Trader's Thread 02 (Jan 09 - Mar 10)

Re: Trader's Thread (Jan 09 - Oct09)

Postby Aspellian » Tue Sep 29, 2009 9:07 am

Thanks Winston for the article - Timeless advice.

- "It never was my thinking that made big money for me. It was always my sitting. Got that? My sitting tight!" – Jesse Livermore.

- Buffett's edge over other investors is that he "sits on his ass and reads a lot." Buffett spends most of his time sitting.

- Jim Rogers' "I don't do anything until I see money lying in the corner" philosophy.

Winston, A Qn to you: How do you usually determine what is Windfall Profits? I will like to understand more.
PS: there is a risk that after one sell from a windfall profits, the prices shoot up before one can enter into position again...

PROMISE, PASSION, PEACE, POWER, PURPOSE, PLAN, PATIENCE, PERSEVERANCE, PROTECTION
DELIGHT, DISCIPLINE, DILIGENT, DETERMINATION, DESIRE

"Its not whether you're right or wrong thats important, but how much money you make when you're right and how much you lose when you're wrong." - Warren Buffet
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Re: Trader's Thread (Jan 09 - Oct09)

Postby winston » Tue Sep 29, 2009 9:15 am

Hi A,

I really dont know. It depends on a lot of factors eg. Market Direction, Trading Volume, % Gain etc..

After I take a position and it jumps a lot, far more than I ever could anticipate, I may want to take profit first and then look for a chance to buy back later when it dips..

I'm not really go at this. I just rely on my emotions. When I feel very greedy, that's probably the time to take profit. I would keep on asking myself why others would want to buy from me a this price. If it's running, I may want to put a trailing stop loss of 2% on it...

Take care,
Winston
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Re: Trader's Thread (Jan 09 - Oct09)

Postby iam802 » Tue Sep 29, 2009 9:16 am

all the above quotes...confirmed that they like to play poker.

If you play poker, you will know what I mean. If you don't, learn to play it and you will understand what I mean :)
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

TA and Options stuffs on InvestIdeas:
The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
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Re: Trader's Thread (Jan 09 - Oct09)

Postby Aspellian » Tue Sep 29, 2009 9:48 am

iam802 wrote:all the above quotes...confirmed that they like to play poker.

If you play poker, you will know what I mean. If you don't, learn to play it and you will understand what I mean :)


probably those quotes can apply to life too!! haha!! :lol:

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Re: Trader's Thread (Jan 09 - Oct09)

Postby winston » Tue Sep 29, 2009 2:20 pm

I forgot to mention that sitting on trade has also cost me alot of money.

When something has run up a lot, the mind starts playing games with you and quote you stuff like "it's the sitting that makes you money", "this is a super-bull market" etc.

When you dont take your profits especially windfall profits in range-bound markets, somebody else will ...
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Re: Trader's Thread (Jan 09 - Oct09)

Postby kennynah » Tue Sep 29, 2009 2:27 pm

basically, i would take profits when my technical target is reached...this could be a perceived resistance level...however, there are times, when the chart suggest more strength and if so, i might even let the resistance be tested to see if it can break upwards...and if it does, i look to the next level of resistance as a possible exit...

of cos, should the resistance hold up, it means price drop...and as long as the technical support level is still higher than the entry price, i will let that support be tested to see if it can hold up prices...if it does, i will maintain the position...but of cos, if support breaks, then the least i will do is to not let the initial profitable position turn into a loss...ie, i will exit at a higher price than entry

the above, is really for long term position, where i would be prepared for wider price gyrations...

but if it is intended to be a short trade, then, i usually set a % profit level...and punch in the 2 stop limit exit orders... one for cut loss and the other for profit taking...

yours truly,

Juicy Annie Kwan
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Re: Trader's Thread (Jan 09 - Oct09)

Postby winston » Tue Sep 29, 2009 7:54 pm

50 COMMON MISTAKES MOST TRADERS MAKE

A survey of more than 500 experienced futures brokers asked what, in their experience, caused most futures traders to lose money. These account executives represent the trading experience of more than 10,000 futures traders. In addition, most of these Account Executives (AEs) have also traded or are currently trading for themselves.

Their answers are not summarized because different traders make (and lose) money for different reasons. Perhaps you may recognize some of your strengths and weaknesses. Yet many of the reasons given are very similar from broker to broker.

http://www.ratiotrading.com/2009/09/50- ... ders-make/
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Re: Trader's Thread (Jan 09 - Oct09)

Postby winston » Sun Oct 04, 2009 8:10 am

Quick Fixes by Bill Kraft

Many traders lose. That is no secret. The important question is why so few actually succeed. I have had quite a bit of experience teaching trading classes and working with individual coaching students over the years and I thought it might be useful to discuss some of the observations I have made, particularly in the coaching arena.

In my experience it is unfortunate that most students do not seek help from a trading coach until losses have reached significant levels. It is not at all unusual for prospective students to call telling me that they have lost 30% or 50% or more of their portfolios.

It seems sad that losses have to reach such depths before help is sought. Recently a student commented to me that it is so odd that in almost all other endeavors in life we get training and education first but in trading and investing the norm seems to be to wait until losses have piled up before looking for help.

Undoubtedly, one of the reasons a lot of losing traders wait so long to seek a coach is that they perceive the cost to be so high. In my own case, I charge $3,000 for a single 6 to 7 hour day and $5,000 for a two day session. At times, special discounts are applied that can reduce that cost. I am aware of some coaches who charge more than twice that amount.

Yes, I can agree that $3,000 is a lot of money, but if we really look at it in comparison to trading, it is probably equivalent to one or two trades. When compared to someone who has lost half of a $250,000 or even a $1,000,000 portfolio it is minuscule. As has often been said, we pay for our trading education one way or the other.

In any event, what can coaching actually do for a trading student? In my own case, when a prospective student contacts me I usually start with a brief conversation on the phone so we can begin to get to know one another. I try to find out what they've been doing and what led them to contact me. I try to make a determination whether or not I think I might be able to help them and suggest what I might have to offer in their specific situation.

I always suggest that they think about it after our conversation to make sure it is something they believe could be helpful to them. Assuming they follow up and decide to go forward, we schedule a date and place and I then send them something I title "New Student Information" along with a form of agreement that essentially says that I will not be responsible for their losses.

The answers to the few questions on the New Student Information form help me learn a little more about a student's background. I'm trying to begin to determine what the individual's biases might be so I can see what obstacles they might have to overcome. For example, it is almost a joke in the industry, that people who are trained as engineers often have a great deal of difficulty achieving success as traders. Engineers are trained to gather every fact possible before proceeding and then often seek perfection in the trade.

This approach can be problematic in that
(a) it is not possible to know every fact that is relevant to a trade, and
(b) even if we did, the facts would quite likely change to some degree by the time we actually entered the trade or shortly thereafter.

Please, understand that I am not trying to pick on engineers. I am only using this as an example and do not mean to suggest that no engineer could ever be a good trader. Just one anecdote: I once drew a rough sketch in a class to illustrate how the time value of an option diminishes ever more rapidly as the option nears expiration. It was a hand drawn rough sketch and meant as an illustration only.

During the break when I came back into the room, an engineer had a protractor and was measuring the slope on my drawing. We made a big joke about it in the class, but had I not walked in on him, protractor in action, he may have tried to apply the specific math to later trades.

In any event, after asking background questions, the New Student Information form seeks things like what the student has studied with respect to his trading, whether he has a plan, and, if so, what it is. I ask what strategies the trader has been using and how they have worked out. Finally, I want to know what they expect from the session with me.

Inevitably, the answers provide us with definite direction and often pinpoint problems with the traders method. While many times the trader puts his finger precisely on the problem even before we have met, it is clear that he has been unable to provide the solution. Oftentimes it is as simple as the fact that the trader has a plan but he doesn't follow it or that he has an exit strategy but doesn't pay any attention to his own exit. Sometimes focus is misplaced and the trader may be fixated on creating watch lists while the whole idea is not to create a watchlist, but rather to find the entry in a trade.

The point here is that there is rarely a quick fix. If there were, the trader would already have accomplished it for himself and would have no need for me. I always try to go back to basics and identify precisely how the unsuccessful trader is failing to cut losses and/or let profits run. From there we try to look at ways the trader can improve his abilities to follow his own plan once created and not let the emotions of the heat of trading overrule his pre-determined decisions.

Recognizing the problem is only the first step and even though a problem may be apparent to me it often is not apparent to the student and even if it is, the solution may not be easy. The fixes are not necessarily quick, but once the problem is identified and potential solutions discussed, the student can go forward to work through their problems.

Good trading may be simple, but it definitely is not easy.

Source: MarketFN.com
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Re: Trader's Thread (Jan 09 - Oct09)

Postby kennynah » Sun Oct 04, 2009 12:13 pm

I charge $3,000 for a single 6 to 7 hour day and $5,000 for a two day session.

i am always very skeptical when peddlers start playing down their fees...
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Re: Trader's Thread (Jan 09 - Oct09)

Postby winston » Wed Oct 07, 2009 8:10 am

How Rich Traders Stay Rich by Brian Hunt, Stansberry Research

"Never confuse brains with a bull market."

Congratulations.

You found an asset that was extremely cheap... extremely hated... and just starting an uptrend.

You took an intelligent position size that limited risk.

You did a great job of sitting tight... of being patient and letting the bull market fully express itself.

You are up 500%. Now... for God's sake... Don't confuse brains with a bull market.

This classic quote is attributed to Humphrey Neill. Neill was a stock market expert who literally wrote the book on contrarian investment thinking. It's called The Art of Contrary Thinking. Neill's advice will save you a ton of money as a trader.

You see, the natural human tendency after hitting it big in the market is to "puff up" a bit... to brag to friends and family about how you "nailed it."

Maybe you did some great analysis on the oil market and rode a big move for hundreds of thousands of dollars. Or maybe you found a promising microcap company that turned into a 1,000% winner.

The natural human tendency after doing something great is hubris. And in the stock market, hubris is more dangerous than ignorance.

In 1999, I thought of myself as a great stock trader. I was 22 years old... and I was sitting on huge gains in tech stocks like JDS Uniphase, Ariba, and Microsoft. I would buy 'em, and they'd go up hundreds of percent. I made more money trading stocks that year than I did from my job.

( So this guy is only 31 years old ? Ok, time to discount some of the stuff he's saying. I've nothing against bright young people but as far as I'm concerned they have not drank enough salt water to be able to see the various risks and opportunities :? )

I figured I would be retired and living on a private island by my late 20s. That's how good I was!

Now mind you, this was during the greatest tech stock bull market in history. The benchmark Nasdaq stock index gained 86% that year. I wasn't some incredible trader. I simply happened to be buying while the market was soaring. I had confused brains with a bull market.

You can guess what happened next. When the market collapsed, so did my huge tech stock bets. I didn't use stop losses. I didn't practice smart position sizing. I lost everything I had gained and then some.

It was expensive market tuition... but it taught me a tremendously valuable lesson.

Rich traders reach a happy medium between confidence and overconfidence. The right balance means having conviction in your beliefs and the courage to act on them... but always treating the market as a dangerous place that can bankrupt you if you don't use intelligent positions sizes and stop losses.

The wrong balance is being overconfident, taking a huge leveraged position, and refusing to say "uncle" if the market doesn't move in your direction.

If you've made a bundle on a big market move, go ahead and celebrate a little. Brag to your buddies. Go on a nice vacation.

But take Humphrey Neill's advice... Remember the lesson of the Internet bubble. Don't believe that just because you were right before, you don't have to limit risk. Confusing brains with a bull market will result in bankruptcy

http://www.growthstockwire.com/archive/ ... oct_05.asp
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