3SOF

OK, so I have been trading for little over a year now, and for that entire time I have been a part of the 3SOF trading community.  This place has been a fantastic place to learn from people with much more experience than myself, to discuss trading ideas, and to come up with new ones.  I have to extend my appreciation to Ramsburg and David of course (good to see you back by the way!!) and especially to Melf Elf, who I have had so many productive discussions with here, also to Setravis, Fous, Calven, Aussie, Terliso, Wrangler, La-Onda and many others here at 3SOF... the list goes on and on....

Anyway, in my year's trading  I have seen my total portfolio value decrease by approximately 30%, which obviously is not a very good start, but I have a feeling I am not the only trader who has ended up down significantly in their first year.  However, during this time I also feel that I have learned a lot about TA and chart reading (am still not too hot on fundamental analysis) and consider this an expensive, but necessary education.  In fact, I firmly believe that I have the skills to be successful at this game, however, on reflection, in this first year I have also fallen prey to just about every pitfall of the beginning trader (In no particular order):

1.   Feeling like I HAVE to have all my money invested all the time, otherwise its not working for me
2.   Trading reactively instead of predictively – i.e. buying a stock because I see it going up, with only the most cursory glance as to WHY its going up.  How many times have I found that by the time I manage to place my order, the stock has peaked and then reverses??
3.   Buying with market orders and selling with limit orders – it should be the other way round!!! (well.. mostly)  Better to get out and miss a couple pennies than to miss your execution because you were holding out for that little bit extra.
4.   Analysing stocks and then not following my game plan – e.g., buying where it is because I have to be in instead of setting a limit buy where I want (near perceived support) and waiting for the price to come to me.
5.   Related to 4, not selling (or at least taking partial profits) when targets get MADE
6.   Related to both 4 and 5, simply not setting targets!!
7.   NOT SETTING STOPS!!!
8.   Over trading – on analysis, to date, I have spent over $9000 in trading fees!!!!
9.   Poor (or simply no) risk management – not appropriately analysing risk:reward profiles and not implementing an appropriate risk management strategy, including not maintaining sufficient portfolio diversity
10.   A tendency to be attracted to "story stocks" and then not selling when the technicals tell me to because I like the story.
11.   Holding through earnings when I don't fully understand the fundamental picture.

OK, so that is probably my top 11 trading follies – I can think of several instances in which I have done each and every one of them, to my portfolio's detriment.  I am also very aware that most of these issues fall into one of 2 camps: psychological issues and technical issues. 
On the psychological front, for me it is very much about the excitement of being in on the action, which as most of us know is very addictive.  It is far too easy to get out of a position because it isn't exciting enough, even though it has not violated your trading plan, especially if it is because you want to throw your money into a stock that is exciting.  The other main issue is trading with, and essentially being at the whims of, the herd psychological mentality, and not treating every trade with objective critical analysis.  I have realised that these issues require a major psychological re-evaluation of my trading style and habits, which I am currently undertaking.
The other side of things are what I have referred to as technical issues, which mainly come down to my broker.  I have realised (in fact I realised a long time ago, but just never did anything about it) that my current broker is totally inappropriate for the way in which I trade.  As a UK based trader, I have been using a UK broker that allows me to trade US stocks.  However, the number of stock that I can actually trade is woefully insufficient, my trading fees are exhorbitant (£15 or over $25 per trade!!, plus exchange rate fees both ways because my account is maintained in pounds), and I have been unable to utilise stops on my trading positions, and I now know that "psychological stops" simply do not work.

To this effect I am currently transferring my funds to a new broker (Interactive Brokers) which gives me a US$ account with low fees, and far more technical tools at my disposal.  At the same time, I am taking this opportunity to completely revise my trading philosophy and strategy which I will detail in the next post.  I know this is a bit long, but I feel that it is important for me to write all of this down and put it on a public board so I can return to it in future and make sure that I actually AM following my strategy (which of course is open to modification), and that I am not still falling into the same pitfalls of the previous year.  In this respect, I will be using this board as my personal trading log.  But feel free to post (constructive) comments here too!

OK, so on with the trading philosophy. 

1.   First of all, I have to know and set out explicitly when to call it quits.  I expect to have just under $12,000 in my trading account (depending on the exchange rate when my funds get cleared).  I am going to give myself an absolute floor of $9500, which will represent approximately a 20% decline in total portfolio value from my current level.  If I breach this level, I will have to accept that despite my beliefs to the contrary, and my current attempts to revise my trading strategies, I am simply not a successful trader, and my money would be better off in the bank.  I will liquidate my portfolio, close up shop, and say goodbye to all the good people here.  This is and has to be rule no. 1.

2.   My medium term goal is to raise my portfolio value to $25,000 over the next year.

3.   Initially I will maintain 5 positions.  While this is not at the level I would like for risk management purposes, considering my total asset value it feels appropriate.  As my portfolio value grow, I anticipate adding a position for every $2500 increase.

4.   Of these 5 positions, I will reserve 3 for medium term trades, i.e. 2 weeks to 2 months or longer, and 2 for short term trades, i.e. anything from 1 day to 2 weeks.

5.   I will primarily trade Nasdaq, NYSE and Amex stock (in that order).  I will also consider OTCBB or penny stocks, but only at a half position, to limit risk.  No Pinks.

6.   Stocks with under 100k average daily volume don't get a look in.  I like liquidity.

7.   I intend to primarily trade long, however, I will have a margin account, so am looking to short stocks as well.  In future I may consider options too.  At least initially, margin will not be used for leverage until I feel that my trading strategy is working successfully, and if I do, it will only be used to leverage already successful trades.  No averaging down on margin!!!

8.   I may buy into a full position immediately or average into a position, depending on the circumstances.  I intend to use an averaging strategy to trade breakouts, buying half on the initial breakout and saving the other half for re-test of that breakout/confirmation.  If it means averaging up, so be it, but this should hopefully limit my exposure to failed breakouts.

9.   My intention is to trade primarily based on technical analysis, and by that I mean my TA.  I am open to and will actively use other people's trading ideas, but as they say, you live and die by your decisions in trading, so make sure those decisions are your own.

10.   Related to that, I aim to have each trading plan set out BEFORE I initiate a trade, be that on the basis of daily or intra-day charts.  If I have not set down a plan before the trade, I will do so as soon as the trade is made.  I will do my best to update the relevant threads on 3SOF with these trading plans, and provide updates and links to them from this thread.

11.   Plan the trade... and trade the plan – stick with trading plans once initiated.  Of course it is ok to modify trading plans as a trade progresses and sell bearish formations or candles on a daily or intraday basis, but "I'm bored with this stock", or "my money would be better off in that stock" are not acceptable reasons to close a trade.

12.   As far as technical trading methods go, I will primarily be trading pattern breakouts, but I am also going to try and make more low-risk trades near support using gtc limit orders for reasonable swing trades.  As far as technical indicators, I intend to primarily make use of RSI, MACD and CCI, coupled with a moving average system to support buying and selling decisions.  In particular, I like the 13ema as a short term indicator of trend support/resistance.  Also Terliso's "3 magic lines".  I will detail specifics in further posts.

13.   I am also going to make more use of candlestick patterns, and where possible, aim to implement a doji pivot reversal strategy (i.e. using doji's as potential reversal indicators where the long/short pivot is a print beyond the legs of the doji, with a stop set beyond the opposite leg).

14.   I will set stops for ALL trades upon or shortly after trade initiation.  I have lost far too much money because of a lack of stops, and even if this results in me getting whipsawed out of positions, I would prefer to maintain an acceptable level of risk than run the risk of large losses.

15.   Earnings...  hmmm, I still haven't figured out an earnings strategy as they are often so tricky to play.  Hopefully by the time I start trading again, earnings will be mostly over, and I can consider/develop this one over the next quarter.  Probably the best rule for now is "if you don't have an earnings strategy, don't make earnings plays".

So, these are the basics of what I am setting out to do.  I may add some other trading rules as they come to me, and will continue to update this thread with trades and trade ideas as I go along, as well as overall portfolio statistics (probably on a weekly basis).  This is primarily a resource for myself to keep track of my progress, but I hope it will also be of use to the rest of the 3SOF community, and as always, I would be happy to discuss things more if anyone is interested.

Good trading!!
ScottishTrader

Kudos Scotsman,
Nice plan you have worked out here.  All my best to ya, and i will be watching and sharing as time permits.  This week take a look at TGC, metals are hot, as are canadian mining companys.  I may enter tommorrow if i can get some at .90 or if it breaks 1.00, with a stop around .85.

GNBT is a fav of mine, Support at 2.00, Stop at 1.85, i believe we will see 3 before the first of the year... hmmm

good night and good trading to ya.  Cheers Joe

Good for you Scots. You have just taken a major step towards being succesful.

Good Luck man.

Aussie

Alright, well seeing as I am still waiting for my funds to clear, I thought I would give a play by play worked example TA-wise that highlights some of the trading strategies I intend to implement.  I thought I would use GIGM, as it is a stock I have traded several times, and one that is very well known here.  There has been a lot of TA on the GIGM boards, which also makes it a nice way to compare different styles of analysis, and of course I'd be interested to hear what others think.  I should also say that while I have traded GIGM several times, this is a historical worked example and I did not make all (or even most) of these trades - it is much easier to identify these things when you can see how they worked out.  Identifying patterns and using them to effectively judge what will happen next is always much harder....

So we all know the long term pattern on GIGM over the last year - basically super-bullish 500% gain in the last year or so.  Easily one of the stocks of the year.  However that crazy bullish run peaked in the spring at 10.78, and then pulled back very sharply, all the way down to the low 6s in may and June.  The first thing to note is that while it was a dizzying fall, the indicators (particularly the positive divergence in the MACD histo) indicated that it was overdone, and after the long red june candle, we had an immediate 2-day reversal and it started a short consolidation just below 7.25.  This consolidation identified this area as resistance and set up an initial buy pivot.  The CCI crossed back over the -100 line during this consolidation, which gives us a buy indicator, now all we are looking for is confirmation.  

A bit about Commodity hannel Index (CCI) - you can read about it here:  http://stockcharts.com/help/doku.php?id=chart_school:technical_indicators_and_overlays:commodity_channel_index_cci  
I've started using it on my charts as the reversals back over the +100/-100 signal lines seem to give fairly robust reversal signals, and while it is still a lagging indicator, it seems to pinpoint buys and sells much more closely timewise than other indicators I have looked at.  Pull up some charts on stockcharts.com with the CCI visible and have a look for yourself to get a feel for it.

Anyway, CCI had reversed, RSI had also bottomed, tagging 30, and when price broke above 7.25 resistance we have a clear buy.  A stop buy order at say 7.28 would have worked well here.  When the CCI tags the 100 line at the end of June and pulls back, we have a short term swings sell indicator.  We also have confirmed resistance just above 9.00, from the May gap down that hasn't been fully filled yet and has already had one failed test, so a re-test and failure at this level confirms our swing sell.  Price reverses and by mid july we get a subsequent re-test of our 7.25 support, which doesn't get breached on a closing basis, and is confirmed by a tag of -100 on CCI.  This provides an ideal op to get back in where we started with a nice healthy gain.  At this stage we can clearly see both the inverse H&S developing, as well as a symmetrical triangle.  Anticipating an upside break of both of these patterns while holding a stop around 7.10 seems reasonable here.  Reversal confirmation and a subsequent intraday re-test gives us an idea of our new ascending trendline.

This rally looks good, breaking out of the symmetrical triangle and inverse H&S and busting through 9.00-9.10 resistance on solid volume on the run-up to earnings.  Stop is raised to around 7.60, still below our new ascending trendline, and as 8.00 looks like a clear pivot area. Earnings produce a big gap that then gets killed.  Its real ugly "sell the news"  and hopefully we are smart enough to take the hint and get out with our gains (or even go with the momo, reverse and go short).  3 days of selling brings us back to our trendline, at the confluence of the sym triangle's two trendlines, and we get a bounce there, with the 50SMA holding on a closing basis.  This would be another low risk area to get a good buy, with a stop around 7.80.  However, we may also want to see what it does when it gets back to 9.10 resistance, which it breaks through at the end of august giving us another buy signal.  

Also note that by this stage the 50SMA (blue), 20SMA(red) and 13EMA (green) are all pointing up (as a side note, I keep thinking that moving average derivatives (i.e., rate of change) would be a useful trend indicator)  suggesting we could be moving into a breakout trend here. Price gaps above 9.50 (also previously identified as potential resistance) and it looks like things are cooking.  Then we get the monster candle on HUGE volume to new highs and things start to go crazy.  We can bring our stop up to around 9.40, or a slightly more aggressive 9.80 - a long way from where the price is, but there is also a lot of volatility up there.  

When price breaks to the upside again, (if we are hanging on by the seat of our pants) we sould probably be looking for signs of a top and reversal.  RSI is teetering around 70 and the CCI heads back below 100.  At this point (2 days after the high) we also get a doji candle.  This sets up our doji reversal pivot strategy - i.e. take the legs of the doji as buy/sell inidcators on a closing basis.  The low of the doji is 11.88, the next day the price closes at 11.87, giving us our signal.  If this isn't enough, the day after opens at 11.85, and despite a move back above 12.00, closes again below our pivot.  This is all the confirmation we need.  As Melf Elf has pointed out elsewhere, we also have a great short setup here as things start to turn bearish, with a stop set just above recent highs of 12.55.  

The US gaming news gives us a big gap down and price action gets very hairy.  we know this shouldn't affect GIGM as they have no US operations, but the gaming sector as a whole is getting killed (Partygaming in the UK just got a 70% haircut).  If we are short, we're licking our chops and may even cover on this breakdown, especially as 9.00-9.10 support holds once again.  If we are looking for a buy op (as I was at the time) things are probably a bit too hairy unless we are REALLY confident that fundamentally this is overblown.  However, we can use the legs of this long-legged high wave candle as pivot points again (on an opening/closing basis).  A couple days later, the CCI pops back up above -100 (buy indicator) and we get our open above our buy pivot, giving us confirmation.  This turns into only a 3 day move, at which point we get another doji/hi wave, which we can use to implement our doji reversal strategy.  the low is 11.01 and the next day gives us a slightly more bearish hi wave candle, but it closes bang on 11.01.  Now we can also see the beginnings of a descending trendline, which suggests this move may not bust through 11.25-27 resistance (the high of the big september candle and of our recent doji pivot). The next day gives us a clear sell signal and we are out for now.

Now the last couple weeks have been fairly bearish in tone, and GIGM broke thrrough our old ascending trendline, while respecting the new descending trendline.  It could easily break down further, but personally, I think we have a good buying op now or very soon.  Again, we have a positive divergence in the MACD histo, price has already tested 9.10 support, and the CCI just pulled back above -100 again, giving us another buy indicator.  The last 8 trading sessions have marked 10.00 as resistance, and a move above here would break this and descending resistance.  A nice strategy here would be to enter a limit buy just a bit above 9.50, maybe 9.56, with a stop just below 9.00.  If this doesn't get filled, we buy a breakout above 10.00 (same stop for now).  Earnings are on Thursday, which represents some uncertainty as we could easily get a gap either way.  However, considering we have already had a decent pullback from recent highs, indicators look good, and we already know that GIGM is producing good numbers, it may be a risk we want to take.  That call is only one each individual can make based on their confidence in the fundamentals and the markets potential reaction to them.

Anyway, I just wanted to post this to both give an idea (and cement in my head) the sort of signals I am and will be looking for in future trades.  Of course it is much easir to see all of this in hindsight, and much harder to respond to and respect the signals given when you don't know the  outcome.  Looking at GIGM's chart now it seems very obvious to me that if I had paid attention, all the signals were there.  However, while I caught some of the runs just detailed, I cerrtainly didn't catch them all, or even most of the value of the runs.  My entries were late and my exits were often mis-timed.  For example, after riding through a good chunk of the 'house of pain" June reversal, finally getting shaken out just above 7.00, (because it hurt too much), only to see the share price reverse and consolidate, I completely failed to buy the 7.25 June breakout.  Instead I bought the lower end of the red candle whcih I failed to sell when it hit 9.00 resistance and rode right through the pullback.  I finally sold in August before earnings, after the sym triangle break, but while it was right on the inverse H&S neckline, thinking "whew!! after a month and a half of being in the red, at least I got out with a small profit". I didn't get round to buying GIGM again until the big volume candle day in September (mostly for "my money is busy elsewhere" reasons).

My point is that while I'm always doing TA on charts, most of my trades have been psychological - i.e. "buy because its running", "sell because it hurts too much".  Simply put, trading reactively.  If I actually used my TA to identify buy targets and buy pivots, and then actually acted upon them I could have made some very successful trades on GIGM in the last 6 months.   Another thing on this -  When you are checking your stocks (or potential stocks) after you have done initial TA, always go back to the chart and keep identifying patterns/candles as they develop  It simply is not enough to check on Yahoo Finance or whatever to see what went on that day.  Too many times I have not paid attention to chart development and then suddenly a stock I should be in (because I monitor it regularly and "like" it) is running away without me and I go "whoa nelly" and chase it to get a poor execution.

All of this I'm saying as much to myself as to anyone else who is reading this.  I'm hoping that by writing this down and repeating it over and over, it will go in and get cemented.  Trade predicitvely, not reactively otherwise while you may get lucky, you will probably just get creamed

Cheers,

ST

OK, so my funds cleared this afternoon, which was great, except that I missed the open, so missed my anticipated entry in GIGM - didn't expect it to react so violently to my analysis!!!  As soon as it hit 10.00, volume just went crazy and it was up at 10.40 in no time.  Looks like GIGM wants an earnings run this week!

Picked up 4 stocks today -

ESLR, 2/3 position at 8.57, as per my analysis on the eslr board, stop at 8.17
http://www.3stocksonfire.org/trading/index.php?topic=3373.msg75971#msg75971

GIGM, late in the day, full position at 10.25 (was holding out for a re-test of 10.00 area but didn't get it), stop at 9.92.

PCU, one of David's suggestions that looks great, full position, at its highs at 56.35, stop 52.95

OMNI, after earnings killed it, looking for a bounce, in at 8.86, stop at 8.42.
http://www.3stocksonfire.org/trading/index.php?topic=5343.msg76081#msg76081

Nice to be back in again, but I have got to get a handle on IBs trading system, very different to what I'm used to!!

Good trading
ST

Scotsman,

Great posts on your trading philosophy!  Applause. 

Cheers Melf, Aussie, and Joet,

Am still getting settled into my new trading routine, it is harder than I thought!!!  I find it very hard to fight the temptation to trade obsessively... and hold off, looking for those breakouts and good buys...  having low trading fees and fast execution really makes it that much easier, which is dangerous!  (Even though it is definitely a good thing!).

Picked up some CNXT this morning when it printed 2.03 - thought it was ready to break out of that triangle, but it sold off later in the day - still looking positive though.  Nice triangle pattern, good volume, obviously wanting to break to the upside.

Pretty hapy with my OMNI pruchase, which I thought was possibly a bit risky, but todays reversal candle suggests that yesterdays reaction was overblown - will maintain a stop at 8.74 and look for continuation this week.

Cumulina mentioned that ESLR got pumped by cramer as a "buy monday, sell wednesday" play - hence yesterday's gap up.  I didn't like this so I set me stop just below th bottom of yesterdays gap. was acting well in the morning, but stalled and then tanked, taking out my stop and leaving an ugly engulfing candle - might be a good quick short set up if it takes out this low again tomorrow (will have a look at it...)

GIGM was ripping today, but also reversed heavily and gave up all its gains.  Leaves a long legged doji on the chart, so I will see what tomorrows pre-earnings action suggests.

Also picked up some DNDN this afternoon - it was looking positive late in the day as it played with 5.20-22 area, and lucky me, I caught the top at 5.25, but I think that DNDNs chart is looking much more positive, so I am willing to give it a bit of leeway.  Symmetrical target is 6.25, initial stop will be set at 4.73.

PCU also looked good, but gapped up a little high, leaving a bit of a toppy candle.  Is looking a little dangerous after a 15 point run, but I like David's analysis and will hold for now.

Quote from: ScottishTrader on November 05, 2006, 06:37:41 PM

4.   Of these 5 positions, I will reserve 3 for medium term trades, i.e. 2 weeks to 2 months or longer, and 2 for short term trades, i.e. anything from 1 day to 2 weeks.

I see you have opened 6 positions in 2 days, based on rule #4 that looks like over trading to me.

Good luck

Good luck with your new trading philosophy/strategy ScottishTrader!

Quote from: ScottishTrader on November 07, 2006, 07:57:39 PM
Also picked up some DNDN this afternoon - it was looking positive late in the day as it played with 5.20-22 area, and lucky me, I caught the top at 5.25, but I think that DNDNs chart is looking much more positive, so I am willing to give it a bit of leeway.  Symmetrical target is 6.25, initial stop will be set at 4.73.

Scotty, I just want to remind you that DNDN will make earnings announcement tomorrow. DNDN chart surely looking good but earnings makes me nervous sometimes so I sold my position today.

Good luck!

Quote from: AussieTrader on November 07, 2006, 08:18:14 PM

I see you have opened 6 positions in 2 days, based on rule #4 that looks like over trading to me.

True - I was looking to get going and got stopped out of ESLR this afternoon, so moved into DNDN at the EOD.  As Terliso pointed out, they are reporting tomorrow, and I will see how this is reflected in the PM. It does seem like overtrading to me too, but as I said, I'm having a little trouble settling into positions that I want to hold/feel attractive to me.

OK,

So after my first week of trading with my new account/philosophy I have already learned several lessons that I will try and incorporate into my trading strategy.  As Aussie pointed out, I think I got a little bit trigger happy with the trades early on, in fact I made 17 trades this week(including partial buys/sells)!!!  Now that IS overtrading (for me anyway)  I hit my pattern day trade limit on Wednesday, which meant I couldn't buy anything on Thursday or Friday (serves me right) so I was left to manage the positions I was holding. 

So first rule, I have to watch the pattern daytraing rule, I only have 3 day trades per week (including getting stopped out), and I lost 2 of these from getting stopped out of positions early.  From now on, I will put in my stop the day after I have entered my position, saving those day trades for either quick profit taking on an intraday rally, or if a position I have entered suddenly turns really sour on me.  I will avoid day trades where possible as it seriously affects my ability to trade later in the week.

Second thing I learned regarding stops.  Twice this week I set my stops too agressively.  In fact, in both those cases, I set a reasonable stop and then brought it up (into the danger zone) when I thought it was "safe".  This happened for both ESLR and GIGM, and I got stopped out at the lows (in fact I think I got THE low on GIGM on Wednesday, as it bottomed at 10.12, taking out my 10.15 stop and then reversed.)  It may add a bit more risk, but stops should be placed clearly below (about 4 ticks?) significant support to avoid being kicked out of a position.

And I still managed to succumb to the "buy it because its going up!" mentality once or twice (neither of which worked out for me.  Have to be very careful about these, as often thay can really hurt you.  Will keep an eye out for speculative penny rippers on the 3sof board, where I can get in EARLY, and not end up catching the top of the move.

Finally, as I now have very low trading fees (my average fees for a position seem to be between $1 and $4) I need to be more aggressive about taking profits (or at least partial profits) on strong positive moves, and then aim to buy back close to my cost average.  Pretty much every stock I played this week (OMNI, GIGM, ESLR, DNDN, PCU, NVAX, CNXT) made strong moves, up at least 5% and then pulled back significantly, wiping out these paper gains.  If I can do this while maintaining my day trade rules, I will be able to at least lock in some profits, protecting against reversals.  This sounds easy, but from experience I know it is not, and I will start working towards setting short term targets for partial profits before-hand, so I don't have to watch the intraday charts like a hawk.

Anyway, here is my weekly portfolio breakdown:

Starting Portfolio Value:  $12325.55
Net value end of week:  $12241.09
Total % P/L: -0.69%
% P/L on closed trades: -1.87%

Current holdings:
OMNI 300@ 8.86  +0.85%
DNDN 500@ 5.25 +0.27%
NVAX 500@ 4.75 -1.16%
CNXT 900@ 2.03 +7.83%

hi scottishtrader,
applause on your honesty with this thread.
trading, while on the surface looks extremely easy, is probably the most difficult thing i have done and for me it is all based on discipline, which i am not very good at, but i am learning.
        i have been through and still go through all the things you talk about in your posts. ( i think i may have stopped chasing stocks we'll see.) over trading , holding losers, impulsive trades, getting in at the high right at the reversal point etc. etc. and yet my analysis of a stock is often right., and when it is not , i have been able to see it very quickly yet unable to pull the trigger.  which for me is an issue of trusting my desicion making. too many techniques and indicators have sometimes paralized me , (melf elf's mind is far more advanced in this department and can utilize a lot of indicators and methods well).
which brings me to my point of finding my own trading style and sticking to one method that will make me a better trader , because after all that is the goal right? to become a good trader . the money will come with that.
recently i had a period of loses that made me take another look at what i was doing .
here is how i approached it.
1.  i cut back on my trading . i only hold one or two, or three positions at a time . this works for me. one is often plenty. ( exept i am holding a bag of ptsc, but so small a position that i ain't gonna let it go unless they go bankrupt!)   
2.  instead of paper trading i decided to trade very small amounts , 100 shares etc. ( i pay 1 dollar commision)  so that a 10% loss would be finacially minimal. it is amazing how much more comfortable it is to not have too much on the line. if the stock moves $1 in your direction you only made 100 bucks but you have the satisfaction of a good trade. if it moves against you and you get stopped out on a down turn you have a managable loss .
3. i take small profits 5% 10% at key resistances or just below. i try not to wait for the exact number. if resistance is $5 and it hits $4.98 that is well close enough for me. this is one of the harder thing for me because that is where greed steps in. the mind ticks over . 
4. i try to always wait for the pullback to key resistance or 9 ma 13ma 50ma etc.. it always comes , always . if i miss it and it goes to the moon without me i move on , there is always another oportunity in the market. ( this goes back to chasing)
5. don't be in a hurry and go easy on yourself
anyway i could write more but i have to go. i hope this helps .
good trading,
maxi

Quote from: rickjust on November 11, 2006, 09:57:46 AM
hi scottishtrader,
applause on your honesty with this thread.

Maxi and Scotsman,

Applause to both of you for your honesty on this thread, and for the great discussion.  I've been wanting to comment on your posts, line by line, I can relate so much to all of what you've said, but I'd probably end up typing for days. 

So, just a few comments...

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trading, while on the surface looks extremely easy, is probably the most difficult thing i have done and for me it is all based on discipline, which i am not very good at, but i am learning.

I laughed out loud when I read that, Maxi, I related so much. 

The discipline really easy the key, I think.  That's why I try so hard to "objectify" my trading as much as possible, stay focused on the plan, and BE DISCIPLINED about executing it.

Specifically, "Here's the pattern...there's the breakout...here's my stop...there's my target...that's my risk: reward....this is trendline support....etc."

That still doesn't make trading "easy," but I know what you mean.  It sure makes it "easier."  It removes the uncertainty that we feel, sitting in a trade wondering where support is...how much risk we should take...where we should exit the trade, and take profits.

"Having a plan," and knowing the answers to those questions in advance of the trade makes trading a lot easier.

There still are the problems, like false breakouts and pattern morphs, that we have to deal with, which is why it isn't a "slam dunk" easy, but again, trading doesn't have to be as difficult as we make it.

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i have been through and still go through all the things you talk about in your posts.

I still do, too.  I don't think that there's a day that I'm not tempted by one of my "demons."   

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( i think i may have stopped chasing stocks we'll see.)

Good for you!  That isn't one of my demons.  But,

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over trading

That one sure is!    

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holding losers

Get thee behind me, Satan!  That is SUCH a demon for me!     

"Darn!  I just got stopped out.  I'm pretty sure that I'm being faked out.  I'm NOT selling!"

The stock ticks lower...lower...lower...

"Aw, CRAP!  Now I have a 7% loss instead of a 3% loss.  Maybe if I "hang on," it will rally into the close, and I can get back to only a 3% loss."

That demon is EVIL..EVIL...EVIL 

It's one of my "Damned if you do...damned if you don't" demons.

More often than not, if I "feel" that it's a quick downside fakeout, but I "honor my stop" and sell it, the stock rallies.  If I don't "honor my stop," and sell it, the stock goes lower...lower...lower...

That's one of the NOT EASY aspects of trading that we all face from time to time, and we probably always will.  The way that I handle it, is that MOST of the time, by far, I "honor my stop," and sell.  If the stock rallies after that, I call it a "GOTCHA!" but I forget about it as quickly as possible, and move on.

In the long run, I know that I've saved myself a lot of headaches by "honoring thy stop."

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impulsive trades,

Total demon. 

I see something during the day that looks really interesting.  I know that I haven't done enough homework to prepare for the trade, but I jump on it anyway. After I own it, the stock starts  down, and you wouldn't believe how fast I can then do my homework, only to find out that I have no business being in that trade. 

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getting in at the high right at the reversal point etc. etc

I HATE THAT!!! 

Those false breakouts!  On those, I sometimes will buy just about the EXACT high tick, then the stock goes back below the breakout, then below my stop.  Grrr-rr.... 

Happened to me in ESLR on July 7.  Ascending Triangle breakout.  FAKEOUT.  Went right back down below the breakout, then it knocked out my stop.

ARRRGGGHHHHH.

"&^%$ happens!"  I've come to view that as a "cost of doing business."  It's going to happen from time to time.  Don't get upset (which I do).  Move on. 

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and yet my analysis of a stock is often right., and when it is not , i have been able to see it very quickly yet unable to pull the trigger.

 

One of my most costly demons. 

The analysis was fine.  Like my ESLR example.  I recognized fairly quickly that it was a fakeout breakout.  Nothing that I can do about that.  Except SELL when I see it.  I sold the break of the ascending line, which was my stop.  I think I've conquered that "unable to pull the trigger" demon, but geez, it took me a long, long time to get over battling that temptation to "hang on."

If anything, I might have gone overboard in the other direction (another demon  ).  I'm pretty ruthless about cutting out losers.  Too much so, I think, but that's my IMPATIENCE demon at work.   

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which for me is an issue of trusting my desicion making. too many techniques and indicators have sometimes paralized me , (melf elf's mind is far more advanced in this department and can utilize a lot of indicators and methods well).

Actually, Maxi, I use relatively few indicators.  RSI, MACD, Ichimoku, a glance at volume and the 50/200DMAs, and that's about it.  Your mind probably is ten times more advanced than mine.  I've only had a little more practice at this than you have..

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which brings me to my point of finding my own trading style and sticking to one method that will make me a better trader , because after all that is the goal right? to become a good trader . the money will come with that.

Yep!  You guys reall-ly are on the right track with your thinking here.  With some discipline and determination, you guys are going to do fine.  It can be a lot "easier," but it also is hard work studying the charts, preparing for the trade, then executing it.

If you dedicate yourselves to creating success for yourselves, you will achieve it. 

Best of luck in all of your trades!