Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

JLJ

Glum Swing Trader - Was Doing Great Until a Couple Weeks Ago

Recommended Posts

:( I was actually making money swing/momentum trading - tho admittedly the market was very good in Sept which helped a lot. I was gaining much more than I was losing. I buy smallish lots (200 shares sometimes 300) and hold for anywhere from a day or two to a week or so. I always have a stop loss in place. Always.

The past couple weeks, I've lost most of my gains of the past few months. My account is currently not much above where I started.

I know that the whole market has been down - the international backlash against QE2, China's inflation problems, and now Ireland - but I don't know what I should do differently. Problem is, my stops (I allow for pretty good wiggle room - I usually set the stop about 8% below the purchase price) have been repeatedly hit, generating losses. (Sadly, after my stop is hit the price usually goes right back up.)

Of course _when_ I buy is important - I look at stocastics to see when prices are likely at the peak or bottom so I can avoid buying just before the price starts to drop. That method used to work, maybe 70% of the time, but with everything down it's not working, except in hindsight. None of the stocks I've bought in the past week or so were much in the green ever, because everything started dropping, so when my stop is hit I lose, and that's happened several times lately.

As soon as it became clear a couple days ago that we were heading for a 'correction,' I started selling what I had left and moving into cash so I'm less exposed.

I'm OK so long as I can identify my mistakes and not keep making the same ones, but I just don't know what I should do differently in the future. Short of buying a crystal ball.

Thanks for any input.

Share this post


Link to post
Share on other sites

One little dirty secret of trading is that almost everything works in the direction of the trend. So your challenge is the learn to identify the trend and trend change that matches the time frame you trade. For swing trades, find and objective way to spot trend changes on the weekly chart or daily chart. You can start by looking at the reversal bar on the weekly chart last week.

Share this post


Link to post
Share on other sites
None of the stocks I've bought in the past week or so were much in the green ever,

 

Often this is an early warning sign to cut a position...... you dont need to wait until your stop is hit.

I have often waited around too long for something to happen when clearly the trade is not doing what I anticipated it to do......

Share this post


Link to post
Share on other sites

Hindsight and backtesting your "edge" are fine as the other posters above mentioned. The real issue is understanding overall market structure and changing with it. You are buying or selling based on lagging indicators which can stay overbought/oversold for longer than you can stay solvent. As one of the other posters mentioned you must be quicker to admit you are wrong. When a position your are in is not acting correctly based on the premise you used to enter the trade, a full stop out is not only not necessary but it is psychologically damaging to a trader. You don't have to be in the market all the time. Patience and discipline and better understanding of trend and change of trend will really help. Experienced traders were not trying to buy and hold long positions near the S & P 1220 level.

Share this post


Link to post
Share on other sites

I wouldn't use mental stops if I were you. You may use them in conjunction with hard stops, but keep your hard stops in place. You will get crushed and go broke if you get rid of your hard stops.

 

Also, if you've lost all of your gains from the past couple of months during this small downturn then you need to reevaluate your system and in particular your money management. You never mentioned what your profit targets are, just your stop loss at 8%. Are you losing far more on losers than you make on winners?

 

Do you short? You may want to have one of your positions be a short when the market starts looking toppy.

 

Just make sure you make up for your recent losses over the next several weeks when the S&P 500 goes back over 1225.

 

Good luck and keep learning. It's not easy.

Share this post


Link to post
Share on other sites

Dear JLJ,

You are going to have to start all over again

And using stocastics without price action is a losing method.

The market will stay oversold / overbought longer than you will stay solvent.

Look on this site for threads on price action. There is some excellent info.

Be careful of Brooks. Thats scalping. And his book takes a while to grasp.

But dont dispair. It takes a while and a bit of cash.

And I think a 8% stoploss is too big -Look at the average move per time period over 20 time periods.

This will determine your stop, maximum 3%. If a share moves on average 8% a day (time period), dont trade it. Find something less volotile.

Do you understand how the market works?The Institutions drive the market .The analysis will determine the EXPECTED FUTURE EARNINGS of a share.An order will be placed for 1 million shares at lets say $50 with a maximum of $55. The market moves up . At $55 the big buyer steps back and waits for a pullback.At $50 he starts buying again unless he has filled his order. Thats why you wait for him and trade on his momentum.

Wait for a pullback.

You also need to know the consensus view of future earnings so you have a rough idea of where the share is heading. So you combine fundamental analysis with a chart.

And finally trading is a full time job.You need 10000 hours to become proficient. Thats 8 hours a day for 5years!!!

The biggest problem with this advise is its too brief, so go and read Soultrader where there is 1000 pages of info.

Been there, done that.

bobcollett

l

Share this post


Link to post
Share on other sites

Some great advice here so I would say yes to all of the above. A few other thoughts came to my mind.

 

One, as mentioned before it sounds like this trader is all "directional" to the buy side. That's tough unless you are averse/against shorting -- if you are, you need something that tells you to stay on the sidelines during those downswing periods. There's going to be plenty of those and you sound like you're just forcing the action and the momentum simply isn't there.

 

Think of all the genius traders that were floating around in 1998 - 2000 - when the markets did nothing but go up and even if you had a down day the next day your stock would go up $30 further reinforcing trader genius disease that was going around. And then the crash hit and it never came back. We all know what happened next.

 

I think it's tough with a long only bias to succeed.

 

In addition, what I've found in my system development which includes tens of thousands of trade observations is it's amazing how often a system/approach you've developed feels just so good and like the holy grail. Then all of a sudden something changes and it completely collapses. You can't even imagine how often I have thought I have developed a breakthrough for myself and it seems incredible for a sustained period then simply breaks down miserably and goes in the trash heap.

 

You really have to develop your strategy to take into account many different market conditions or it's doomed to fail in time.

 

MMS

Share this post


Link to post
Share on other sites

yes....what they said on the last two posts expounding on my comments. Excellent advice folks....10000 hours is absolutely correct. Learning to trade is a full time job.

Share this post


Link to post
Share on other sites

Bobcollett talked about a 20 day average true range. Check out the work that Charles LeBeau has done on chandelier exits using an exponential ATR. That sets your stop loss based on the volatility of the stock you are purchasing.

 

In addition, you might want to watch different time frames to see what the overall movement is, and be watching some market averages to see when we are getting either a reversal, or into a trade range.

Share this post


Link to post
Share on other sites

Thanks everyone for the thoughtful replies. I do know about how institutional investors drive prices, the importance of expected earnings, etc. However I don't know what 'reversal bar' and 'price action' are. I need to find some really basic info on technical analysis - the info I've read assumes you're familiar with a lot of terms I don't understand, so it's above my head.

What I did was to buy based on fundamentals - using my primitive knowledge of stocastics to avoid buying when the price is peaking - then I'd ride it up for a while, then sell. It was working great until a few weeks ago when the market started going down.

I lost about two-thirds of my gains in the past few weeks. No, I didn't lose all my gains. I think I had good 'beginner's luck" - I benefited from a good market in September and October.

Interesting that I don't hear a lot of people here saying "you can't make money the way it's been the past 2 weeks" - does that mean you can, if know what you're doing? I'll admit that I don't :)

I don't have a problem with admitting I made a bad buy and should sell before the price drops further. In the beginning, if the price dropped much after I bought, I'd sell - and it cost me. I keep detailed records of all my trades and I spend a lot of time looking at what I did, when, and why, then I look at the charts and see what the price did _after_ I sold. What I saw was that almost every time I sold, the price would come up, often substantially, anywhere from minutes, to a day or two, after I'd sold. Once I realized I was selling too soon, I began to hang on and the price would go back up and I started to have good gains. ...Unfortunately, that also meant when the market started to fizzle a couple weeks ago, my stocks would go down - down - down then my stops were hit.

However, even then, most of the time when my stops were hit, the price only dipped a few cents, maybe 20 cents max, below my stop - then it came back up, often quite dramatically. (There was only one stock that continued to go down and stay down.) So if my stop had been 8.25% below what I'd paid (as opposed to 8% below) I would not have been stopped out and would have still been there when the price came back up. I think a closer stop would backfire. Obviously my position sizes should be smaller so I don't lose as much if the stop is hit. Or I could buy stocks that are less volatile, as one of you guys here suggested.

The thing is, I've often done well with volatile stocks because it would go up a couple bucks a share in one day, I'd sell, then when it would drop I'd buy it again. I've made great gains from buying and selling a small number of stocks, repeatedly. If they don't have pronounced price swings this isn't possible (in the short term, at least).

I'm willing to spend the time to learn. I appreciate folks here reminding me that it takes a long time to get good at this.

Share this post


Link to post
Share on other sites
I need to find some really basic info on technical analysis - the info I've read assumes you're familiar with a lot of terms I don't understand, so it's above my head.

What I did was to buy based on fundamentals - using my primitive knowledge of stocastics to avoid buying when the price is peaking - then I'd ride it up for a while, then sell. It was working great until a few weeks ago when the market started going down.

I lost about two-thirds of my gains in the past few weeks. No, I didn't lose all my gains. I think I had good 'beginner's luck" - I benefited from a good market in September and October.

.

As a suggestion: read Trading for a Living, and Come Into My Trading Room, both by Dr. Alexander Elder. I don't believe he focuses on stochastics, but he does focus on swing trading and I think both may be helpful.

 

Having a tighter stop will cause more losses, but smaller ones. Everything is a trade-off, but with good trades chosen, good position sizing, good stops, and knowing when to exit will hopefully prevent such a large loss of gains.

 

there is a lot to learn. Some of the best learning comes from making mistakes; but it also helps to know why the mistake was a mistake - or there is no learning at all. On the other hand, there is value in learning what has been a mistake for others; at least in can help prevent making unnecessary mistakes.

 

The market has had a number of hiccups since March, 2009, and doesn't seem to want to make a steady bull market out of the chaos. And scan of any number of stocks will show gains since then, but not without some dips here and there, for who knows what reason. Don't give up; I think if you read those two books (and you may want to read them numerous times, as they are loaded with information) and learn from this go-around, you will do well. Rome wasn't built & etc.

Share this post


Link to post
Share on other sites

Elder's multitimeframe approach is valuable. High for trend; Mid for setup; and trigger on some price action (you only need two timeframes here not 3).

 

(Moderator: Removed 3rd part URL)

 

Focus mainly on pins, buobs, ibs etc. But remember that price action without context (the higher trends say and the pullback point) is just another way of losing money. You need both.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Similar Content

    • By adamal7
      Hello guys,
      I'm starting to swing trade commodities, especially soft commodities (corn, sugar, coffee, cotton, soybean, ...). I'm also checking gold and oil.
      My problem is I'd like to know what is the best broker for trading those markets (regulated, large commodity choice) ? For CFD trading.
      I'm thinking of IC MARKETS who are very good with forex and have good trading conditions.
      The concern I have is that I need a broker that offers MT4 as a platform, and also I'd like to be able to open mini lots positions for a better risk management.
      As a swing trader, I'm less concerned by the spread but looking at the financing fees.
      Wish you have a nice day, and thanks in advance.
      Alexandre.
  • Topics

  • Posts

    • NFLX Netflix stock, with a solid top of range breakout, from Stocks to Watch at https://stockconsultant.com/?NFLX  
    • NFLX Netflix stock, with a solid top of range breakout, from Stocks to Watch at https://stockconsultant.com/?NFLX  
    • It depends. If you have lots of money that you can buy a house without a loan and if you don't have any parents to sponsor then it is a good idea. Otherwise it might be a bad idea depending where in Canada you are heading to. I earned a good middle income in my home country and I migrated to Vancouver 5 years ago at the age of 35. I had to start right from the bottom, lowest of the low.. Now i am finally earning a middle income in Canada but I still cannot afford to buy a one bedroom apartment. Having left behind friends, family and home, most of the times I think it is not worth it.   In short, do not migrate if you already have a good life in your home country and you are happy. Only migrate to Canada if you really have to leave your home country say there is a war or something really bad. Discrimination still exists here and its really tough for newcomers unless you are super rich. Good luck. David Chong, Quora  
    • This is bigger than the internet. Bigger than mobile. Bigger than social media.   While everyone was distracted by stock market fluctuations and political theater…   Most people have NO IDEA what just happened last week with ChatGPT.   Their new memory feature allows ChatGPT to remember EVERYTHING about you across all your conversations.   Think about that for a minute...   While most tech companies have been collecting mere breadcrumbs about you - your likes, your clicks, your browsing history - OpenAI is now collecting the most valuable dataset in human history: your complete psychological profile.   This is Zuckerberg x 5,000.   The more you use ChatGPT, the more it understands you, becoming a supercharged reflection of yourself that improves at an exponential rate.   Are you a regular ChatGPT user?   Consider whether it’s time to turn off the “you can train on my information” feature. To prevent your data from being used for training while still using the memory feature:   Disable Model Training: Navigate to Settings > Data Controls. Toggle off "Improve the model for everyone". Manage Memory Settings: Go to Settings > Personalization > Memory. Here, you can: Turn off memory entirely. Delete specific memories. Use Temporary Chat for sessions that won't be saved or used for training. Now the investment implications…   Why This is Bigger Than You Think Consider this: the relationship between humans and ChatGPT is evolving beyond a mere tool.   People are now treating these AI assistants as friends, confidants, and even romantic partners.   I'm not making this up - there are already documented cases of people ending real human relationships to pursue “connections” with their AI companions.   A viral Instagram meme shows a person going through life with a glowing, featureless humanoid figure - representing ChatGPT - as their companion.   The post has over 1.1 million likes and comments like "Bro ChatGPT is like my best friend. Ain't even ashamed to say it" with 25,000 likes.   But here's where things get really interesting for investors and entrepreneurs...   Three Things to Watch For starters, hardware is the next big thing for the big players.   The iPhone form factor is dead.   It hasn't meaningfully changed in nearly a decade. The next evolution in hardware will be designed specifically to interface with these AI companions.   OpenAI is already working on hardware with Johnny Ive, the legendary designer behind the iPhone and iPod. But you can’t ignore Elon Musk’s edge here.   So what does all of this mean for you?   The companies that control the personal AI relationships will be worth trillions. OpenAI and Elon Musk will have the coziest moats. We're witnessing the birth of a new internet - one built on agents that can communicate with each other across platforms. Google's new agent-to-agent protocol allows AI agents to work together without sharing internal memories or tools. The hardware companies that create the perfect interface for these AI companions will dominate the next decade of technology. And almost nobody is talking about what this means.   My prediction? Within five years, most people will have a personal AI that knows them better than anyone else. And they will interact with it in ways that seem foreign today.   (And, yes, it will almost certainly have dystopian elements.)   In the meantime, the biggest gains won’t come from household names. And, right now, James is seeing a prime opportunity to invest in the most under-the-radar plays in AI…   For dirt cheap. By Chris C. Source: https://altucherconfidential.com/posts/use-chatgpt-protect-yourself-now
    • KBH KB Home stock, nice day and rally off the 50.82 support area, from Stocks to Watch at https://stockconsultant.com/?KBH      
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.