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Important insights from one of our workshop participants this week: a ton of good learning inside these ideas
Our initial stop placement reflects the information available when our trade is initiated. Any price action after the trade provides additional information and can be used to update the stop placement. An example is the use of the MACD histogram to exit before taking a full 1R loss.
If your system is designed to catch singles, don’t wait for the home run before exiting. Take the single and move on (until you can recognize when the market is making it obvious that this time you should hold on for more).
Markets may have unique characteristics that should be taken into account when making framing and trading decisions. DBA, for example, can be framed with tights stops, seems to make orderly moves, and sees more action only after the opening of the grain futures markets.
Framing trades with tights stops right after the open feels like getting caught in a dolphin hunt (the underwater tornado). The lunch and afternoon sessions tend to provide a better environment for identifying trades using the WMB method.
The importance of understanding the type of move you’re trying to capture (F –> C; B –> A), and matching your entries/exits with that type of move.
After learning how to trade large index ETFs (IWM, SPY…), index futures provide a way of using the same skills to produce higher returns.
Respect the R.
Opportunities are available any time the market is open.
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- 5/26/2011: Scalp System: Sniper (tradewest.wordpress.com)
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- Veksler’s Forex Blog: More erratic price action, ugly swings and cleanouts ahead (tradingfloor.com)
- FX Options Update: Greece concerns spark EURUSD vols buying (tradingfloor.com)
- Day-Ahead Musings for Tuesday, 5/16 (ampleanalytics.wordpress.com)
- Day-Ahead Musings for Monday, 5/15 (ampleanalytics.wordpress.com)
- Long Index ETF (tradeking.com)
- Equity Update: Optimism remains as Ford gears up (tradingfloor.com)
defining critical price levels for any trading target
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Price levels you should know for any target in your asset allocation strategy
- Minimum mandatory exposure
- Minimum price level indicating RS momentum advantage
- Limit of Maximum rational outperformance
- Maximum outperformance in the lookback period
- Maximum outperformance since the target began trading
- Your estimate for next new high?
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pre-market call on silver
the overnight session in precious metals was strong, and given the “maxpain” and oversold condition of silver, we ar prepared for an upward-trending momentum day in silver. An intraday move of 7% in silver is normal these days (between low of the day and high of the day) which translates to a move greater than $2
1st hour statistics for high of the day & low of the day
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some analysis in our chatroom today examined hundreds of symbols (ETFs and large cap stocks) that make their high of the day or low of the day in the first hour of trading. To our surprise there are a considerable number who’s probability of an early high or low of the day is greater than 95%.
That’s a staggering number, especially when we examine how much follow thru after the first hour there can be; we’ll be working this up into a tarding staregy pretty quickly because we like the odds and the additional control it gives over our trading, once the morning shenanigans at the open are past
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weekly themes: defensive sectors, consumer staples
all of the globsal indices are testing double bottoms, while all 4 iof the main US indices are stronger
the lack of multiple day follow thru has really favored individual companies at the expense of indices
Clear winners have been old boring stocks like: JNJ, KFT, MCD, WMT with INTC in the techs showing real strength as well
charts of interest link
http://www.youtube.com/watch?v=sSJIZMLbD6s charts of interest link
daily report review link
http://www.youtube.com/watch?v=ZHnn5XepgDw daily report review link
weekend report review link
Continuous learning is continuous improvement
Andrew Lo notes that beating the market does not come easy, nor is it something that is easy to maintain. Lo likens the pursuit of above-average returns to that of a company trying to maintain its competitive advantage. After introducing a hot new product, a company cannot just sit back and wait for the money to roll in. In order to remain above the competition, management must be flexible and look for ways to continuously improve and innovate. Otherwise the competition will overtake them. Money managers, traders and investors who find ways to outperform the market must also remain flexible and innovative. Just because a method works today, does not mean it will work tomorrow. In an interview with Technical Analysis of Stocks and Commodities, Lo sums it up by stating:
“The more creativity you bring to the investment process, the more rewarding it will be. The only way to maintain ongoing success, however, is to constantly innovate. That’s much the same in all endeavors. The only way to continue making money, to continue growing and keeping your profit margins healthy, is to constantly come up with new ideas.”
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weekend review May 15, 2011
- Market in Bull Normal; Market is neutral on a short term basis
- Equities were sideways all week, digesting last week’s gains, with a slight advantage to the US and its defensive sectors
- Commodities experienced more weakness this week, with silver remaining highly volatile
- Rebalancingproject:
- Monthly rebalancing : next re-evaluation on/about 1 June
- 331 is holding EWA, MDY, IWM;
- 631 is holding EWA, MDY, IWM
- Quarterly rebalancing: next re-evaluation on/about 1 July. 333 is holding DIA, MDY, IWM;
- Monthly rebalancing : next re-evaluation on/about 1 June
- ETF2 notes: selling EWG, EWY by rule (below average scores on AVG and STR, and negative on 5 week %)
- Theoretical exposure is recommended at 40%; therefore no new buys
- model portfolio is at 40% after the sells
- Making preparations this week for the research weekend and live trading week on KC. Time flies!
- You can use this link for adding questions and/or comments to be addressed in the weekly webinar
http://www.surveymonkey.com/s/WeeklyWebinar
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- Apple Weighting Slashed in Dramatic Nasdaq Retooling (techland.time.com)
