found a website by a trader named Linda Raschke where she had a couple of articles, on on Tape Reading, that sort of helped point me in how to make a practical start with the Wyckoff and Neil method. I'll hunt down the links later and post them here so long as it would not violate the traderslaboratory rules. I'll send a PM to the moderator and ask first. I am taking a small draw tomorrow from last week's activity. I have been trading using my smart phone, and I want to buy a lap top and set it up with mobile broadband. My current business is such that I am traveling about 90% of the workday which puts me out of the office for 100% of the trading session on most days. My business plan calls for all future trading related expenditures to be funded out of trading profits. This first draw will pay for a trading laptop, accessories (car charger, case, etc.), and mobile broadband service from September through January.

40draws reading between the lines - Thank you, SIUYA.

When I first responded to this discusion, I have to admit that I had not really read the author's initial post as thoughtfully or as literally as I should have. Instead, what sparked my attention and prompted me to participate was the phrase "from zero to making a living at this game in 6 months." I ignored the thrust of the question posed. Had I read it thoughtfully, and actually answered the question, I would have said something along the lines that "of course no one would hate someone for succeeding - after all, I take one person's success to indicate to me that my success is also possible." However, the orientation of many respondents seems to be the opposite: "I have been doing this for years, and I haven't been able to succeed, so how dare you think you might be able to do in six months what I have been unable to do in six years." I have not made any claim to be making a living at the trading business. I simply said I was a new trader, and I was giving myself six months either to show myself this is a viable business for me or not. Given the tenor of most of the responses, the original author's suspicians have been proven to be well-founded.

You never know whether I am who I say I am or a fifteen year old pulling your chain. However, I'm as unclear on the nature of the "con" with which you are apparently charging me as I am with the source of your "flabbergastedness" that resulted from one of my earlier posts. If I am not mistaken, you are also the one who said I was heaping disrespectful remarks on DbPhoenix. I insist that all of my exchanges with DbPhoenix have been nothing short of respectful. I do not understand your attitude toward me. It is one thing to disagree with me, and if you think me on a fool's errand, so be it. You're entitled to your opinion. But to call me a con borders upon hostility. "Joined August 2012, one months experience": As I said, I'm technically now in week six, and we all have to start somewhere. My interest in the markets had previously been limited to more or less blindly investing in mutual funds in my Keough. A chance viewing of an infomercial for a day trading school as I flipped through the tv channels early, early one morning was the catalyst that started my investigation of the possibility of trading actively for an income. I actually called that school that day. The experience of that phone call led me to decide that I needed to learn as much as I could on my own first, as my sense from talking to their "admission counselor" was that he was a con. "Read all the books": I've read twenty-six books, or about 4.25/week. Most of these are pretty quick reads, well-written, and thus easily and quickly understood. If a book was not easily understood, if it was poorly written, or if I found myself struggling to make sense of it, I closed it and never looked back. At least six books fit that criteria, so technically I read twenty or so books, and started but failed to finish six or so. I'm about done with the books, however. I am awaiting a twenty-seventh, Techniques of Tape Reading, based upon a review of this work by DbPhoenix. It should be here Monday evening, and I would estimate that I will have finished a first read no later than Wednesday before I lay me down to bed. "Slick answer after slick answer": I'm flabbergasted. Well, perhaps not flabbergasted, but at least slightly bewildered.

That statement of yours indicates to me that your experience and your approach to this businesss, and probably your view of life generally, is vastly different from my own. With the exception of risk, the rest is foreign to the manner in which I have approached and structured my study. Such a difference likely will lead to a vastly different result. I'm not passing judgement. I am just noting a difference between us that strongly implies to me that if it were possible to graph your journey and my own from a common temporal beginning, our paths would almost immediately, and necessarily, diverge.

I'm good for now, but thank you for asking.

I haven't asked this of anyone, nor would I. Now, if you were to tell me that I couldn't possibly succeed in a mere six months, because you yourself spent seventeen months working full-time at becoming a trader, I might ask, for the sake of clarification, if you meant you had started 17 months ago and you are still working on it, i.e. seventeen months down and now you are working on month eighteen, or if you meant it took you seventeen months from the time you started on, for example, January 1, 2007 until you finally achieved profitability in May 2008, and that since that time you have been supporting yourself primarily as a trader. That would hardly be asking for your qualifications as a trader. That is merely asking you to make your meaning plain. If you tell me you are a success, I'll take you at your word. I'm not one to ask a stranger to prove anything to me. I've gotten where I am by worrying about myself, and not what the other fella is doing. I do not care nor need to know whether you or anyone else are a successful trader or merely a fifteen year old pulling my chain. Given enough interaction, I trust I could figure it out on my own without the need to ask. As for charts, mine are fairly bare bones affairs. My trades are short term - most being open and closed within the same trading session, while others are held for a few days. I do have a line struck at the current session's opening trade price and also at the prior day's closing price. I also write down yesterday's high and low using a lowly pencil and wide ruled paper in a 17 cent notebook. Other than that, any notes or annotations which I think may be helpful for review are drawn after the trade is closed using a separate screenshot edited in paint. In other words, the only lines on my chart in my charting software are yesterday's close and today's open. I also use volume, and that is plotted in a subpane of the main price window.

I hope my editing preserves the intended meaning of your post. How many of these failed individuals know why they continue to struggle and fail? There seems to be a propensity for self-absorption and a distinct aversion to self-exploration. I'm new to this business. I admittedly have much to learn. While I am confident in my ability to succeed, I do not think I have under-estimated the difficulties involved. After all, I have devoted nearly every free waking moment for going on six weeks to studying the problem of how to make consistent short-term profits from trading in stocks. But I know that if something isn't working, then there is a reason, and the reason is going to be either I am deficient in my knowledge or I am deficient in the execution of my plan. In either case, the buck stops here with me. Of course, in the case of the many, it may be the case that after having sought answers not in themselves but rather in all the wrong places (another book, another methodology) for a period of months or years, these individuals no longer have the ability to sort out what pertains to the real world of the markets from all the layers of, for lack of a better word, "stuff " which their exploration of countless books and methodologies has created in their understanding, in which case self-examination itself would likely become just another failed project.

1) You have spent 17 months working full-time as a trader. Are you now supporting yourself financially from your trading profits, or are you drawingfrom savings or another source of income. 2) Why has it been so difficult for you?

Well put, as this seems to be a common character trait, a sort of "intellectual defense mechansim" of trading forum posters. "If I couldn't do it, then neither can you, because if you could do it, then I would have been able to do it too, and better."

Let me say first that I am not looking for a fight nor am I meaning any disrespect. I do have an opinion and point of view that is markedly different from the majority of opinions voiced in this thread, and I am simply trying to make that view plain. 1) The deadline is not about "pressure." The deadline is about not wasting time. It is a "get 'er done" deadline. If unable to get it done in six months, no use thinking the next six months would be any different. 2) Far from being "abstract," a goal of making a living is very concrete, so long as one knows what it really costs to finance one's living. There is nothing abstract about a goal of generating a minumum of $70K per year in short-term trading profits in order to fund one's existence. 3) I am now believe that the majority of trading forum posters are not funding their living from trading profits. My goal is to understand and to be ready, willing, and able to act upon price action well enough within six months so that I will be able to make the equivalent of 40 draws of $1750/draw over the course of any trailing 52 week period. Your proposal that a better goal would be "to understand x different methodologies in y months or to work through 10 trading books in z months, etc." strikes me as what is probably wrong with those who seem to be churning themselves into nothing for what is apparently years upon years - they have been led to believe that they need to know everything before they can do anything, and as a result end up knowing nothing and, if able to act at all, do more harm to themselves than good. 4) For example, I have read 26 trading books in the last 5 weeks. I have found three to be worth studying, and five or six worth reserving for further study. The rest strike as a waste of my time. Why would I need to continue consuming trading books? And I do not mean that rhetorically: At some point, and fairly soon, enough has to be enough. 5) What good would understand "x different methodologies" do me? I would think I only need one. Here's a question I'd pose to the community as a whole: Forget about trading for a living - who among us has ever taken any money out of their trading account that was profit, and not merely part of the initial funding, and then used those profits for anything, whether paying a bill, buying a bag a groceries, or indulging in a personal product purchase, or anything at all? And who has never withdrawn even one penny of profit, perhaps instead throwing good money after bad to keep the trading account open as they chase this apparently elusive goal of "trading for a living?"

"Getting on with it" is exactly what I am doing.

Exactly ... if I can't make a go at it in six months, why wouold I think things would be any different in six years? Given the responses here, I have to wonder how many traders posting to trading forums really trade for a living. I would have thought that the response from a forum of profitable market operators would be more positive and less skeptical. Consider the difference here compared to the the tone of Wyckoff's Studies in Tape Reading. While Wyckoff obviously knew that most members of the public who speculate do so poorly, he also makes it clear that if someone were to take the time to understand the how and why of price movement, and then to speculate according to the way the market in fact works, that it should neither be difficult nor take an interminably long time to acheive profitability. Going to the first pages of Studies in Tape Reading, Wyckoff mentions a friend of his who had started trading over the same ticker with a trader named Joe Manning. In the beginning, they were both trading in 10 share lots. Years later, Joe Manning was trading hundreds of thousands of dollars, while Wyckoff's friend was still trading in 10 share lots. In six months, I'll either be on my way to being a Joe Manning, or I'll be like Wyckoff's unnamed friend. If the former, then full steam ahead; and if the latter, I'll move on to something else.

Someone, perhaps more than one, referred to Jesse Livermore's frustration when he responded to the question of "how can I make some quick money in stocks," by saying no one would ask their surgeon or attorney "how can I make some quick money in medicine or law." He tells of the offense he felt. Afterall, he was someone who had spent a lifetime reading the ticker and studying price movements, how dare someone ask for a quick tip! What he did not say in the same breath, and what those quoting him may have forgotten, is that it was only a matter of months after he had started as a quotation boy in a broker's office that he himself was able to read the tape quite well, amassing a fortune of "$1000" very quickly. Technically, trading does not seem very difficult. Again, I do think that many of the more technical approaches using various indicators and candlesticks and bar studies are very difficult, and my hat is off to any and all who are able to use these for profit. For me, I will stick to price and volume. From what I have browsed here and elsewhere, however, it seems to me that the difficulty most have with trading is not the technicals, whether they are using basic price and volume or more complex indicators and bar studies; rather, the problem seems to be that a lot of people struggle with what Livermore called fear and hope, which leads them to win small and lose big, when what is needed is the exact opposite. I have given myself six months to do this. September through January will be the tell. If it doesn't work out, I'll move on to something else. I still have my business and I am still making an income. After twenty-six years, I am ready to retire from my current line. But I am still a youngish guy (I started in my line when I was eighteen) and I need to move on to something else. I think that this trading business is my next thing.

I cannot imagine that "making a living" means anything less than being able to provide for oneself and one's family at a level that allows not merely for sustenance and survival, but for living well. We may debate what "living well" with respect to financial means entails, but for most it would mean not only a table and food to put upon it, but a decent place in which to dwell, a well-funded retirement for yourself and your spouse and well-funded college savings programs for the children. And let's not forget piano and clarinet and trumpet lessons as well as photography classes and a golf coach for the young budding Tiger Woods. When I speak of making a living at this business, I mean specifically generating an income sufficient to replace my current income so as to cause my family not a moment's change to the lifestyle to which they have become accustomed. We do not live extravagantly, we have no debt other than the mortgage, we have retirement and college and emergency savings. I have funded two trading accounts which are not included in the aforementioned retirement/college/emergency savings. Because I am a self-employed, the net profit from short term trading operations needed to maintain my lifestyle is substantially less than I require to achieve on my schedule C. Short term capital gains, while subject to one's normal income tax rate, are not subject the self-employment tax. Therefore, given my current situation, rather than a six figure net profit from business, I need about 36% more than the current US median household income of $51413, or about $70,000 net short term capital gains. Given my deductions, the size of my family, etc., this amount would leave me, after taxes, with about the same amount of cash to finance my family as I currently am able to keep from my earned income from self-employment. Not a king's ransom, to be sure, not even a princely frog's, but that is the plateau level for me that will define whether or not I am or am not "making a living" from trading or whatever business I am engaged in for an income. I have five months to prove to myself that I can generate $70,000 on an annualized basis from my trading operations. It seems a reasonble goal.