daytraders after market lounge 10th may 2012, page-18

Gandalf, sorry for the belated reply. But the subject matter in my opinion deserves more than a few sentences. My answers are directed with the assumption that you are a day trader. As you asked me on the day traders thread. Also there is much more to it than I can answer in a single post.

1) struggled to find any strategies in print anywhere I can use.

The chances of that are very small. The reason for that is the market is ever evolving so any single strategy or method needs also to evolve with the market. As the trader has to evolve with the market also.

A= “Trades that work in hot markets destroy accounts in cool ones.
Stocks trend only 15% to 20% of the time. Price ranges cause grief to momentum traders the rest of the time.”

So you need a strategy that conforms to all market situations. And that can be tweaked to utilize and gain profit from all the trading opportunities that present themselves. This is why statements like “ only trade up-trending markets “ are inexcusable and wrong. As a day trader you need to trade all movements that are going to increase your trading account. Due to the constant tweaking needed to stay in tune with the market makes any system printed a year ago all ready redundant. The best you can hope for is to read many books and take the best they have to offer to create a system that encompasses the above. And that through minimum modification keeps you in tune with this ever evolving market.

2) Plan the trade ,then trade the plan. Words to live by but not a stategy in itself.

If you had no strategy it would be impossible to plan anything. An architect must have a pencil. Similar a trader has to have a plan. Most traders have no plan. They run no calculations. And yet are surprised when they fail to execute a profitable trade. This is linked with the above. Create a strategy that gives a trading plan to cover all market conditions. If you only trade gaps. Then you miss profit on break outs. If you only trade breakouts. Then you miss profit on range bound action. Ect, ect.

3) Like bazinga, I hold stocks that are too costly to cut for a loss and I am close to hitting a wall capital wise.

You have had no plan. Therefore your positions have gone against you.


B = “Decide how long you want to be in the market before you execute. Don't daytrade an investment or invest in a swing trade.”

When I pointed out that a distinction should be made between day trades & short term trades. I became the bad guy. I wasn’t saying it for my benefit. I know how to trade and I have a very good trading strategy. Now you may understand why I stated it. A day trade must be considered different to all other trades as it needs separate emotions to trade the trade unemotionally. Greed must not be a factor in a day trader as it leads to positions being held until the trader is like you and bazzy, trapped, unable to trade any further as the trading capital is tied up in useless positions.

C = “If the market doesn't perform as expected, exit on the first reaction. You have missed something in your analysis, exit and play else where.”


D = “NEVER, listen to anyone else's opinion! Only YOU know when your trade isn't working. Chat rooms are full of people looking to justify the position they took in a trade. This will clutter you up with useless information and one sided opinions concerning stocks. So avoid all public forums, unless your using them to have a laugh.”


4) I have been trying to get my head around T/A so as to identify entry & exit points. Is that a strategy?


Of course it’s a strategy. FA is only useful for long term. It gives nothing for the day trader. Looking at an announcement is fine. Reading that announcement is a waste of time. If the announcement is good you will see it reflected in the price. But the 10 minutes you save by not reading it is well worth spent looking for your next position. If taking a long road journey you wouldn’t embark without first reading a road map. How any day trader can day trade without looking at charts and understanding them, boggles the mind. In effect you’re on a busy highway driving with a blindfold. It’s also not just a matter of looking at the chart. You need to understand the chart and TA to a level of expertise that creates profit. 10.000 hours is recommended to become a professional in most endeavors.


E = “Work methodically through each analysis, and never be in a hurry.”

You can’t work through anything if you don’t understand TA.


5) Having stops I understand, but dont think that's a winning strategy in itself.

I’ve posted extensively about stops. Used wrong they do & will cost you a lot of money.

F = “Filter the trade through your personal plan. Ditch it if it doesn't meet your risk tolerance.”
G = Make sure your trade fits the clock. Price movement aligns to specific time cycles. Success depends on trading the right ones. Manage time as efficiently as price. Time is money in the markets. Profit relates to the amount of time set aside for analysis. Know your holding period for every trade. And watch the clock to become a market survivor.

I combine F + G and that is my strategy concerning stop losses.


6) Yeh ,position sizing & money management as well.


The spread tells you about position size. Time to hold trade also tells you the exact position size. Again the 2% rule for me is laughable. If you have executed your trade based on your plan set to a specific time period. You know how much to place into each position. The only rule in money management is to minimize risk and create profit. Control risk through planning before seeking reward. An old market saying goes. “Attention to profit is a sign of immaturity, while attention to loss is a sign of experience.”

The market will always take from the foolish and give to those that are prepared. If you want money from the market, you have to earn it through hard work, attention to detail and rigorous planning. Expect to work far more than 40 hours per week as a day trader. This nonsense about good traders spend an hour a week on research is an absolute lie. I know many professional traders and not one of them spends any less than 50 hours per week on the market. Most people spend eight hours at work a day for $400.00 a day. I spend six hours a day at my job. If I was only making $400.00 a day, I wouldn’t get out of bed. I make the profit I make because I apply myself to studying and researching my potential positions.

7) But my losses tell me there's gotta be more to it that I have'nt worked out.


Your losses tell me exactly the same thing. You have no trading plan or strategy.


8) Appreciate anything specific you can add to help me become a better trader m8.


Just take all the above into account. Create a trading plan. Tweak it to suit your personality. And don’t deviate from it. On a public forum, that's as specific as I'd like to get. I don't mind giving of my time to help someone. But as usual I expect it to be received by a few as arrogant and the blowing of my own trumpet. Due to that small minority I am getting more & more selective in what I post.

Nothing desperate about it. You’ve hit an impasse in your market career and have asked for advise. I just hope that my answers can help you to bust through this blockade so that you have a fruitful and enjoyable career.

Once more I'll add the market truths are not mine. I've picked them up over the years from numerous places.