The trader's thread

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plantguy90's picture
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The trader's thread

Hey since there are a few on this forum that see opportunities in the current financial markets, thought I'd start this thread a spot to talk about anything related.  Often on other threads the subject wanders into the matters of finance, savings, financial assets, and so not wanting to steal any more threads, if conversations get too specific about certain trades, strategies, whatever, lets put it up here. 

I for one am trading more aggressively with my savings than ever before.  I see volatility as opportunity. 

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Re: The trader's thread

As an experienced and successful (I made money last year and am reporting gains on my taxes) trader/ investor, I caution anyone who reads this thread to do their own work.  We all see things differently, some use charts, some don't... Some of us follow rules, others don't ... Those of us who use charts use different time frames and indicators.  It might be stated someone is currently long in a position, while you might be short in the same position.  Both may be correct depending on your time horizon. 

A serious word of caution... Just because someone is in a particular trade, doesn't mean that you should jump into it yourself!  Don't be influenced by what others are saying. Find the evidence to backup what someone else is putting out there before putting any $$$'s into the market.

Do your own work!

Cat

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Re: The trader's thread

Sage advice, Cat!

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Re: The trader's thread

I found this on another forum.

Anyone spot a Bubble?

long term dow

I do however like Jim Rogers take on commodities though. Too bad I've got nothing to invest/gamble with.

Best of luck.

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Re: The trader's thread

plant -

Good idea to start this thread.

Echoing Mrs. Dogs - trading and investing is a do it yourself thing.  Don't count on someone else's system, or plan or newsletter or 'advice' without thoroughly examining it and confirming it for yourself and seeing how it plays into the trading technique you are looking to do.  Find what works for you and do it.  Don't be content with doing it until you get it right - Do it until you can't do it wrong.  It is especially critical to not become dependent on someone else for your information - because when that person is gone or the information source (newsletter, ezine, etc.) goes away, you won't have anything left.  You must learn to assimilate information by yourself and integrate that into your specific trading approach.  Do not listen to the noise around you - it will only distract you from what you are doing.

If you need a daily reminder or bit of encouragement, look in the mirror in your bathroom - what you see is the only person who truly cares about your money, the only person responsible for what happens to your money, the only person to thank when you trade well (and you will) and the only person to blame when things go wrong (and they will).

Remember Chris M's post about trusting yourself. 

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Re: The trader's thread

I have no methods I follow, so I have to say I'm a "gut" trader.  Also I have limited chances to play the markets, and my schedule is inconsistant, so my risk profile is huge right now.  I temper that with a conviction that the issues I trade have limited movement potential in these turbulent times.  I am open to new ideas, but I aint as good as I once was, to borrow from a western song, meaning my ability to monitor too many ideas has shrunk since my younger days.

Let me start with a recent idea:  I think GE will trade below 5, probably break the buck like Citi someday.

 

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Re: The trader's thread

Dogs and Cat:

I've heard each of you talk about your trading success.  I understand and agree that taking "live" advice can be dangerous, but perhaps you wouldn't mind sharing general strategies or case studies of past trades that we might learn from. 

Cheers,

Patrick

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Re: The trader's thread

Plantguy -

Your post gave me both a sick feeling in my gut as well as feeling of glee.  The sick feeling is due to the fact that "gut" traders typically do not have a long shelf-life.  The gleeful feeling is becuz I can make a ton of money from gut traders, so it is in my own best interests to have "gut" traders in the market.

Keep in mind - one should trade what the market is doing, not what
one thinks it is going to do.  If, using a set of rules (not simply your
gut), you determine that GE is going down, then by all means...TRADE!


Keep your trade size consistent - do NOT bet the ranch on it.  What I mean
by that is, you could be right or you could be wrong.  I would guess that
at some point in your life, you have done something stupid.  However, at
the time, it seemed like a good idea.  Time proved otherwise.  Because of
that, you can not tell me when you are going to do something right - and
likewise, you can not tell me when you are going to do something wrong.
As such, if you are consistent with your trade size, then you won't get killed
when something going against you - and, despite everyone's dreams - you also
won't get rich on a single trade. 

While it goes against my own selfish interests, please please please get some
education - trading by your "gut" is like going to Vegas and choosing
Red or Black.  You may be right now and then, and might even get a string of
winners, however, it is simply a matter of time....

 

JL Lord

 

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Re: The trader's thread

Hi Everyone,

Great idea for a thread Plantguy. 

I have always been interested in trading but never knew where to start.  I would like participate in the markets but without a base knowledge and a little insight I am not going to. 

 JL, you mention getting some eduction before starting to trade.  I agree wholeheartedly.  I was hoping some of the members of this board could help a beginner, such as myself with, with some titles for required reading. 

Thanks in advance for your helpful responses.

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Re: The trader's thread

I think there is no better read for beginners than Stock Investing for Dummies available anywhere the Dummies series is sold.

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Re: The trader's thread

Patrick,

If you want trade dates, I have plenty of those.  Not sure they are much help unless you are using the same charts and indicators that I do.

Basic strategy... Trade in the general direction of the market, and trade around known events, such as splits and earnings.

Cat

 

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Re: The trader's thread

JL, I appreciate your copmpassion, but would you care to inform us how you happen to be on the "other side?"  By gut I simply mean I trade when there is belief that probability for making money is good.  Maybe my semantics isn't quite up to date, I am an individual trader and not an institutional one.  I was a stockbroker in a previous life, I've worked at a bond desk, now I am a farmer, so I don't think I'm doing all that bad.  I dont trade more than what's in my comfort level, my asset allocation allows me to sleep soundly at night.  I pity those who have to get up and actually work in that racket every day, I remember those days and people and don't miss it one bit.  I can walk away anytime, it doesnt impact my life.

 Edit:  Just googled "JL Lord", Apparently you sell options collar strategy books for $300, as politely as I can, thanks, but no thanks...  As Dylan once said, you go your way and I'll go mine...

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Re: The trader's thread

cat;

is there a search function on the forum that allows you to dig up threads? I cannot find any search function!

 

thanks!

 

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Re: The trader's thread

paranoid,

Yikes, not sure what I did wrong as to why the links don't work.  You can search the last few words of the links or you can click on the envelope under my pic (next to email) and that takes you to all my post.  There is a search feature on the top right corner of most pages.

Cat

edit.. If you copy and paste the link, it works.  Some of them lead to the subscriber's only forum.

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Re: The trader's thread

plant -

Wrong JL Lord.  Trust me.

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Re: The trader's thread


hi plantguy

I understand your concern however, don't confuse my chosen screen name with
what I do to make a living - said differently, I have absolutely nothing to do with
selling books about collars, options etc.  Yet, I do make my living from trading. 

My ears are always open for other sources of income, so if you know of a way that
I can get some kinda royalties/commissions from the book company - please
contact me asap!!   I'm more than happy to pay you a finder's fee!   ;)

Please dont read more into my comments than is actually there - I meant no harm. 
In this environment, there is no way to determine one's experience - whether that
experience be as a broker or as a trader or other endeavor.  Reading the posts on this
site, it is apparent that the vast majority of people do not know much about
trading/investing and many are thirsty for knowledge.  My reason for posting is
the hope/belief that someone will find value in my words/experience.  I'll stand
by my original words - a 'gut trader' will typically have a short-shelf-life. 

You are correct in realizing that "you" and "I" would never be on opposite sides of a
trade - unless you are one of those 'blankity blank' market makers!! 
Yet, it often happens, very very frequently actually, where "someone"  will enter
or dump a position, likely based on an emotional response to some news event (a gut
trader perhaps...).   You'll see this action in all sort of 'markets'.  Think of the
housing market recently - people were flocking to buy houses at over-inflated prices.
Why were 'they' doing that?  Lots of reasons - many of them could be lumped into the category of  an emotional response to market activity.  

To see a regularly occuring example of what I'm referring to - watch CNBC just about any
morning - you'll hear Mark Haines either cheering or crying about how the market or a
specific stock is going to open up higher or lower...and then, sometime during the morning,
the market or stock "may" reverse.  Wha' happened???

Typically, you'll see (infer) that people either entered or exited a position, only
to have the position reverse.  Once you know how, and it does take a long time to figure
it out (certainly these boards are not the place to try to describe what one looks for),
 there are lots of opportunity there.  I am not speaking of day-trading. 

I saw 'gut-trader' which, in my experience, is exactly the type of trader who creates these
oportunities.  God knows, I have done it a lot myself, so I am a less-than-proud
card-carrying-member of the 'pot calling the kettle black' club. 

JL Lord

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Re: The trader's thread

My broker has been urging me to get back into the market since the Dow dropped below 8000. I've been waiting for Dow 5500.

Recently, with every trade I determine an exit strategy. For example, I may buy DIA when the Dow hits 5500 and pre-set the sell point at 6900. It's also useful to determine a limit if your investment starts to slip.

I bought USO when oil hit $33.

I've shorted the Treasury with an ETF called TBT.

I recently bought 500 shares of Veolia.  

I'm trading about 15% of my money. I have 15-20% invested in land and food systems. I have 12-15% invested in precious metals/etfs. The remainder is cash that my broker wants to 'put to work'...but this volatility scares me a bit. I hope to brace against inflation in 12-24 months.

I would love to hear about more day-to-day trades. I have very few people to talk to about investing especially ones that are tuned into the state of the global economy AND my value system. 

 

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Re: The trader's thread

deadman -

It sounds like you have a decent plan - especially with a defined exit point before you even get into a trade - but aren't you green market biased?  Also like the distinction you make between trading and investing.  We trade both ways - up or down depending on what the market gives us.

Any thought to trading DIA puts as the Dow gets to 5500?  Why wait?  I think the Dow between 3000 and 5000 by the end of the summer is a very real possibility.  There was a lot of money to be made in DIA puts since last August.  Especially if you bought in or near the money and a lot of time - at least 7 months.

If my broker was advising me to get back in as the Dow passed 8000 I would have fired him.  Wait - I fired my broker in 2004.

We've had tremendous success buying and selling Put Leaps as the Dow has melted.  Especially with the volatile stocks - I noticed you are "scared" by volatility.  Volatility is our best friend - stocks that move is what we look for.  We don't look for the whole move either - just take a chunk of the move, toss the cash in the bank and move on to the next trade.  Too much chance that a trade will back up over you if you are waiting for the last nickel to get out or run away from you if you are waiting for the best nickel in.

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Re: The trader's thread

Dogs/ Cat

Do you guys use a trading software? What brokerage do you use?

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Re: The trader's thread

Right now I'm 99% in cash.  My kid just started day care and pickup is at 12:30, since I am going to miss the close I decided a break from the chum is in order. 

Its a bit odd when Blue chips all look like cheap (under 10) or penny stocks.    

 

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Re: The trader's thread
Jarhett wrote:

Dogs/ Cat

Do you guys use a trading software? What brokerage do you use?

Jarhett -

Check your email later this evening.  I'll pass on some more info.

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Re: The trader's thread

 

at the request of Cat, I'm copying a post that I wrote in "what to do with a 403b" to this thread...

 

ken

Thank you for your kind comments on my earlier response.

I may be reading too much into your most recent comment about "...let the 403b grow with conservative investments
over a long period of time since I don't expect to need it for awhile..." but let me tackle it nonetheless.

First off - when you say you don't need it for awhile...if you've not done so, do give some serious thought to how you want to use it when the time comes that you do need it...think of the cattle example in the earlier post...are you going to eat the investment, or eat its children, or eat its granchildren.

2nd comment - you mentioned concern about losing it all due to the possibility of hyperinflation.  As mentioned earlier,
first look at the options you have available to you, then go back and study how those options have performed historically
in hyperinflation scenarios.  You can use the US markets and specific sectors at the end of Carter's term as a first example, although that isn't exactly hyperinflation.  Look for other periods in US history where we had heavy inflation and look to see how various sectors performed.   Additionally, do some digging to find out how various sectors performed in non-US markets during periods of hyperinflation - Argentina is a recent example that comes to mind. 
Don't limit your research to just one time period - one specific does not allow one to form a generalization. 

3rd thought - Something to let marinade in your brain for awhile...
what is the definition of "conservative investments"?  Some would use that phrase to refer to dividend paying stocks; others would use it to refer to bonds; in years past, that term was applied to owning shares in AT&T; Which is the correct answer?  The correct answer is the answer that 'you' give. 

I would answer it in a way that just might get me a rip from someone reading this.  In my mind, the riskest investment is
one that the buyer does not understand.  The converse does not hold - ie simply understanding something does not automatically make it conservative.  For example - bonds may be considered 'conservative' yet holding them in a period of rising interest rates would not be considered conservative

Lastly - the comment about govt confiscation.  It has been reported that ideas are being bantered around Congress about
moving 401k and/or IRA balances into some kind of a guaranteed return fund.  If that gains traction and looks like it will
happen, then you probably have a few choices (and one prayer).

If it passes, the 'prayer' is that there is a future date assigned.  If it passes and is implemented immediately, then
there is nothing that can be done - the opportunity to grow those account balances just disappeared.   However, if it
is to be implemented at some future date, then ira holders get to go through the mental gymnastics associated with considering taking the withdrawl, pay taxes and (any) penalties on the withdrawn funds, and then put those funds to use in a taxable account. 


For someone who has not taken the time to learn how to make money work for them, I dont know the answer.  For someone who does, it becomes a simple math problem to figure out which alternative is better. 

The above statement applies to an IRA.  What happens to a 401k held at a current employer?  In my opinion, there are at least two choices.  (By the way, this is 100% speculation since no legislation is pending, to my knowledge, and thus the guidelines are unknown.)  

One choice is to say "oh well". 

Another choice is to quit and withdraw the money.  (That may draw some counter-point discussions.)

Everyone's situation is different so a one-size-fits-all statement is impossible.  For ex - a young person with a smaller 401k balance would have a different answer than would a middle-age person with a very large balance which would be a different answer than that of a soon-to-retire person with medium size balance looking at a possible impact to their pension
(there might be a heads-up message here also...how secure is that pension stream? Compare it to the trade-off of having those 401k funds in hand - see Chris' recent post about the CTA pension issue as well as how strong you believe the PBGC to be....how do you spell "just print more money")

The net of this...nobody cares about your money more than you do.   It behooves you to learn how to make money work for you.

ken - this next part is not targeted specifically for you but for others that might read this...

Family & friends are sick & tired of hearing me say how amazed I am that people are willing to outsource their future.

What I mean by that is....most people are happy to hire a housekeeper or a gardener to handle the mundane tasks of cleaning the house and mowing the lawn.  We'll send our shirts to the cleaners rather than iron them ourselves. 
Broadly speaking, individuals are willing to outsource the mundane tasks.

We'll also outsource the specialized tasks like putting on a new roof or a new airconditioner.  Most people are smart enough to probably figure it out, but they realize that the event is a once in a decade or once in a lifetime event and it is far simpler to simply write the check to someone who does that task every day in their profession. 
Broadly speaking, individuals are willing to outsource the specialized.

If you observe corporate America, you'll see that they too are willing to outsource activities that are not part of their core competency.  For example, they'll outsource a call center, or they'll outsource janitorial services.  However, you would have a hard time convincing, for example, GM or Ford that they should outsource to Toyota, even though Toyota is kickin their butt...and kickin their butt by whatever measurement you wish to use.  GM or Ford or any corporation is typically unwilling to outsource their "crown jewels".
So, broadly speaking, corp america is willing to outsource the non-essential tasks but unwilling to outsource "the crown jewels".

Now, going back to individuals...of those that work, most people work becuz...
1) they need the money
or
2) they're working toward retirement
or
3) they want/need something for stimulation

In my experience, most of the people in groups 1 & 2, get their quarterly 401k, IRA, and brokerage statements in the mail.  Before they open it, they'll drop to one knee, look to the heavens, genuflect once or twice, open the envelope, and then either gasp in surprised joy or gasp in horror at what they see on the statement. 

The words spoken are either "Thank God - not as bad I had expected"  or
"insert favorite profanity here", followed by a gut-wrenching feeling.

Either one of those signifies someone who has put their future into the hands of someone else's judgement.  That 'someone else' is determining your future and your future financial well-being.  If this describes you, then you're doing what corporate america refuses to do - outsourcing the crown jewels - the crown jewels of your own financial future. 

JL

 

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Re: The trader's thread

First off, a thanks to Dogs for recent encouragement which sent me past the tipping point and got me back into the market.  It had been at least two years since I made my last trade and today I got back in.  Although I may lose on my first trades, it still feels good!

I'm a high risk options trader.  With that said, I like to play the volatility game.  I love it that a lot lf the ups and downs are based on emotions as people try to understand which way the future is going. Usually I wait until there's a bump in the opposite way the market if going and then buy put/options for the trend. For example, we all know the trend in the market right now is to go down.  So today when there was a bump up, I bought puts believing that in a few days the market will reverse the trend.  Sometimes I get caught in a bad position but more times than not I take a bit of profit and get out.  One advantage I have in doing this is that I'm a scientist and I have a pretty good feel for reading charts and seeing trends since I've been doing this all my career. I don't really need to know all the details of why the charts move the way they do, I just see that something is moving it between resistance points. (I do, however, check for obvious things about the company in the news before I buy.)

As the others said, everyone needs to find what works for them.  I'm only telling you what I do because this is the purpose of the thread.  I'm not saying that others should do what I do.  And, even though I take high risks on options, I don't "bet the farm" doing so.  In fact, I consider the money I use as my "play money"so I don't get too upset when I lose. Since I'm a little out of practice I don't expect to do too well at first but with this market I see a great opportunity ahead. 

I'll let you know how it goes.

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Re: The trader's thread

Mr Fri -

Your welcome I think.  This post is not an indictment of what and how you are trading but I need to clarify a couple of things for other readers.

Just to be clear to any other readers, while my discussions with Mr Fri about how I trade may have gotten him interested in getting back into the market -  

WE DO NOT TRADE THE SAME WAY!!!!!!!!!!!!!!!!!!!!!!!!!!!

I do not use "play money" - when I get into a trade I view it as deadly serious.  I am not willing to lose anything.  If the trade starts going against me, I AM GONE.  I close the trade with a small loss and move on.

I NEVER EVER try to guess which way the market or stock is moving.  I wait until I have confirmation of that move and I trade accordingly.  In light of yesterday's pop, I would wait until the downward slide has started before I would get back into a trade to the downside.  I strongly believe the markets are going to reverse on yesterday's gains, but I WILL NOT GAMBLE THAT THE MARKET IS GOING DOWN.  I am waiting for it to start moving back down and then I will look for an suitable entry point to get in.  Jumping into a trade without a good entry point is suicide - even if the movement is with you.

I do not and never will accept risk.  I have a zero loss tolerance - and I'll say it again, if the stock or option starts moving against me, I close the position, take a small loss and move on.  Trying to guess the market and jump a trade is accepting a level of risk that I will never do.  Sure you may have big gains every now and then, but you will also have big losses.  IMO, it is much better to take smaller, consistent gains combined with a zero loss tolerance.  You make money in the market by focusing on minimizing your losses with a hard and fast, disciplined zero loss tolerance - not by focusing on finding or guessing the market to make the occasional big return trade.

I'm not knocking Mr Fri for the way he trades - he understands and has accepted the risks associated with the way he trades.  I like my approach over his, but that's why Baskin-Robbins has 31 flavors.....Cool

I don't and won't trade that way.

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Re: The trader's thread

The BIX.X is rolling over on the small charts.  We will see if the move carries over to the larger charts.

Cat

 

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Re: The trader's thread

Let me go on record and point out that Mrs. Dogs called the beginning of the end of the "suckers rally" at 09:55.

Did anyone catch Bob Pisani on CNBC this morning calling an "Official Bull Market"?

 

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Re: The trader's thread
Dogs_In_A_Pile wrote:

Let me go on record and point out that Mrs. Dogs called the beginning of the end of the "suckers rally" at 09:55.

Did anyone catch Bob Pisani on CNBC this morning calling an "Official Bull Market"?

 

We will see, the BIX.X is still on the small charts as far as a trade. 

Cat

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Re: The trader's thread

Cat-

 why do you look at the Bixx.x instead of the S & P or dow?  what chart are you mainly looking at 1 min, 5 min, 10 min, etc?

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Re: The trader's thread

Jarhett,

I am looking at the S&P and the INDU and a lot of other charts.  Also looking at many different time frames of charts from a 21 minute to a monthly chart.  The financials took us into this rally, they may also take us out of the rally. 

When I say small charts, I am talking about anything smaller than a half of a day chart.

Really too early to say exactly what might happen.  I was just saying the financials are turning over (down) on the smaller charts, they could lead to a larger time frame trade.

Cat

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