Comments:
Well...
From the perspective of the account balance, it was a rotten day. But from the perspective of my trading abilities, it was a good day.
I have two accounts, and IRA and the 'I am supposed to generate enough income to live off of' account. I can only trade the IRA account with limited frequency due to the cash cycle and lack of margin. ABIO popped up on my new screener and I debated which account to buy in with. I choose the income account. This was meant to be a day trade. I got in too early and bailed 11 minutes later (an eternity) after a small bump and then reverse. after the stall I knew it was going up, and given the day trading restrictions on the income account, I bought in with the IRA account - scaled up after the first full bar and rode it out perfectly. Heh. If only it had been the income account, I would have made back all of the money I have made and loss since January 1st. Oh well.
So - my strategy/plan is changing. Overnight, lengthy stays are tough to do, mentally and emotionally. Also, my faithful screener has been turning up nada for the last several weeks.
Momentum.
Blue Collar Trader has turned me onto FnG's blog and the stuff just makes sense. (Interestingly enough, ABIO was one of his picks on Friday.) The market approach just makes sense - and he appears to be very successful in his trades.
Out of curiosity, I pulled up all of his picks for Friday and backtested them with my intra-day trend strategy. Here are the results:
I thought I would test a bear day (1-22-2010):
Heh. Two winners and one very bad day. Needs a little work, but one thing to keep in mind is that FnG screens and does not trade the entire day on a particular stock, but just as they appear. And I need to play with my stop loss value.
Acouple of additional insights, percent profitable does not mean that much. And I ran the same stock pick list on days other than the 'trade' day (i.e., trading the 3-26 list on 3-1). It seems it is more important to trade on the right day with the right stocks rather than applying the same strategy to a group of stocks every day. I think I knew this intuitively, but did not state the idea in my head. This changes my whole approach to backtesting.
So here is the plan - I am going to wait until I can trade 4 times in a day. Until then I am going to paper trade on my own screener and - FnG's picks.
Exciting times.
http://www.BusyStock.com is an emerging provider of financial service with a distinctive approach.
ReplyDeleteThe unparalleled stock screener built for traders, with 5 day high/low watch, 20 day high/low watch, ATR, RSI, MFI... and more. BusyStock.com offers a fresh perspective beyond what traditional data can reveal.
In the meantime, BusyStock.com's Earning Release Tracking tool has been the buzz for a long time.
Also, We follow Pre-Market with a unique Top 100 Stock list.
We thank all of you for your support and your constructive input which helps us to grow and serve you better. If you like our site, tell your friends. If you don’t, tell us.
Fear and Greed Day Trader emphasizes the point that trading in the momentum style is more art than science. Therefore, knowing tech analysis principles are important but are limited in their value in this style of trading. And so are fixed, mathematical formulas and rigid rules also limited in their effectiveness. It is more seat-of-the-pants than many market approaches. Like when I ride my motorcycle... There are basic rules of the road and the understanding of how to physically operate the bike. But, none of that teaches you the nuances, the life saving maneuvers, safety procedures, etc. Those come from experience: brushes with death and general road time with the machine. I could taech you the basics but I could never teach you what to do if you are riding 40 miles per hour and some idiot pulls out in front of you.
ReplyDeleteI recently read an issue of Newsweek(?) that highlighted the heroic exploits of Capt "Sully" Sullenberger, on the one-year anniversary of the "miracle on the Hudson."
The article, if I remember correctly, was entitled, "Why They Don't Make Pilots Like Sully Anymore." I would encourage you to read it because it is analogous to what I am talking about with this method of trading. That is, he was able to land that massive 50-ton plane in the water because he knows how to fly it and not just set the auto-pilot. Modern trained pilots are 'domesticated" but he was military trained and in a time when you had to have a set to be a good pilot. There lies the difference. Trading with a mechanical strategy may offer success but it has no depth of understanding. Momentum trading means playing price and volume and really reaching into and understanding the movement. That is why Scott Farnham and others like him are great traders. Price and volume are meat and potatoes and that is where the big dogs eat. Learning the basics of tech analysis sets the table but learning how the markets move is where the bread is buttered. Then, learning to manage your mind completes the meal.
Best of luck to you.
Thanks for the insight BTC - I will make it a point to check out the article.
ReplyDeleteThus far in my trading experience I have found that accurately describing entries and exits via technical indicators is frustratingly out of reach. Something about me that wants/needs that mechanical approach. Perhaps I am just not comfortable with the uncertainty (heh - who am I kidding).
However elusive - I think it is a good exercise in understanding to try and quantitatively describe what is happening - things that I should look for entry and exit. My problem is probably the tendency to try and nail it - I need the 'be in the moment' reminders. Thanks again.