40draws

Here is what I've been reading: Understanding Wall Street, Jeffrey Little Studies in Tape Reading, Richard Wyckoff Tape Reading & Market Tactics, Humphrey B. Neil In adition to these, the books I've read that I have kept to read again are Wyckoff's Stockmarket Technique, vol. 1 & 2, Stock Market Profits by Schabacker, How to Make Money in Stocks, by Wiliam O'Neil, Reminiscences of a Stock Operator by Edwin Lefevre, and How to Trade in Stocks by Jesse Livermore. I am a voracious reader, often consuming one to two books per day, and I have read a number of other books over the last month that I have been selling back to Amazon (a form of loss cutting). I have also spent a fair amount of time reading trading websites, blogs, and trading forums. I have found very few that added to my understanding in any beneficial way. I found some articles by a trader named Linda Raschke to be helpful, as well as some interviews with a trader named Dan Zanger. It is likely no accident that both refer to authors such as Wyckoff and Schabacker (Raschke) and William O'Neil (Zanger) as major influences. One thought that struck me early on, and has continued to recur to me over my five weeks journey, is that many who speculate in the financial markets seem to be of a mind that it needs to be more complicated than it really needs to be. Of course, my having said that can easily, and likely will, and probably should be readily dismissed by those who think it a highly complicated and difficult business, as I am admittedly new to the business. I am realist enough to recognize that they may have the last laugh. For now, I am pleased with my progress. I am confident. Maybe I am just lucky that my personality and my background have caused me to find affinity with certain authors and not others. I read several books that raised more questions in my mind than answers before I stumble upon Wyckoff. Studies in Tape Reading made perfect sense to me. It is likely my background - I am a self-employed tradesman who understands the difference between retail and wholesale, and the need at times to mark down inventory, sometimes below even wholesale cost, selling product at a small loss to avoid complete spoilage and a large loss in order to purge the shelves, so to speak, to make room for more salable goods. On the other hand, I just finished a fairly recent book on technical analysis by an author who appears to be widely read and highly respected by professional traders (if the book jacket blurbs are to be believed) that was chock full of indicator studies. Far from making sense to me, I am baffled by it. That doesn't mean there are not others who are not only not baffled, but who also use these indicators to engage in profitable trading operations. I do not dwell on the fact that I am unable to do what others do with ease. I have always been of the mind that I can do what anyone else can do so long as I am able to find my own way. Fortunately, it seems as though others have found my own way long before I ever was, and therefore, I simply need to follow those who blazed the trail before me. I think this describes my situation as well.

I re-read my original response to DbPhoenix, and I do not see anything I have written which could be construed as "abuse and nasty remarks." I was trying respectfully to participate in this discussion by answering the questions he directed at me to the best of my ability.

I'm not sure from whence your "flabbergastedness" comes.

The list I am trading consists of active stocks and ETF's. I am looking for stocks that are gapping open, and my preference, for now, is given to those that gap higher. Having read a good number of your posts yesterday and today, I would say that one of patterns I look for is similar to what you call a "hinge." Wyckoff's Studies in Tape Reading, by the way, is one of the books that I have been reading and re-reading. I am looking for small consolidations where I can take a position for the next move higher, while allowing for a loss cut level that is usually small relative to the potential profit should the move continue. I would say that I am using gaps to indicate that the supply/demand balance has tipped in favor of the buyer, and I then look for additional evidence that there are sufficient sellers trapped on the wrong side of that imbalance to sustain the move for a profit. I don't take you as being harsh at all, and you are correct, feelings have nothing to do with it. Certainly a poor word choice on my part. As for data, my sample is regrettably small. Hence, my acknowledgent that revisions may be necessary as I gain experience, knowledge, and ability.

1) I've learned that Will Rogers was right, that I should buy some good stock and hold it 'till it goes up, and if it doesn't go up, I shouldn't buy it. Which is to say I have been looking to find stocks were buyers seem to be overwhelming sellers, and then to identify patterns that suggest buyers will continue to outstrip sellers. I buy, and if it doesn't go up, I sell (the next best thing to not having bought it at all). 2) I understand the importance of a trading/business plan. I feel I have the basic structure of a solid plan in place. As a business plan, it is solid enough to structure my activity, and flexible enough to accomodate growth and change in my knowledge and abilities. PS I'm a quick study, and have been since I was a young'n. I do not like wasting time, and five months would be an inexcusable amount of time to waste given how little we get to begin with!

Technically, it will be six months, with one down and five to go. I am confident that that shall be sufficient.

How fortuitous for me to have found this discussion! I have five months before I need to be able to make a living at this trading business. I have read a good number of books on trading and the financial markets, and I have managed to find three that struck a chord with me, and to which I have therefore devoted much time to studying: one is a basic "textbook" on Wall Street and the financial markets. The other two are examinations of the manner in which the price of a security moves as Wall Street transacts its business. I have also spent many hours over the last four or five weeks to studying charts at night after the market closes, as well as to observing as much real time market activity as my current engagement allows. Of course, "much time to studying" and "many hours observing" are relative. I infer from what others have said that many would find my description of my having devoted "much time" and "many hours" to learning this trading business to be laughable when compared to the amount of time that they themselves have devoted to learning to trade for a living. I am only about a month into this endeavor (my investigations commenced on July 13th 2012, to be exact), and I have this week started to take my first trades. I am hoping that six months proves to be sufficient for my preparation.