What does your turnover look like? Are you doing this everyday? Are you looking at charts for companies everyday? What’s the universe you cover? Etc. ndq & spx are both up 20%+ ytd. Does your process generate risk adjusted alpha?
Turnover isn't as bad as you would think. 46 trades this year. I look at holdings pretty well every evening and trade the next morning if necessary. My universe is the Canadian market. Yesterday my scans showed 2 new candidates and I have a watch list of 62 stocks. (Just did my review and it took less than 8 minutes. I'm full invested right now so It was a quick scan) My portfolio is up just over 30% YTD. I have no idea what risk adjusted alpha is.
A chart is like a beautiful women. It drips with sex. It wants you. And you want what that chart has to give! Excitement. But not all charts are the same.. some have sexual transmitted diseases, some just want your money... it is the relatively few that are pure. So the first question is what type of trade set up are you looking at. Is it a ski slope? A down in the dumps stock that has fallen from say $35 to $5 and then has remained at $5 for years? Well in that case you look for a flurry of volume sticks at the end of the pattern. That shows interest are people getting out at the low? Not after a year they had time to do that-- That's a hint that you should explore further. Is it a head and shoulder set up? Are you buying a higher high? Are you on the cup and handle are you in the cup and ready to head higher up? Another pattern (one of my favorites) you have a stock and it is doing well it has caught your attention and then you notice owch! Big down day followed by one more with volume! And strangely- a late day turn around that brings that days' losses back to zero and the next day it gaps up and guess what-- weak hands are gone and your stock is ready to resume it's natural pattern. In general when I have huge gains (which is often) I do not like those to come on light volume. It's no 100% rule, stocks drift but when I have a position that usually trades 3 mil and it goes up alot on 600K vol... Well you have to wonder if that surge is going to be taken right back. Conversely going lower on high volume is almost never well received. In fact when a stock of mine gaps lower I am preying for low volume, for a distortion that will remedy it's self. What's great about investing is each situation brings out a different tactic in yourself-- lets say your stock sells off hard with absolutely huge volume... well that's Ok that means most likely the stock will over shoot it's true value and you simply buy at the end of the frenetic selling. Behavioral Value is something you learn over time and it serves you well. people panic and that can be to your advantage. Climatic selling that is peak volume / and drip selling that dries up<-- Both are are great tells. One last thought: People get real tied up watching screens of movers. Vol alerts! Whatever I practically ignore the pre- market- I do all my work first and then toggle over and see what is receiving attention. Don't let the market guide you, don't be a follower looking up some stupid Robin Hood Stock.. Do your own homework, do your own charting and do it all before you look at any hot list. In general what has worked for me reliably over the years is I have an idea the stk market looks like it is embracing it it jumps up out of the gate... and I buy the early retrace. Usually about 10:30. Then you must decide am I making a day trade out of this or not. I must say deciding when to sell is a lot harder than when to buy. The worst feeling is closing out a daytade for a 7% gain only to have it really explode the next day. For the knowledge there you have to be inside these companies heads and be able to extrapolate to the general masses.. and other professional investors, what is the hook, the angle that is going to gather eyeballs... Oh it's yet another energy drink but this one has proven to raise metabolism... stuff like that. That's actually from a stock I recently misplayed! maybe not the best example but you need ideas that others can understand even pros. Lastly the stock symbol. I have been thinking about writing a small book on this and self publishing but the symbol is these days more important than ever. Ok. It grabs the attention of the young investor who relies on little else.... Call your company something catchy that will relate to the younger generation and you will get massive out performance. And it's not just catchy symbols, regular symbols that make sense in relation to the parent company are fine too.. It's just perplexing bad symbols that do not point towards the company itself or the area they compete in- those stocks are to be avoided. Or symbols that don't pass one crucial test-- The Test I developed myself-- you ought to be able to say the name of the company and or the symbol followed by the phrase " On My Chin " As in Confluent on My Chin. It's not 100% accurate " Chubb On My Chin " Actually is a good insurance play but I would say this metric works 75% of the time. Hope This Helps ~ stoney
Halfway thru the thread,but I do believe there are a handful of traders who knock the cover off the ball trading momo type strategies.. From what I have read,the 2 most important factors are the chart patterns and money management..It appears fundamentals are a confirming indicator...at best.... Momentum Masters is a good quick read...
What do you identify as an edge? That should determine your thought process. Maybe stick to one or two strategies? Maybe stick to one or two charts?
Anybody ever hear of this guy?? Don't know if he's legit or a Unicorn,but he appears to be a pretty good at reading the charts.. https://qullamaggie.com/
MY THOUGHT PROCESSES AS I LOOK AT A CHART I am looking for bullish/bearish pressures within three contexts: 1) The larger context. This is the market cycle I speak of in my journal. This contexts reveals the larger buy/sell pressures. 2) The patterns that form i.e. triangles…wedges…trend lines…BO’s…. Flags…etc indicate pressures in the intermediate context and SHOULD be correlated with number 1 above. 3) The immediate context. Beside the phase of the market cycle (the larger context) and the intermediate context (price patterns) there is an immediate context. Each bar and it’s position relative to other nearby bars reveals something of the pressures. Each bar being a bear bar, bull bar, or doji bar upon it’s close reveals more hints about the immediate pressures. Consecutive “like” bars indicate pressures..i.e. several bull bars in sequence or several bear bars in sequence. The size of the bars (range) also reveal more about the pressures. I am keen on “seeing” which side is winning, the bears or the bulls, in all three contexts then employing trading tactics, techniques, or setups that give me more probability of a successful trade. The question to ask myself: Given a view of the contexts above, with their buying and selling pressures, which they reveal, will my PT likely be hit before my initial risk is hit? If I can get a positive traders equation then I will take the trade and may even employ additional tactics after an taking an initial position….for example…such as averaging down. In the right context averaging down gives me even GREATER probability of a successful scalp (1 to 8 points in ES) and greater profit potential as I am adding at cheaper prices and when price turns and goes my way I make MORE money. If I have read the pressures correctly I should, in addition, have a high win rate. If I average down and I am right on the pressures I also increase my probability of a winner AND thus a bigger monetary winner. If I am wrong on my read then averaging down increases my probability of getting out at BE or a small loss. The dynamics of price movement after my entires will reveal if my read was wrong or right. Of course there are times when an average down position will go totally awry and I have to have an exit point where I will totally dump the loser followed by doubling or tripling up new entry, but in the correct direction. This way I get back my loss quickly and usually also back in profit.
Doesn't this increase your risk? Is it unreasonable to think you might have more than one loser in a row?
Actually, done in the right conditions, it INCREASES my probability of getting back a previous loss and likely even making a profit. Instead of seeing it as increased risk I view it as “increased profit potential” because my previous position (my loss) has now shown me I am the wrong side of the market for a scalper, and I need to make haste and get on the right side. The doubling up or tripling up is to get back my previous loss in 1/3 to 1/2 of size price movement that created my loss in the first place. Of course I don’t have to double up on my next entry but if the market has proven to me that my previous read is wrong then by doubling or tripling up I get back my loss more quickly. As far as more than one loser in a row. That is rare for me but does happen. If I take a second loss and it is a double up loss then I am not in sync with the market. I am getting whipped sawed. I would see no reason to keep trading with money. I would instead prefer to go to a SIM and see if I can iron out the reasons why I am out of sync and get myself back in sync. Often it may just be a temporary mental issue. Or it may be that I am distracted and not focused. Or it could be physical. I am diabetic and some days my brain just does not work well. If I think I got “whatever” the problem is ironed out, then I can go back to real trading with $$$$, if I wish to continue. If I then continue to lose then I believe it to be better to shut the computer down and go find something else to do for the day. I try to keep everything a process for myself. Not an emotional event. I work the process.