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Blog summary

noreply@blogger.com (Vadym Graifer) — Sat, 19 Dec 2009 19:54:00 +0000

Trading Philosophy – General Understanding of the Markets.

Ø Market and Logic

Ø The Dual Reality

Ø A Trader’s View of the Market

Ø Information vs. Price

Ø Trends and Reversals

Ø Changes and Consistency in the Markets

Ø Manipulation in the Markets

Building Trading System

Ø Role of Technical Analysis

Ø How to Start

Ø Paper Trading

Ø Type of Movement

Ø Structure of the Setup

Ø If-Then Scenarios

Ø Types of Entries

Risk Control

Ø Role and Necessity of Stops

Ø Stop Loss vs. Sitting It Out

Ø Averaging Down

Ø Basics of Stop Loss

Ø Deeper Look into Stop Loss

Trading Psychology

Ø Basics of Trading Psychology

Ø Novice

Ø Intermediate

Ø Experienced

Ø Sophisticated

Ø Psychology of a Stop Loss

Ø Psychology of Relapse

Ø A Trader’s Mental State

Day Trading, Scalping and Tape Reading

Ø What Is Scalping

Ø What Is Scalping II

Ø What Is Tape Reading

Ø Basics of Tape Reading

Paper Trading: Waste of Time or Valid Learning Method?

noreply@blogger.com (Vadym Graifer) — Tue, 08 Dec 2009 23:10:00 +0000

Numerous discussions of paper trading, and its value as a learning tool, usually see participants divided into two camps. One claims total uselessness of paper trading, another vows never to start without it. The scoffing camp points out the obvious limitations of paper trading:

It doesn’t allow you to estimate slippage during your execution.
It leaves unanswered the question of whether your order has a chance to be executed at all.
It keeps you in a relatively relaxed state of mind as there is no pressure of endangering real money.
It also doesn’t allow you to master your order routing tools in full.
Finally, it’s very easy to cheat oneself, changing one’s decision after the fact and booking corrected results.

Is this all true? Why, of course it is. Does it render paper trading useless? By no means. Paper trading can be extremely helpful if two conditions are met. The first is applying this learning tool at the right time and with the right purpose. The second condition is doing your paper trading right.

Let’s try and build the rules of paper trading that will allow us to turn it into powerful learning tool. We can identify three cases where paper trading instead of live trading is in order:

A beginner getting his feet wet.
A trader testing a new trading system.
A trader hitting a losing streak.

The first case is the most common. Let’s analyze the right way to structure paper trading for this situation.

Paper trading allows you to ease into real trading and see if your theoretical approach works. It is a stage where you start measuring your method against market movements. You are going to have enough time to deal with the psychological pressure and execution side later on, adding them gradually as you start trading with a small size. However, before real money is used, theory should be checked against the reality, and this first experiment should be as painless for your trading account as possible. Obviously paper trading does not pursue any meaningful target unless your trading system is structured so you can test it; thus, start with constructing your trading approach, then proceed with testing it in real time.

Paper trading is done in a fairly simple way. It is an imitation of your actions without actually sending your orders to the marketplace. You define your setup with all of its components: trigger for entry, stop level, signs of exit, possibly with partial exit and stop trailing. Then when observing the market action you are imitating your responses and writing them down. This is going to be your first encounter with the market so take it seriously. Paper trading will teach you plenty about market action without risking your money if you are watching carefully and acting responsibly.

Observe whether your setups are working. Watch the market action and define if your response is reasonable. If you lose money on paper day-by-day, something is not right with your approach. Try to make corrections, find out what factors have not been considered. This is your troubleshooting stage – look for problems to solve. If you get negative results, do not get frustrated – take them as a blessing in disguise. It’s much better to find out about a problem before committing actual money to a flawed method.

Watch if your risk control is working. Do you lose within your defined limits on any given trade and on any given day? Maintain strict discipline at this stage – your future trading results are going to suffer if disciplined behavior doesn’t become your second nature.

The crucially important purpose of paper trading is to find out the maximum drawdown that you can run into. This element might require a somewhat prolonged paper trading stage. The point here is, losses and wins are not necessarily distributed evenly along the timeline of your trading. You can run into cluster of losses. While the average loss might be affordable in terms of your trading capital, such a cluster may not. It is very important to make sure that a losing streak is not taking you out of the game.

Here are the rules of paper trading that allow it to be as realistic as possible and make paper trading an effective learning tool:

Make your decisions real time only, not after the fact. Looking at the chart and deciding where you would have entered and exited won’t do you any good. Everything is easy in hindsight and looks very different when you are up against what Alan Farley called The Hard Right Edge – end of the real-time chart leading you into unknown. Write down your entry when your setup is triggered; write down your exit when the chart hits your profit target or stop.
Keep you trading rules exactly as if you were trading real money. Any decision of “I’ll do this although with real money I would do that” kind renders your paper trading worthless. If your stop level is hit, your paper trade is stopped and should be written down as such, even if a stock immediately bounced back up. If your profit target is not hit, do not write it down as less profit but still profit – it negates the very purpose of paper trading, which is to see if your targets are realistic and your stops are placed correctly.
Take trades with the same degree of risk as if you were trading real money. A decision to paper trade a risky stock that you do not intend to trade when doing live trading makes no sense. You paper trade to test your strategy, not to play around.
Use the same set of tools as you intend for live trading. If your trading strategy requires Level II, for instance, paper trading without it with idea that with it your trading will be even better makes no sense. It won’t be better, it will be different.
Consider your entry and exit executed only if there are actual prints at the price you target. Just seeing bid or offer where you want them is not a guarantee that you could get your order filled at that price.
Consider the amount of shares available at your price. If you intend to trade 1,000 shares but there are only 100 shares offered, chances are in real trading you wouldn’t get your order filled in full. Watch actual prints to determine how many shares there really are.
Do not use paper trading to project what kind of money you are going to make. This is not the purpose of this stage. It can only make you unnecessarily impatient and eager to start trading live before you are ready. Simply write down the results to see if your planned strategy is working.

One more purpose of this stage is to get comfortable with your tools. Configure everything as you need it for live trading. Move windows around your screens to have them placed as conveniently as possible. Start with your charting software. Play with the fonts to have all the information that you need on the screen while text is still easy to read. Play with the colors so that different windows are easy to distinguish. Learn to quickly manipulate your charting software. Change symbols, link windows, change time frames – do everything that you will need to do in the course of trading. Draw necessary lines on the charts, add and delete studies and indicators that you are going to use. Do it long enough to make the process automatic.

Learn your order routing software. Manipulate the controls, changing quantity of shares, price of your order, type of order and route. Switch from limit order to market order and back, practice changing the price quickly. Play with controls long enough to make the process automatic. See how to set advanced orders. If necessary, print out excerpts from order routing instructions and place it within easy reach.

Finally, start routing orders in a way that keeps your money safe. Do it in the following way.

Set small amount of shares – from ten to fifty. Set the price far enough from the market price to not get filled. If a stock is trading at $20, prepare your buy order at $10 and short order at $30. Send the order. Observe how a confirmation appears. Now cancel the order and observe the confirmation. Make sure that all the messages you receive become familiar so you do not spend much time reading them later. Make sure that confirmation pop-ups do not get in the way of observing the action. Observe the reliability of your quote feed, especially in the most active periods – market opening produces fast conditions when the quotes are most likely to lag. Make sure that you have trading desk phone number on a speed dial to be able to reach help as fast as possible if something happens to your internet connection or quote feed – no technology is perfect.

It’s often asked how long this stage should be. There is no fit-for-all answer. There are traders that breathe through it in a week, and I know a trader that paper traded for a full year. It doesn’t mean he was a slow learner. He just was perfecting his trading system until he was totally satisfied with it. Although a year is probably a bit on an extreme side, a week or two is not really what suits most people. This is usually not a matter of exact time that would be the same for everyone. Paper trading serves certain purposes, and you should move ahead when those purposes are achieved. Keeping all the rules of paper trading, do you show consistent profit? Have you observed how your setups work and gotten comfortable with them? Have you made sure that you know the drawdown your system can produce and that you can sustain it? Have you become comfortable with your charting and order entering software? If you can answer Yes to all these questions, then paper trade just for a couple weeks more. If not for any other reason, do it to practice one of crucial elements of your psychological makeover – patience. The skill to sit on a sideline will serve you well. It will also allow you to get into your first trading day with more feeling of self-control.

We mentioned two more cases when paper trading is appropriate.

Testing a new system or to tweak an existing one is obviously calling for going back to paper. You are changing something – why risk real money before you make sure it works well? Usually when a trader is doing that he already has enough experience under his belt to know how to paper trade effectively. Just make sure that you give it enough time so your results are statistically significant. I know a trader who does this kind of new tweak testing not even stopping his live entries and exits. While making real trades he simultaneously writes down optimized ones, comparing the results and making conclusions about the quality of optimization.

Going through a losing streak, a trader wants to find out the cause of under-performance. Is it market conditions that change in a way that ruins his system? Is it a trader himself acting in an undisciplined manner? If it’s the market, does something get changed fundamentally or is it a short-lived fluke? Does a major trend change? Is it just a temporary range contraction with no volume? What is likely to come next? These kinds of questions are not easy to answer in the heat of the battle. Thus stepping aside to re-evaluate things, to regroup and to regain your confidence or to re-tune your approach is a good decision.

For whatever reason you go to paper trading, your major step to assure the success of it is to define the purpose and to work out the steps to achieve it.

Stupidity, hypocrisy or both?

noreply@blogger.com (Vadym Graifer) — Sun, 15 Nov 2009 16:59:00 +0000

When I have the same conversation many times in a row, I know it's time to do a blog post on the topic. This time it's a discussion (somewhat outside of usual scope of my posts but relevant anyway) of the causes of financial crisis, framed as "who is to blame" question. This thing is, I refuse to join the "darn banksters and their greed got us where we are" chorus. Not because I have some particular reason to love banks and bank people, mind you. I simply can't see how you blame something or someone acting according its nature and doing so within the framework you yourself created.

Any explanation, any description, any user manual is by definition simplification of things. Let's simplify this.

If you put a carrot in rabbit's cage - carrot will be eaten.

If you put a rabbit in wolf's cage - rabbit will be eaten.

Putting carrot in rabbit's cage or rabbit in wolf's without understanding what fate awaits for both is stupidity.

Bemoaning carrot's and rabbit's fate, blaming rabbit in carrot's "death" and wolf - in rabbit's is hypocrisy.

Pushing lenders to lend to barely or un-qualified borrowers; Lowering lending standards; Repealing laws and rules that kept such unsafe practices at bay; Guaranteeing those unsafe loans via GSEs; Keeping super low rates for too long - all this created a framework where profits could be had while risk was mitigated or masked by those guarantees. Creating a situation where a profit-oriented by its very nature organization can make a profit while relegating risk to someone else's shoulders and not foreseeing the inevitable failure is stupidity. Creating such situation, observing that organization doing just that and blaming it for following its very nature is hypocrisy.

Should banks be excluded fully as entities having their hand in everything that happened? Lord no. But the idea that the bank by itself is some kind of evil organization or that people working in or for the banks are necessary bad is ummm... how do I say it softly... stupid? Yet it's just the mindset that is being propagated. Let's all hate banks and solve our problems by materializing this hatred in this or that form - while real culprits are all too happy to channel the anger away from themselves.

Manipulation: myth and reality

noreply@blogger.com (Vadym Graifer) — Sun, 30 Aug 2009 19:17:00 +0000

Always hot and contradictionary topic, causing emotional flare-ups all over various boards and forums. Since the conclusion some make is that manipulated markets are untradeable, it becomes a matter of practical interest for us. As traders though, we are interested in reality, so let's try and analyze the matter at hand. Also, as traders we want to do it not for the brain exercise but in pursuit of a practical pragmatic purpose - and that's what we are going to arrive at.

Little qualifier before we begin: everything said below is said about normal liquid markets. I am not discussing extremely thin markets where the smallest order can move the market - those are disaster in the making for anyone who wants to play them, manipulation or not. I am talking about those real markets, you know - hundreds of millions of shares available, thousands of players involved.

Second qualifier: everything said below is said as a TRADER - someone who reads the markets and strives to profit from his read. If you prefer to discuss social aspects of this topic - that's for some other blog.

First things first: we need to agree on a definition - so we discuss the same thing. Let's go over some versions and see which ones are realistic and which are not. So, what do we mean when we say "manipulation"?

1. Assigning the price arbitrarily.

Here are couple phrases that you will find familiar; I have no doubt you heard them many times.

"They keep the price down so they and their friends could load up on the cheap".

"They run the price up so they and their friends could unload".

Sounds familiar? Thought so. The premise here is, there is certain entity (THEY) that is capable of making the price whatever they want. Practically assigning a price. Woke up this morning, got yourself a price... How nice for THEM. I have couple questions though.

First: HOW? Really, what is the mechanics of artifically keeping the price low or running it high? Can you just say "stay low" or "run up" and so it will? Or you have to actually SELL in order to keep it artifically low and BUY to run it artificially high? Because if you have to sell, really sell real shares, then what is the point in doing that? If you want to take advantage of the low price you kept low by selling, you will need to buy, right? And that's when you are going to play right in hands of those who bought from you earlier - lifting the lid and switching to buy side, you are going to run the price up now, to the benefit of those who bought from you earlier. If you are lucky, you may break even by buying back your shares at about the same avereage price you sold at earlier. Most likely you won't. Same scenario plays out if our brave manipulator runs the price up by his own buying. He does that for... whose benefit? His own or his friends, right? And just what will he/they have to do in order to take advantage of that inflated price? Why, sell of course. But he is not supporting the price anymore since he turned into a seller. If he run the price up all by himself, it's going to collapse as soon as he withdraws his bid, let alone starts selling. (If you are tempted to say at this point "wait, but his actions could have attracted others so he kind or provoked them and then they did his bidding for him" - good thinking but hold your horses, we will get to it).

So, actual selling or buying in order to get price where manipulator wants it is not really the way to achieve anything but get steamrolled. And, I still have second question. Here it is:

Listen, if government/Fed (entities most often accused of manipulating the markets) really have the ability to just make up any prices - why do we experience these gut-wrenching crashes at all? Those wild fluctuations cost elected officials and public servants their jobs, influence one's historic reputation - why wouldn't THEY just keep markets going up forever and ever? Everyone's happy, everyone's wealthy, some are rich, no mass revolt, no complications, THEY are cheered - what possible reason would THEY have to let it all go down in flames making THEIR life immensely difficult?

There is only one conclusion I can come to here answering "true or false" to this one: FALSE!

If we agree that no entity can simply assign a certain price, let's move to the next possible definition.

2. Manipulating information flow.

THEY present reports and numbers and analysis in a distorted way in order to provoke certain reaction - that's the gist of this accusation. True or false? I don't think anyone in their right mind would deny it's possible and it does take place. The only question I have about this one: what else is new? Name me any society, any civilization, any period in human history where and when it wouldn't be done. Let's be real here: no one should endorse or condone or justify this practice - but there is no reason to consider the markets being untradeable for this reason. How exactly you trade the markets where information is being distorted is another matter, and we did dicuss it earlier, for instance here. As far as traders point of view goes: there always was, is and, I'll venture to suggest, will be a divergence between what available information says and how the market reacts. You will find confirmations of this phenomena in the books written 100 years ago. Whatever you think about the practice, whatever causes it - by no means it prevents anyone from correct reading the market and profiting from its moves. It happened always and at all levels - Bre-X, anyone? UAUA false news last fall?

Interesting thing about this aspect is, many of those who express their outrage at this kind of practices by government, Fed etc. also claim they they see through the lies and know how things look in reality. I certainly don't claim anything even close to this kind of understanding of these complicated economic issues, but... if what THEY do is so transparent, then it must be possible to exploit, no? I mean if you understand what manipulator is doing, then as a trader thank him and use his manipulation to your benefit. And if you can't - well, either his manipulation is not as transparent as you think (in which case what's with accusations) or your trading skills are not as great (in which case, maybe best to focus on honing those) ?

My conclusion would be: TRUE, but old as the world itself.

3. Government and Fed own buying or selling of certain assets.

Sure. Why would anyone try to deny this if they themselves claim they are doing it. The question though is, so what? They pursue certain goals, thei intentions can be analyzed, so how is it different from any other market force? Read the tape and trade accordingly. And, while we are on a subject of definitions, let's call it for what it is: intervention. Because, if you want to call any entry into the market with certain purpose in mind a manipulation, then any single buy or sell, yours included, will be manipulations. Government intrusion, considering that the government is not, or should not be, exactly market moving force can safely be called intervention then.

Conclusion: TRUE, but from a trader's point of view, how is it different from any other market moving forces?

4. Faking intentions so other traders get duped into wrong reactions.

Ahha! Now we are talking my language (those of you who read our trading logs know it as Threeiish).

There are two aspects to this kind of manipulation. One is what is known as "painting the tape". The term refers to illegal activity in which manipulators buy and sell the stock between themselves. While they remain net neutral, their actions create a false impression of a certain activity. This is clearly and undeniably illegal; if you know for the fact it's taking place on a certain security and have an evidence - simply report it.

Another aspect is actual trades placed by manipulator in the market in attempt to create certain reactions. Our manipulator may try to buy very quietly in order to mask the fact that he is building position - and that's what in fact skillful player will do at the early stages of accumulation. When his accumulation is mostly done, he will try to make his buying more noticeable to attract new crop of buyers by increasing volume and new highs in price. When and if he is successful, other players will come and take the price higher - and he will start distributing his shares to late buyers. And that's how The Game is played. This is readable. This is basics of the method known as Tape Reading. If our manipulator is successful in doing it - more power to him, AS LONG AS IT'S DONE BY HONEST RISK TAKING. Yes, that's my criteria - because what I described means he takes the risk, fair and square. If he is unsuccessful, he will lose money. Can it be that the company goes bankrupt on him while he accumulates shares? Sure, if he didn't do his homework well. Can it be overtaken by another company at the price lower than his average accumulated price? Can the sector turn down before he gets a chance to distribute his shares? Can some new technology come around and benefit a competitor while making the company whose share he accumulated obsolete? See where I am going with this? Unless our hypotetical manipulator acts on illegaly obtained inside knowledge, he takes honest risk - and, most importantly for us trades, in a process of doing so he creates readable opportunity for us. At least for those of us who have the skill to read it - but isn't it the whole point?

Let's make out last conclusion: TRUE, and thank you trading gods for that.

Got other scenarios? Throw them in, let's discuss.

Trading climate: new or same old?

noreply@blogger.com (Vadym Graifer) — Sat, 29 Aug 2009 15:05:00 +0000

Reading a lot of "market is not a place for a reasonable investing/trading anymore" comments, I thought I'd chime in and offer my point of view.

To see where I am coming from, consider that I:
- have been trading every day (aside of vacations) for the last 13 years (2 months shy as of this moment),
- made every trading mistake known to humanity and couple I invented all on my own,
- recovered from them after 2 years of learning curve and trade for a living ever since,
- conversed with hundreds if not thousands of traders of all thinkable backgrounds, time frames and approaches.

Here are some of things I see similar in any market, I'll list them and you see if they sound familiar.

1998 - 2000, tech boom, things go higher and higher and higher. Some are happy, making tons of money and talking about "new paradigm"... and some are not, losing their shirt on attempts to short the market, talking about how insane and irrational the run-up is, predicting demise day after day, talking about manipulation and how impossible it's become to trade. There are stocks here and there that turn into cult names, and groups of fanboys cheering them up. XYBR is louded as next MSFT, WAVX is predicted to go over 100, analysts say QCOM should go over 1000 when it trades at 700. KTEL goes from 5 to 20 and 30, and "realists" (your faithful was one of them and paid dearly for that) short it, and it proceeds to 80. Some make money trading what's right in front of them; the rest is discussing how the market should not be this way, trading their beliefs and losing money.

2001 - 2003, tech crash and consequent bear market. Trend reverses, yet permabulls continue buying every new low thinking it's just a pullback (new paradigm, remember?). Market proceeds lower and lower and lower, and seeing the magnitude of drops, a lot of people start talking about selling being overdone. Now it's a move down that is considered insanely big. Each new leg down is being blamed on, guess what... manipulation of course. "Market became impossible to trade" is being heard from every corner. Optimists average down and lose their shirt. Yesterday's darlings start disappear altogether - simply go bankrupt, delisted etc. Some lucky names get bought out before the final crash, and its the suitors that get killed now. Quality companies lose their value at unthinkable rate - QCOM is nowhere near 700 anymore, and soon loses even 100; a lot of former highfliers go to lows some call insane (NT, JDSU anyone?). Now.... one thing seems to be the same: During all this some traders make money trading what's right in front of them; the rest is discussing how the market should not be this way, trading their beliefs and losing money.

Bull market starts in the spring of 2003. No internet crazies anymore, but hey, there is always a place for "new new paradigm". Market goes higher and higher and higher, and a lot of people say it's insane, housing is a bubble, financials are overblown... and lose their shirt trying to short them... Now, one thing seems to be the same: Some are making money... my reader, be a doll, save me some typing and insert the end of the first two paragraphs.

Housing finally bursts, crash ensues, some of yesterday's darlings go bankrupt (spectacularly I must say), bear market starts. Market proceeds lower and lower, and attempts to buy each new low become common and lead to new bursts of frustration and refrain of "insane, manipulation, impossible to trade". Some are making money... etc, I know, get's annoying.

Market puts a low in March of 2009, and starts making new highs - insane new highs, of course... you can finish this part now without me typing it all.

See some things repeating themselves over and over again? Patterns in who makes money and who doesn't? Patterns in language, in assigning the blame, in finding another scapegoat (day traders in tech boom, "frequent traders" now), in invoking all-encompassing word "manipulation" that makes some feel better but still doesn't help them make money? Patterns in going against the trend, effectively fighting the market instead of being in tune with it? Patterns in trading ones own beliefs instead of market's reality given us in prints on the tape? Patterns in thinking "if something doesn't go according to my belief, it's the market that is wrong but never I"?

See where my favorite motto of many years TRADE WHAT YOU SEE, NOT WHAT YOU THINK is coming from?

One question test

noreply@blogger.com (Vadym Graifer) — Mon, 24 Aug 2009 23:25:00 +0000

As it often happens during the most uncertain times - at what potentially is a trend reversal point - I get a lot of questions about signs of such reversal, in this case top. As it often happens, a lot of those questions are asked in order to confirm author's belief - and if no such confirmation is obtained, back and forth arguments ensue. Over the last week or two, I expressed my point of view that we were not ready for full blown reversal yet, and more upward action was likely to come.

One theme that constantly popped up in such exchanges (not a first time mind you, it's rather typical way of thinking) was this: "but there is no job creation, commercial real estate is imploding, A is weak, B is wrong (long list of what is wrong with economy)... this market must drop, I am shorting it!"

Notice one thing that all those reasons have in common? Well, aside of them being probably right. They all have no ties with market timing. Here is what I mean by this: if you employ some idea for trading related decision-making, you have two major questions to answer. One is the direction of your planned trade. Another is timing of the trade initiation. All the ideas listed above have to do with direction... do they have anything to do with timing? How do we distinguish which ones help us pick the right entry moment and which do not, leaving us to seek more indications to time our trade right?

Easy. There is a one question test that does just that. As you evaluate your trading idea, ask yourself: IS IT A NEW TURN OF EVENTS OR WAS IT SO A DAY, A WEEK OR A MONTH AGO?

Because if jobs creation wasn't there a month ago either yet market went up during this month, how does this fact enable you to enter short now? It does not. Any economy related, company related, sector related idea can be verified by this question in order to find out whether it should be used in timing your trade or you need to keep it as purely directional idea and look for something else to help you with timing.

You would think this is something that concerns mostly position or swing traders... but I get this from day traders too. 'I am shorting RIMM, I just analyzed their this and that, and it's very weak". RIMM is up 2 and half points for the day, so I ask: Why here? Is there any short setup, sign of reversal? What is it that makes you think short right here and right now? The answer is: Well, I just finished reading that report... Pause, then we both laugh as my counterpart realizes that his timing of finishing the report is fairly dubious as a market timing event. OK, I start laughing just a tad sooner as I am not polite enough...

Anyway, once again. Your one question test concept is, could this have been said a week or a month ago just as well and did not impact market during this time? If so, what makes me think it will do so now?

Two last posts

noreply@blogger.com (Vadym Graifer) — Tue, 28 Jul 2009 16:25:00 +0000

Sorry for the confusion guys, last two posts obviously should have been in trading log where they belong... I don't want to move them over to preserve calendar order of trading log.

Jul 27 2009

noreply@blogger.com (Vadym Graifer) — Mon, 27 Jul 2009 19:58:00 +0000

The day started well with wins on BCRX, DRYS longs and RIMM short. Then things got boring and narrow, we took small stops on AIG and AXP and finished slightly positive and bored. Such is summer.

Session Time: Mon Jul 27 00:00:00 2009

[08:28] {ese} godd morning....if anybody is hanging

[08:29] {nemo} dude

[08:29] {ese} errrrrr good

[08:29] {ese} dude

[08:29] {nemo} how's weekend?

[08:30] {ese} smoking hot out here.....over 30 celcius

[08:30] {ese} you?

[08:30] {nemo} not quite that hot here, humid though. Been coldest/wettest Summer in the North East in a long time

[08:31] {ese} very interesting ....one of the hotest driest summers on record for the west coast of canada in a long time

[08:32] {nemo} global warming/cooling

[08:32] {nemo} climate change

[08:32] {nemo} wow, climate is changing...like it's never done that in history

[08:32] {ese} lots of forest fires burning in the Okanagan Valley in the middle of the province

[08:32] {Threei} uhhu... except they said global warming will translate in rainy summers in our neck of the woods

[08:32] {Threei} good morning

[08:32] {nemo} interloper

[08:33] {Threei} that me is

[08:33] {ese} morning chief

[08:33] {nemo} sorry...three syllables

[08:33] {Threei} ese :)

[08:33] {nemo} hi yoda

[08:33] {Threei} right nemo... see me speaking in one syllable words

[08:33] {Threei} that

[08:33] {Threei} me

[08:33] {Threei} is

[08:33] {nemo} grammatically lacking too

[08:33] {Threei} yes

[08:34] {Threei} so?

[08:34] {ese} only worry for me with the fires in the Okanagan.....it'll effect the wine crops

[08:34] {nemo} so what

[08:34] {nemo} buy now ese

[08:34] {ese} my god man can you imagine it.......no W

[08:34] {nemo} not like you can't

[08:34] {ese} WINE

[08:35] {Threei} JASO Closese on three-year term loans from the Export-Import Bank of China

[08:35] {Threei} - Closed two three-year term loans in the aggregate principal amount of CNY620M (approximately $90....more... (related LQD )

[08:35] {nemo} so you'll go from WINE to WHINE!

[08:35] {ese} ha ha....good one

[08:35] {Threei} (approximately $90.8M) from the Export-Import Bank of China.

[08:35] {Threei} - Both loans carry favorable interest rates that are below the benchmark interest rate set by the People''s Bank of China

[08:35] {Threei} BLTXX Baltic Dry Bulk Index +1.9% first gain in 6 sessions

[08:36] {Threei} DRYS is trying on that

[08:37] {ese} yes indeed

[08:40] {ese} gotta go get coffee..............................and hypodermic needle

[08:51] {Threei} noth a whole lot of news and action so far

[08:51] {nemo} these next two weeks are HUGE vacation weeks

[08:51] {Threei} as a rule, yes

[08:52] {nemo} commutes around boston highways is a "relative" pleasure

[08:57] {ese} ahhhhhhhhh......coffee

[08:59] {fernp} good morning everybody

[08:59] {ese} hey fern

[09:05] {BillyD} GM all

[09:06] {Threei} fern, billy :)

[09:09] {JohnK} gm folks

[09:10] {Threei} John :)

[09:12] {Threei} okay guys

[09:12] {Threei} not much is happening which is not really surprizing,

[09:12] {ese} pres.......never thought i'd see you on this board.......good to have you aboard

[09:13] {Threei} Mondays are like this lately: action seems to be a weelend hangover

[09:13] {Threei} somewhat lost,

[09:13] {Threei} no clear direction,

[09:13] {Threei} hectic opening with no patterns,

[09:13] {Threei} then flat.

[09:14] {cosmo} .... and you want to go home...right?

[09:14] {nemo} yeah...sounds like a hangover

[09:14] {ese} how dare you describe my like on this board vad!!!!!!

[09:14] {Threei} Let's see if we get something more or less playable,

[09:14] {ese} life

[09:14] {Threei} always cosmo

[09:14] {magoo} morning

[09:14] {cosmo} :)

[09:14] {Threei} mags :)

[09:14] {jfjf64} mornin all

[09:14] {Threei} jf :)

[09:14] {texus} gm all

[09:14] {nemo} resource stocks up though

[09:14] {Threei} sorry ese... I thought I was describing mine

[09:15] {Threei} DRYS maybe a scalp candidate at the open

[09:16] {Threei} on daily 6.30 was forming as a trigger, but it gapped above that

[09:16] {Threei} ideally, pullback into .30 would be a perfect entry

[09:17] {Threei} if we don't get it, then hopefully it forms an opening range narrow enough tp structure break play

[09:17] {larisa} gm :)

[09:17] {Threei} Larisa :)

[09:17] {Threei} JASO, I don't know...

[09:17] {Threei} solars get some attention last days,

[09:18] {cosmo} they rise in the morning....

[09:18] {Threei} whether it's a new play in the sector or traders just go through the motions testing waters, hard to tell

[09:18] {Threei} hmmm cosmo...

[09:18] {Threei} I'll have to ponder that

[09:18] {Threei} see you in three months

[09:18] {cosmo} makes cents

[09:19] {ese} HGSI......22 a share in takeover scenario

[09:19] {ese} whats the historical high on HGSI.....

[09:20] {Threei} Thursday, July 23, 2009 11:39:46 AM

[09:20] {Threei} Human Genome Sciences Inc Hearing Piper Jaffray making positive comments (timing uncertain)

[09:20] {Threei} - Piper suggests HGSI could fetch around $22/shr in a takeover scenario

[09:20] {Threei} look at the date

[09:20] {patel} good morning everyone

[09:20] {Threei} patel :)

[09:20] {Threei} now, BCRX...

[09:21] {Threei} this really is geting tiresome eh

[09:21] {nemo} yeah, making money sucks

[09:21] {Threei} thing has no moral brakes

[09:22] {ese} whats the historical high on that one......my charts only give me a year

[09:22] {Threei} touched on 10.15 earlier

[09:23] {Threei} not sure ese... requires more research than I am willing to do on Monday morning, sorry

[09:25] {ese} ok

[09:26] {BillyD} SQNM strong last few days....

[09:26] {ese} SQNM take over chatter as well.....but the daily chart looks fab

[09:26] {dino} gm

[09:26] {ese} that gets by 6 and skys the lim,it

[09:26] {ese} dino

[09:27] {Threei} dino :)

[09:27] {BillyD} hi dino

[09:27] {Threei} SQNM does look attractive

[09:27] {Threei} let's keep half eye on that for a setp

[09:27] {ese} very

[09:27] {ese} indeed

[09:28] {nemo} dino :)

[09:29] {nemo} GLW earnings bad

[09:30] {Threei} BCRX, letting break go

[09:30] {Threei} waiting for something to shape up

[09:30] {Threei} DRYS...

[09:30] {BillyD} yeah, I almost hit 10

[09:31] {magoo} AET

[09:31] {Threei} too bad you haven't...

[09:31] {BillyD} well, you know why

[09:31] {Threei} yup

[09:31] {BillyD} could be 9.70 in a blink

[09:31] {Threei} ACAD, no news that I see

[09:32] {cosmo} sqnm

[09:32] {ese} L sqnm .93

[09:32] {ese} nice fill

[09:33] {ese} out .02 +.09

[09:33] {BillyD} gj ese

[09:33] {nemo} 20k of the little buggers?

[09:33] {Threei} DRYS pulling back

[09:33] {ese} no just 3k

[09:34] {ese} to thin tks billy

[09:34] {Threei} any dive under .40 deserves an entry on a first sign of strength

[09:34] {nemo} mellowing with age ese?

[09:34] {Threei} with stop under .30

[09:34] {BillyD} HGSI may take the 15 today

[09:34] {Threei} if never loses .40, then .50 break becomes long trigger

[09:34] {ese} ya what can i say

[09:34] {Threei} HGSI 15 long trigger as we talking on Friday

[09:35] {Threei} DRYS tries to go for a break

[09:35] {magoo} on tv

[09:35] {magoo} sigh

[09:35] {Threei} Long Setup: DRYS .50 break

[09:35] {Threei} stop under .40

[09:35] {Threei} President Obama: China and US must cooperate to advance their mutual interests and support economic recovery (related EUR/USD USD/CNY FXI )

[09:36] {nemo} Yeah, you guys gotta' buy our debt

[09:37] {JohnK} well, we buy THEIR junk, it's fair :)

[09:37] {Threei} lol

[09:37] {Threei} DRYS under .40

[09:37] {Threei} too brief

[09:38] {BillyD} u saying buy DRYS under .4

[09:38] {Threei} it's not here nor there yet

[09:39] {nemo} weekend hangover

[09:40] {nemo} bid strength on drys

[09:40] {nemo} oops now selling

[09:40] {ese} L sqnm .93

[09:41] {Threei} I'd say, break is still valid

[09:41] {Threei} although aggressive entry seems to be preferrable

[09:41] {Threei} but it's a kind of personal call

[09:41] {fernp} took .42

[09:41] {Threei} yup, that seems to be the best approach

[09:42] {fernp} I am out. TY Vad

[09:42] {Threei} welcome... scalper to the marrow of his bones :)

[09:42] {ese} out sqnm .01 +.08

[09:42] {fernp} 100% scalper :)

[09:43] {ese} tks

[09:43] {Threei} Long Setup: BCRX .20 break half lot

[09:43] {Threei} stop under 10

[09:44] {Threei} DRYS 1:1 for regular entry

[09:45] {magoo} q server vad?

[09:45] {ese} l sqnm .10

[09:45] {Threei} 19

[09:45] {JohnK} out of DRYS thx T

[09:45] {Threei} sure

[09:45] {magoo} ty

[09:45] {Threei} who partials out, stop for the balance to .44

[09:46] {ese} out sqnm .17 +.06

[09:46] {ese} ok.....maybe a little premature getting out

[09:47] {magoo} out DRYS .61

[09:47] {magoo} ty

[09:47] {ese} it's a good days work......

[09:48] {patel} nice call on DRYS :)

[09:48] {Threei} stop to .49

[09:48] {Threei} maybe a bit too tight but I am not willing to sacrifice much on Monday

[09:48] {Threei} or Tuesday

[09:48] {JohnK} out of BCRX too - thx again T

[09:48] {Threei} or Wed

[09:48] {ese} vad if you get a chance can you give me a pullback estimate on sqnm

[09:48] {Threei} BCRX almost 1:1

[09:49] {Threei} 1:1 with no almost

[09:49] {ese} .10 ?

[09:49] {magoo} you thinking 11 today?

[09:49] {Threei} feels like break rather than pullback ese

[09:49] {Threei} mags... I don't know if this thing has any sensible limits at all

[09:50] {ese} tks took the break

[09:50] {magoo} seems like 11

[09:50] {ese} .L sqnm .32

[09:50] {Threei} 1:2 BCRX

[09:50] {Threei} I am out

[09:50] {nemo} why no partial?

[09:51] {Threei} SQNM like charm

[09:51] {ese} out sqnm .43 +.11

[09:51] {Threei} had jusrt half lot nemo

[09:51] {Threei} didn't make much sense to me to partial

[09:51] {Threei} my risk appetite was a bit too high maybe, lol

[09:52] {Threei} okay, now SQNM seems more likely to do a pullback dance

[09:52] {magoo} out BCRX .55..look to reload prob

[09:52] {magoo} TY vad

[09:52] {Threei} welcome sir

[09:53] {Threei} not going for SQNM break this time

[09:53] {magoo} scalp regret drys..BUT i hate that stok

[09:53] {Threei} dive under 6.20 is tempting if occurs

[09:53] {Threei} DRYS, those who partialled:

[09:53] {Threei} 1/4 more out here

[09:53] {Threei} stop to .55

[09:53] {ese} tks vad....that break advice put me over $1000 for the day

[09:53] {Threei} go home

[09:53] {ese} thing of beauty this stock

06[09:53] * magoo slaps ese around a bit with a large trout

[09:54] {Threei} what else do you need from Monday at the end of July

[09:54] {ese} eeeeeeeeeeeyouch........felt good

06[09:54] * nemo slaps ese around a bit with a large roll of cash

[09:54] {Threei} here is my drop into .20

[09:54] {ese} not a whole lot

[09:54] {Threei} aww, too fast

[09:54] {Threei} or it's me who is slow?

[09:57] {Threei} Preview: June New Home Sales due out at 10amET

[09:57] {Threei} **consensus expectation: 352Ke v 342K prior (+2.9%e m/m)

[09:59] {Threei} waiting out the report

[09:59] {Threei} DRYS stop to .59

[10:00] {Threei} JUNE NEW HOME SALES: 284K V 352KE

[10:00] {nemo} ohoh

[10:00] {Threei} (+11% M/M

[10:00] {larisa} wow

[10:00] {Threei} correcting, 384

[10:00] {nemo} oh

[10:00] {nemo} but month over month, what bs

[10:01] {Threei} JUNE NEW HOME SALES: 384K V 352KE (+11% M/M)

[10:01] {Threei} - prior revised from 342K to 346K

[10:01] {Threei} - Median price $206,200,v $221,600 m/m; -12% y/y

[10:01] {Threei} news typist hit wrong one in aa hurry

[10:01] {nemo} sssloppy

[10:01] {Threei} voice text was correct, 384

[10:01] {Threei} so who knew what was right, lol

[10:02] {Threei} DRYS, last act is coming

[10:02] {Threei} stop to .69

[10:02] {Threei} and getting ready to sump it into spike over .80

[10:02] {Threei} sump = dump

[10:03] {nemo} helluva day there Vad

[10:03] {Threei} out

[10:03] {Threei} .81

[10:03] {Threei} okay... the desk is clear

[10:03] {Threei} what else is out there

[10:03] {nemo} RIMM kinda looking possible short

[10:04] {Threei} BCRX is consolidating closer to high again, lol

[10:04] {Threei} hmm CAT

[10:05] {Threei} if we get sharp dive into 42, will be interesting

[10:09] {Threei} SQNM, now this level doesn't look attractive enough

[10:09] {Threei} want deeper pullback

[10:09] {Threei} as day progresses, tyhere is more wekness

[10:10] {Threei} CAT near 42

[10:10] {nemo} wonder if money going to move to the sidelines with the big auction tomorrow

[10:10] {Threei} but slid there slowly

[10:10] {Threei} no sharp drop

[10:10] {Threei} not sure about entry

[10:10] {nemo} rimm ended up dropping .70

[10:13] {Threei} GM Treasurer: hope to repay govt loans "much sooner" than the 2015 deadline

[10:13] {nemo} 2012 it's all over anyway

[10:13] {ese} closed out my BAC position from last week .81 was long at .44 +.37

[10:13] {Threei} lol nemo

[10:14] {nemo} rimm testing morning lows, no volume spike yet

[10:14] {nemo} oops, fell over

[10:15] {ese} did it ever

[10:15] {nemo} still sell side strength on LII

[10:17] {nemo} RIMM bounce coincided with Qs

[10:19] {nemo} zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

[10:21] {ese} lookin to go long sqnm again after the rinse out

[10:22] {Threei} volume dried up on it so much, can't get firm read on it

[10:22] {Threei} no pace

[10:26] {Threei} here is the name we haven't heard in a while:

[10:26] {Threei} VNDA Hearing renewed takeover chatter circulating (15.69, +0.53, 3.50%)

[10:28] {magoo} any read amzn or rimm boss?

[10:28] {nemo} just took this off Big Picture on new home sales: Sales of new one-family houses in June 2009 were at a seasonally adjusted annual rate of 384,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent (13.2%)* above the revised May rate of 346,000, but is 21.3 percent (11.4%) below the June 2008 estimate of 488,000.

[10:28] {Threei} RIMM... .35 break short

[10:29] {Threei} AMZN, could be a scalp long

[10:29] {Threei} aww

[10:29] {Threei} late

[10:29] {nemo} invalumidated

[10:29] {Threei} meant .90 break

[10:29] {Threei} no chasing

[10:30] {nemo} huh?

[10:30] {Threei} and not sure it's good again

[10:30] {_matt} parameters for rimm short please

[10:30] {Threei} it's invalidated, went over resistance

[10:30] {nemo} below .60?

[10:33] {Threei} RIMM is trying to reestablish

[10:33] {Threei} Short Setup: RIMM .35 break if stays under .50

[10:34] {Threei} invalidated again

[10:34] {ese} roll up the rimm to win

[10:34] {BillyD} tough to get RIMM to cooperate

[10:35] {nemo} not at 77.60 it wasn't?

[10:35] {Threei} ?

[10:36] {nemo} what ?

[10:36] {BillyD} u take it there nemo?

[10:36] {nemo} no, I asked at that level

[10:37] {Threei} I don't understand the question

[10:37] {Threei} RIMM's reestablished

[10:37] {ese} ok learning question....why .35 and not .60

[10:37] {ese} where it would hit resistaqnce

[10:37] {ese} too risky in terms of a break out long

[10:37] {Threei} RIMM 1:1

[10:38] {ese} nice one....who ever took it

[10:38] {BillyD} got it ty vad

[10:38] {Threei} ese... I outline the setup - level of aggressiveness on entry is your decision

[10:38] {Threei} enter on the trigger, or aggressively before it, or conservatively after break and retest...

[10:38] {Threei} can't make this decision for you, it's too, umm, personal

[10:39] {nemo} nice monday morning so far Vad

[10:39] {Threei} 1:2 RIMM

[10:39] {Threei} me out

[10:39] {nemo} at the end of July no less

[10:39] {Threei} yeah, not a small feat, lol

[10:40] {Threei} can I go home?

[10:40] {nemo} You are home

[10:40] {ese} sorry missed vads vads invalidated statement

[10:40] {Threei} invalidated or reestabilshed?

[10:40] {Threei} I made both twice, lol

[10:41] {ese} i get ya vad.......i don't short much so am very curious.....

[10:44] {fernp} first trade for me on RIMM since long time ago. shorted from .39 to .04 ty very much Vad

[10:44] {magoo} any read BCRX vader?

[10:44] {Threei} :)

[10:45] {Threei} yes mags... I can read "you idiot, you missed entry on pullback near 10" written on it

[10:45] {Threei} was easy scalp with .10 trigger...

[10:46] {BillyD} Vad, is there a way to assign sound to your official alerts in Mirc?

[10:46] {Threei} I believe so

[10:46] {nemo} not to the alerts, but to the "floor" so you'll get alerted to all Vad's comments....even the inane ones

[10:46] {Threei} but it needs to be done on your side

[10:46] {BillyD} right

[10:47] {Threei} why, you can set an alert for "long setup" and "short setup"

[10:47] {larisa} you can get sound to "setup" word, it is in every alert

[10:47] {larisa} lol

[10:47] {BillyD} how Larisa?

[10:48] {larisa} right click on vads nick, ifo, highlight

[10:48] {larisa} info

[10:48] {nemo} some setups are informal though

[10:48] {Threei} better yet: right click on my nick - Control - Ignore

[10:49] {Threei} nemo... Billy asked for "official" alerts

[10:49] {Threei} okay guys, so far so good - no stops, and things worked out nicely,

[10:49] {nemo} I'm looking for the word notification myself

[10:49] {Threei} what we have here is slow erosion of activity,

[10:50] {Threei} much like most days during this "summer rally"

[10:50] {nemo} "A failure to communicate."

[10:50] {BillyD} thx Larisa :)

[10:50] {Threei} so I am hesitant to play breaks

[10:50] {larisa} yw

[10:50] {Threei} like BCRX right now,

[10:50] {Threei} forms breakout

[10:50] {Threei} but IMO, more likely to be a trap

[10:51] {Threei} I am skipping it,

[10:51] {Threei} instead looking for pullbacks or range plays to scalp

[10:51] {BillyD} Vad, when you have a minute, can you do an official test setup alert....want to see if works

[10:51] {Threei} if some break works, so be it, I'll miss it

[10:51] {Threei} Long Setup: TEST at whatever price it is

[10:52] {Threei} works?

[10:52] {fernp} works fine. TY larisa

[10:52] {magoo} no quotes TEST

[10:52] {BillyD} not here

[10:53] {BillyD} do I have to put an & in front of threei when adding to highlite

[10:53] {Threei} do you have sound enabled?

[10:53] {BillyD} fern can you help me out

[10:53] {larisa} do not forget to check "enable highlight" on same screen :)

[10:54] {BillyD} I do now Vad...can you please try again

[10:54] {Threei} Short Setup: TEST for magoo to ignore

[10:55] {BillyD} perfect TY

[10:55] {Threei} :)

[10:55] {fernp} Works fine. Billy. just "enable highlight" and select a sound for "Setup" word

[10:55] {fernp} ok

[10:55] {BillyD} hmmm...just went off for you as well fern for the word "setup

[10:56] {BillyD} figured it out

[10:58] {BillyD} HIG strong

[11:01] {Threei} well... 16 break is kind of obvious setup

[11:01] {BillyD} you like it

[11:02] {BillyD} stop is a little wider than I like

[11:02] {BillyD} for this one

[11:03] {nemo} big order @ 16

[11:04] {Threei} I would be more jazzed about it if it established narrower range

[11:06] {magoo} BCRX vad..trying

[11:06] {Threei} NVAX too

[11:07] {Threei} I start thinking, whole BCRX thing is about swine flu

[11:07] {magoo} WFC strong

[11:07] {dino} gern

[11:08] {Threei} I don't see any news GERN

[11:11] {dino} nor i

[11:11] {jfjf64} jpm nice vol

[11:14] {dino} pxp l .95, stop .79

[11:17] {ese} l sqnm .34

[11:19] {dino} pxp to b/e

[11:21] {dino} out pxp .07, +.12

[11:25] {Threei} HIG, if spaneds about 3-5 minutes between .90 and 16, becomes a valid break

[11:26] {Threei} anyone knows what's US % of deficit of GDP?

[11:27] {nemo} 350%+

[11:27] {Threei} annual, not overall

[11:27] {Threei} sorry, I was unclear

[11:27] {nemo} 16%

[11:27] {Threei} ty

[11:28] {nemo} I believe gdp is about 12 trillion

[11:28] {nemo} 13.78 trillion

[11:30] {Threei} AFAIC, HIG is valid setup here

[11:30] {nemo} afaic?

[11:30] {Threei} Long Setup: HIG 16 break if stays above .90

[11:30] {Threei} as far as I am concerned

06[11:31] * Threei slaps nemo around a bit with a large vocabulary of Internet abbreviations

[11:33] {BillyD} DRYS striong

[11:50] {nemo} wow, both NAS an S&P volum at about 110&

[11:50] {nemo} 110%

[11:53] {magoo} dam..missed BCRX

[11:53] {Threei} Preview: French June Jobseekers data due out at NoonET

[11:53] {Threei} anyone's interested?

[11:53] {fernp} DRYS strong

[11:54] {nemo} Bet prostitution is up

[11:57] {dino} lol

[12:00] {Threei} HIG so invalidated

[12:00] {Threei} in fact, why didn't we short .90 break

[12:00] {Threei} lol

[12:00] {Threei} you noticed guys?

[12:00] {nemo} were you in coma?

[12:00] {Threei} over last couple weeks, majority of invalidations could be safely shorted

[12:00] {BillyD} all the levels of support down

[12:00] {BillyD} keeps me from doign it

[12:01] {BillyD} especially with mkt upticking

[12:03] {dino} cat s .25, stop .41

[12:07] {larisa} HIG signalled short for me at 11:08, 11:35, 11:54. did not take any of them though:)

[12:07] {Threei} last two would be good

[12:08] {nemo} RIMM Vad setting up for short

[12:08] {Threei} first would work too but try your nerves firast

[12:08] {Threei} .85 break?

[12:08] {Threei} if stays under 77?

[12:08] {nemo} seems reasonable

[12:08] {Threei} strucrure is right

[12:08] {nemo} not that I would consider my opinion valid

[12:09] {Threei} time of the day is more prone for random outcomes

[12:09] {nemo} Qs look like they might be bottoming

[12:09] {larisa} stop it nemo:) you reading RIMM pretty good, nice call short earlier today

[12:09] {nemo} or turning up, which will probably take rimm with it

06[12:10] * Threei slaps nemo around a bit with a large suggestion to drop this humility crap

[12:10] {nemo} my first broken clock moment larisa...but it is lunchtime,

[12:10] {nemo} I consider it honest analysis...other things I know much better

[12:11] {BillyD} SQNM....times past seems it can't hold a gain w/out a shake

[12:16] {jfjf64} afl l .51

[12:16] {dino} cat stopped

[12:16] {nemo} rimm invalumadated

[12:16] {Threei} TASR Announces new multi shot TASER device

[12:16] {Threei} oh good

[12:17] {Threei} now they can be sued multiple times over a single encounter

[12:20] {dino} amgn l .29

[12:20] {dptl} good day all......late today was out fishing :)

[12:20] {Threei} missed a few good one... but hello anyway

[12:21] {ese} out sqnm .64 +.31

[12:21] {dino} gj

[12:21] {Threei} wtg

[12:21] {ese} tks

[12:22] {larisa} nice ese

[12:24] {ese} tks....have a 1:20 tee time....have to pay for it

[12:24] {nemo} you buying the course?

[12:25] {larisa} tee house :)

[12:25] {ese} would love to someday.....with vads help...that could be possible

[12:30] {Threei} but I no golfer

[12:30] {nemo} RIMM back?

[12:31] {BillyD} you could be silent investor Vad

[12:31] {Threei} me? silent? HAH!

[12:31] {Threei} fat chance

[12:31] {BillyD} sorry, sarcastic investor

[12:31] {Threei} that's me

[12:31] {Threei} no nemo

[12:31] {Threei} too random

[12:32] {Threei} can work or can shake, 50/50

[12:32] {Threei} it went so far up that in fact it was a much better setup at 77 break if you wanted short

[12:36] {dino} esi, snda

[12:38] {jfjf64} afl been gd to me will go .61 l from here

[12:43] {ese} L drys .86

[12:44] {ese} this will be an over night hold unless it goes nuts a t close

[12:48] {BillyD} AIG holding up

[12:49] {ese} so is drys....q"s heading dn....drys heading up

[12:49] {dino} vsm, wide snda l.55

[12:49] {BillyD} Vad, any AIG thoughts on momo if takes 13

[12:50] {Threei} it's a two day's high

[12:50] {Threei} tempting

[12:50] {ese} dino whats vsm.....it's not showing up on my screen

[12:50] {Threei} let's just see if it manages to stay above .90 long enough for a tight stop

[12:51] {patel} any thoughts on MSFT

[12:51] {dino} very small

[12:52] {BillyD} fern, please see dcc

[12:52] {Threei} not really... no slightest signs of long, and short on 23 breakdown, while possibe, will offer just a small scalp most likelty

[13:00] {Threei} yawn

[13:00] {fernp} out DRYS from .83 +.09 (double bottom, after a pullback, one of my favorite setups)

[13:01] {magoo} vad..we i anything

[13:01] {Threei} in coma

[13:01] {Threei} wtg fern

[13:01] {nemo} awww Vaaaad

[13:01] {fernp} ty

[13:01] {BillyD} fernp see dcc

[13:01] {Threei} TREASURY $6B 20-YEAR TIPS AUCTION BID-TO-COVER RATIO: 2.27 V 1.58 AT LAST REOPENING

[13:02] {Threei} indirect bidders take 47.8%

[13:02] {Threei} Nissan Motor Co., Ltd Expects to launch all-electric model in the US & Japan in 2010

[13:03] {magoo} i ronic though...nobody wants to buy these

[13:07] {Threei} they

[13:07] {Threei} will solve that mags

[13:07] {Threei} yhey'll increase taxes on oil/gasoline,

[13:08] {Threei} giove insentive to buy green vehicles (at taxpayer expense of course)

[13:08] {Threei} and everyone will want to buy those

[13:09] {Threei} solar energy too expensive? tax oil. Problem solved

[13:09] {Threei} never mind that insentive to work on technology to make solar cheaper got killed

[13:09] {Threei} incentive too

[13:12] {BillyD} AIG trying

[13:13] {Threei} looks better and better

[13:15] {Threei} one-two bars more please

[13:15] {Threei} then break

[13:17] {fernp} stop under .90, if breaks 13, no??

[13:17] {Threei} yes

[13:17] {Threei} for hardcore scalpers under .95 but that has hgiher chance of a shakeout

[13:18] {fernp} ty. under .90 for me

[13:18] {Threei} hear that chomping saound?

[13:21] {Threei} pesky scalpers have 1:1

[13:21] {Threei} AIG moves against market and against FAS

[13:23] {Threei} SEC to reportedly make rule 204T permanent to reduce abusive naked shorting

[13:23] {Threei} - considering banning naked CDS or requiring reporting of all short interest in CDS contracts

[13:25] {fernp} I want to be a pesky scalper :)

[13:25] {Threei} no go for daytraders

[13:25] {BillyD} oh well

[13:34] {_matt} opinion on reversal play on aks off 18.98 on quick spike and getting in after 19.00?

[13:36] {Threei} can't tell in advance without seeingh how it gets there

[13:36] {Threei} the point is,

[13:36] {Threei} if it drops fast into levels you are interested in it's one thing,

[13:36] {Threei} and if it slides slowly into them, it's another

[13:37] {Threei} equally important is the price where it tops out before dropping there

[13:39] {_matt} very educational, thanks

[13:40] {Threei} sure

[13:41] {jfjf64} vad aig 13 break ya lk

[13:42] {Threei} again?

[13:42] {jfjf64} yes

[13:42] {Threei} no :)

[13:42] {jfjf64} ty

[13:42] {Threei} works much better as a bounce

[13:42] {jfjf64} how did i know that

[13:44] {Threei} ummm... because it stopped us on a break but bounced like a rubber ball?

[13:46] {BillyD} DRYS

[13:47] {jfjf64} how axp look to ya 50/50

[13:48] {Threei} don't know

[13:48] {Threei} weird dive on it

[13:48] {jfjf64} very

[13:49] {Threei} US Rep Frank: "Too big to fail" issue will not exist in the future 'if we do our jobs' correctly (related XLF )

[13:49] {Threei} oh boy

[13:49] {Threei} I have a so many comments to this one, it's not even funny

[13:49] {ese} i'm back....drys is looking real good Billy

[13:50] {Threei} remember last week I said, DRYS is not dropping anymore and even trying daily range highs while Baltic Dry index drops every day

[13:51] {Threei} that was clue to jump on a first day index reversed

[13:51] {Threei} [08:35] {Alert} Threei BLTXX Baltic Dry Bulk Index +1.9% first gain in 6 sessions

[13:51] {Threei} [08:36] {Alert} Threei DRYS is trying on that

[13:52] {ese} and succeeding

[13:55] {BillyD} AXP may be a short if stays under 29 and breaks .90

[13:57] {BillyD} Vad, you like DRYS if breaks

[13:58] {ese} I do.........i'm in at .86

[13:58] {BillyD} :)

[13:58] {larisa} lol

[13:59] {Threei} do I have any other choice now than "no"? we have to hedge each other, right?

[13:59] {ese} ya.....I thought that was prety funny

[13:59] {jfjf64} vad here in lot about flash trading you know anythin hurt us or help us??

[14:00] {magoo} vad, how i add a new chart too laser?

[14:01] {Threei} jf... it will hurt you badly if you read and think a lot about it

[14:01] {nemo} view=}chart

[14:02] {magoo} ty, now how i get a stock symbol in it?

[14:02] {Threei} bunch of bs from whole bunch of people who know nothing about the issue...

[14:02] {Threei} mags... drinking already?

[14:03] {BillyD} BCRX inching up

[14:03] {magoo} why yes..yes i am

[14:03] {larisa} magoo was trading without charts ?

[14:03] {nemo} do you want to use it to trade Mags, or use it with existing windows

[14:03] {Threei} thought so

[14:03] {magoo} just as another stock to follow

[14:03] {magoo} not connected to lev 2

[14:04] {nemo} so, you want to follow one stock all the time, or be able to change stocks?

[14:04] {Threei} to put a stock symbol in it you need to do this very complicated manipulation, mags:

[14:04] {Threei} click on it,

[14:04] {Threei} then gently hit the key wioth first letter of your stock symbol on it,

[14:04] {Threei} then hit second key with second letter of symbol,

[14:05] {BillyD} rflol

[14:05] {Threei} and repeat it until whole symbol is typed in

[14:05] {Threei} then hit this big one which says Enter

[14:05] {Threei} close your eyes

[14:05] {Threei} and when you open them again, voila

[14:05] {magoo} how do i know which stock symbol to enter??

[14:06] {BillyD} go ahead Vad

[14:06] {Threei} for that you need to bring chicken entrails to trading gods altar

[14:06] {Threei} and say kreks peks phecks three times

[14:06] {Threei} in the miodnight, on the crossroad

[14:06] {Threei} spit three times over lweft shoulder

[14:07] {Threei} and go back home.

[14:07] {nemo} at full moon...the tough part will be finding a virgin

[14:07] {Threei} In the morning, the symbol will be revealed to you

[14:07] {jfjf64} bcrx

[14:07] {Threei} see? jf did just that yesteray

[14:11] {jfjf64} lkin hig

[14:12] {dptl} lol

[14:14] {ese} mags am i detecting your getting no respect here?

[14:16] {ese} I feel for ya.......I've been on the receiving end of this crew as well......brutal

[14:17] {Threei} full room of roger dangerfields...

[14:18] {nemo} who?

[14:19] {magoo} ty btw

[14:19] {magoo} ie chats

[14:19] {Threei} A selection of Rodney Dangerfield humor

[14:19] {Threei} I dont get no respect was, of course, his

[14:19] {Threei} signature line

[14:20] {magoo} look BCRX

[14:20] {magoo} i said 11 twice earlier

[14:20] {Threei} you did

[14:21] {jfjf64} we gonna test high vad bcrx

[14:21] {magoo} any read AMZN boss

[14:24] {Threei} no, not after suuch spike

[14:26] {magoo} CAT read?

[14:26] {ese} am outta here ladies and gentlemen.....see ya tomorrow. golf awaits with my son

[14:27] {nemo} thanks for the warning ese

[14:27] {dino} accuweather.com "1,044 daily record low temps. have been broken this month nationwide"

[14:28] {Threei} take care ese

[14:28] {Threei} CAT, the only thing I would play on it is a little bounce, staying under .70, then short on .60 break

[14:32] {jfjf64} if breaks .70 wd ya lk long

[14:32] {Threei} no

[14:32] {jfjf64} ty

[14:35] {dino} green coming

[14:36] {Threei} green shoots you mean?

[14:38] {dino} not!

[14:40] {dino} amgn to .41

[14:40] {dino} out +.12

[14:49] {dino} esi sm l .60 wde

[14:56] {jfjf64} snda statin up

[14:56] {Threei} Fed's Plosser: Will need to increase rate before unemployment reaches highest levels; there is risk of inflation in late 2010

[14:56] {Threei} - Exit strategy will require many tough choices

[14:56] {Threei} - Unsatisfied with the Obama's systemic regulator plan as the Fed may be assuming too many roles

[14:56] {Threei} - Sees growth as positive in 2H09

[15:00] {jfjf64} axp bounce vad

[15:01] {Threei} feels lower

[15:03] {jfjf64} looks it

[15:06] {Threei} almost ready for as bounce

[15:07] {jfjf64} lets go

[15:07] {Threei} not yet

[15:07] {Threei} very soon

[15:07] {magoo} which AXP?

[15:07] {jfjf64} wait on yaaaaaaaaaaaaaa

[15:07] {Threei} .35 long

[15:07] {Threei} stop .28

[15:07] {Threei} as all bounces, could taker a few tries

[15:08] {Threei} don't touch it if not ready to try a few times

[15:08] {nemo} which stock

[15:08] {Threei} AXP

[15:08] {Threei} 15:00] {jfjf64} axp bounce vad

[15:08] {Threei} [15:01] {Threei} feels lower

[15:08] {Threei} [15:03] {jfjf64} looks it

[15:08] {Threei} [15:06] {Threei} almost ready for as bounce

[15:08] {Threei} come on, follow the train of thoughts

[15:08] {dino} esi stopped

[15:08] {nemo} had to step away, missed it

[15:10] {Threei} not this time

[15:12] {Threei} shakout

[15:12] {Threei} see if pulls back under .40 for another chance

[15:15] {jfjf64} stopped to penny grrrrrrrrrrrrr

[15:15] {Threei} yeah, by two cents

[15:15] {Threei} rude

[15:16] {jfjf64} .26 here

[15:19] {BillyD} Vad, you thinking re-enter AXP?

[15:20] {BillyD} or play over

[15:23] {Threei} should give one more

[15:23] {Threei} for doluble bottom

[15:23] {Threei} .40 break

[15:23] {Threei} or dive into .30

[15:24] {Threei} whichever comes first

[15:25] {magoo} JAZZ takes 6

[15:25] {Threei} I see no news

[15:26] {Threei} something's worng with AXP

[15:28] {BillyD} done with it]

[15:28] {Threei} yeah, let's leave it alone

[15:28] {Threei} there is something behind this drop, other than just market following

[15:36] {Threei} anyone sees anything on JAZZ?

[15:38] {fernp} not here Vad. Nothing in Dow Jones News

[15:39] {Threei} ty... nothing here

[15:44] {dino} all dyer snda out .25, +.70

[15:45] {dino} dayer

[15:45] {BillyD} BCRX

[15:48] {Threei} nice patience dino

[15:49] {dino} thx

[15:53] {Threei} sheesh JAZZ

[15:53] {Threei} finishing near high

[15:55] {Threei} and makes new one

[15:55] {Threei} okay guys. thank you all

[15:55] {Threei} have a good evening, see you tomorrow

[15:55] {patel} take care vad

[15:55] {fernp} good evening all

[15:56] {magoo} WAIT VAD

[15:56] {dptl} have a good evening all

06[15:56] * magoo slaps Threei around a bit with a large trout

[15:56] {Threei} too late, I've left

[15:56] {BillyD} lol

[15:56] {Threei} :)

[15:56] {larisa} bye:)

[15:58] {magoo} bye all..ty

Jul 24 2009

noreply@blogger.com (Vadym Graifer) — Fri, 24 Jul 2009 19:56:00 +0000

Session Time: Fri Jul 24 00:00:00 2009

We have merrily finished a week of 5 winning days in a row. SPWRA, AIG, RIMM, something else... Not too shubby for a summer trading. Have a great weekend!

[08:09] {Threei} CSUN China Sunergy Guides Q2 solar cell shipments above prior forecast to 35-45MW; expects to return to profitability in Q2 v -$0.15e

[08:09] {Threei} - Gross profit margin is expected to be around 9%, compared with prior guidance of a positive low single digit number.

[08:18] {BillyD} gm Vad

[08:20] {Threei} Billy :)

[09:01] {fernp} good morning everybody

[09:01] {Threei} fern :)

[09:02] {cosmo} RIGL pre mkt high = 9.25 fwiw

[09:06] {cosmo} SEPR

[09:06] {cosmo} 17.12 hi so far

[09:07] {Threei} (RU) Russian Deputy Economy Minister Klepach: Russia may not get back to 2008 steel output levels by 2012

[09:11] {ese} GM all

[09:11] {Threei} ese :)

[09:11] {ese} anything strike your fancy this morning vad?

[09:12] {Threei} not so far

[09:13] {cosmo} solars maybe?

[09:14] {cosmo} spwra

[09:14] {Threei} CSIQ, CSUN, LDK...

[09:15] {Threei} worth watching, just not sure if it gets any follow through

[09:15] {cosmo} i'm watching the horizon

[09:16] {Threei} Yesterday 16:52 SPWRA Guides Q3 EPS +40% q/q (implies $0.33 v $0.32e), Rev +40% q/q (implies $417.2M v $382Me) - Conference Call

[09:16] {Threei}

[09:18] {ese} yup my solar screen is green........

[09:19] {cosmo} green flashes

[09:19] {ese} indeed

[09:19] {cosmo} in the morning too

[09:22] {cosmo} SPWRA hit 30 last night.... fyi

[09:22] {_patel} good morning everyone

[09:25] {Threei} morning patel

[09:25] {jfjf64} mornin

[09:26] {Threei} jf :)

[09:27] {JohnK} gm folks

[09:27] {Threei} john :)

[09:28] {Threei} I got nothing for the open... will wait for the scanner to spit out something

[09:29] {Threei} DECK is decimated

[09:30] {Threei} Yesterday 16:00 DECK Reports Q2 $0.26 (ex items) v -$0.09e, R$102.5M v $102.6Me; Raises FY09 sales outlook

[09:30] {Threei} - Q2 UGG brand net sales +22.9% y/y to $74.4M

[09:30] {Threei}

[09:31] {cosmo} RIGL 10 hod

[09:31] {Threei} Long Setup: SPWRA half lot .80

[09:32] {Threei} if stays above .60

[09:32] {nemo} damn

[09:32] {dptl} good morning all

[09:32] {Threei} 1:1

[09:32] {Threei} dp :)

[09:32] {nemo} who got it?

[09:32] {JohnK} too fast for me

[09:33] {Threei} got .83

[09:33] {tomg} in .85 out .06, ty vad

[09:33] {Threei} :)

[09:35] {nemo} whoa, aig and fuqi

[09:36] {nemo} news aig?

[09:37] {Threei} no

[09:39] {magoo} morn

[09:39] {Threei} magoo :)

06[09:39] * nemo slaps magoo around a bit with a large alarm clock

[09:39] {magoo} yea..no kidding...was out boozin

[09:40] {Threei} SPWRA non-stop

[09:40] {nemo} what about other solars?

[09:40] {Threei} lukewarm

[09:41] {magoo} we in any vad?

[09:42] {Threei} no

[09:42] {Threei} scalped SPWRA before you woke up

[09:42] {Threei} RMBS Update: Price Target raised to $60 from $40 at Capstone

[09:43] {Threei} wow

[09:43] {chiro} 3i...u good teacher....scalped RIMM on this bounce for +.90 ....too fast to post

[09:43] {Threei} atock is under 17 and they argue target 60 vs 40?

[09:43] {Threei} gj chiro :)

[09:44] {Threei} Preview: July Final University of Michigan Confidence due out at 9:55amET

[09:44] {Threei} **consensus expectation: 65.0e v 64.6 preliminary

[09:44] {Threei} - Most estimates for July Final range between 64 to 66.

[09:44] {Threei} - Reminder: the Preliminary reading at 64.6 came in below the 70 estimate.

[09:45] {jfjf64} jpm

[09:46] {ese} L bac .78

[09:46] {jfjf64} hgsi

[09:47] {Threei} BCRX...

[09:47] {Threei} can you believe this?

[09:47] {BillyD} yes, but tough entry with early low volume

[09:48] {nemo} patience, you in tck?

[09:49] {_bradc} did you scale out of spwra or just scalp it?

[09:49] {Threei} RIMM dive into .80 interesting

[09:49] {Threei} scalp

[09:50] {cosmo} rigl might test 10

[09:50] {JohnK} got $.11 out of RIMM scalp thx T

[09:50] {cosmo} at some point...

[09:51] {jfjf64} stop rimm ??

[09:51] {Threei} ??

[09:52] {Threei} I haven't even given entry

[09:52] {nemo} jf you jumped the gun

[09:52] {Threei} and you ask for a stop?

[09:52] {jfjf64} .80 entry thought

[09:52] {Threei} [09:49] {Threei} RIMM dive into .80 interesting

[09:52] {JohnK} sorry :)

[09:53] {nemo} Ready...FIRE!!!...aim

[09:53] {Threei} Long Setup: RIMM .70 break

[09:53] {Threei} if holding above .60

[09:55] {Threei} JULY FINAL MICHIGAN CONFIDENCE INDEX: 66 V 65.0E

[09:56] {ese} bac stopped. 60 -.18 full lot....went for break out...didn't work

[09:56] {nemo} rimm testing support area

[09:57] {jfjf64} hig strong

[09:59] {Threei} CDC report states H1N1 flu could affect 40% of the US population over the next two years if vaccine is unsuccessful (related SWINEX NVAX BCRX GSK ROG.SZ GILD )

[09:59] {magoo} amzn bounce vad?

[10:00] {nemo} rimm holding support

[10:00] {Threei} .20 worth a try mags

[10:00] {Threei} if holding 86

[10:00] {Threei} not holding

[10:00] {nemo} rimm just mirroring qs

[10:02] {Threei} could some expectations about swine flu developments be what fuels BCRX stealth run?

[10:02] {nemo} Summer Friday at the end of July...zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

[10:03] {magoo} i caught amzn .05

[10:04] {Threei} see BCRX?

[10:04] {magoo} out .41 TY vad

[10:04] {Threei} I swear this thing goes to 10 today lol

[10:04] {magoo} if sets up..vcall it

[10:04] {Threei} BCRX Hearing strength being attributed to chatter that Premivir could receive authorization for emergency use (9.13, +0.55, 6.41%)

[10:05] {Threei} rumors...

[10:07] {jfjf64} hig ouch

[10:08] {Threei} RIMM

[10:08] {Threei} long half lot first strength

[10:08] {Threei} .50

[10:08] {Threei} if holding .40

[10:09] {Threei} Long Setup: RIMM .50 if holding .40

[10:09] {Threei} invalidated

[10:09] {nemo} short

[10:09] {BillyD} tough to geta mkt feel so far

[10:10] {_patel} Threei, quick question, before the entry trigger on a stock and it falls below the holding does it always become invalidated.

[10:10] {nemo} that'll be 3r test of support

[10:10] {nemo} 3rd

[10:10] {Threei} could still be valid if price touched under suport just lightly and briefly,

[10:10] {_patel} ok

[10:11] {Threei} or could re-establish itself if returns into break range and spends a few minutes there

[10:12] {_bradc} looks like upside down cup and handle

[10:13] {Threei} Long Setup: STT 48 break half lot

[10:14] {Threei} if stays above .85

[10:15] {jfjf64} grrrrrr

[10:15] {nemo} it's holding the low

[10:16] {Threei} Long Setup: SPWRA .60 break half lot

[10:16] {Threei} if holding above .50

[10:18] {jfjf64} 75.70 bg lv rimm

[10:19] {Threei} every invalidated setup sop far could be faded succesfully

[10:19] {BillyD} HGSI

[10:19] {jfjf64} 100 percent

[10:19] {jfjf64} goota luv it no

[10:20] {ese} fitb...going nuts...and to think i was out with -.02....ohhhh well

[10:20] {Threei} gitta use it

[10:20] {jfjf64} lol

[10:21] {ese} l PMCS .01

[10:26] {ese} l bac .43

[10:29] {Threei} BCRX... look how stubborny it returns to the high

[10:29] {BillyD} this time

[10:32] {BillyD} chart looks right BCRX

[10:35] {ese} bac stop to break even .43

[10:36] {ese} pmcs.....nice orderly trading stock.....civilized would be the word

[10:36] {jfjf64} bcrx

[10:37] {jfjf64} does it wanna test high

[10:37] {_patel} very boring day today

[10:39] {BillyD} HIG .50 BDN if stays under .60

[10:39] {Threei} I feel like apologizing

[10:39] {_patel} apologizing for what threei

[10:39] {_patel} its not your fault

[10:39] {ese} out pmcs even .01

[10:39] {Threei} for boring day :)

[10:39] {BillyD} missed while typing

[10:39] {ese} didn't like that little jump down

[10:40] {_patel} did RIMM trigger the 1st time you typed it in

[10:40] {_bradc} narrow ranging day since open

[10:41] {magoo} vad, spwra bouncer?

[10:41] {Threei} no, RIMM was invalidated every timer

[10:41] {_patel} oh ok

[10:42] {Threei} doesn't look like that mags

[10:45] {ese} bac stopped........even

[10:46] {ese} i might be done for today.......i cain't make nooothin vork!!!!

[10:47] {magoo} c'mon big guy...when the goin gets tough..the tough uh um .

[10:47] {nemo} nobody is makin' nothin work ese

[10:47] {nemo} wuss

[10:47] {ese} one of those days for sure.....

[10:47] {Threei} when the goin gets tough the tough goes golfin

[10:48] {magoo} vader has something up his sleeve

[10:48] {jfjf64} his camera

[10:49] {ese} definately......take my frustrations out by beating the crap out of a golf

[10:49] {ese} ball

[10:51] {ese} markets not down huge really.....just enough to take the steam ot of things

[10:51] {ese} out of things

[10:52] {Threei} and, I suspect, to lure shorts in

[10:54] {jfjf64} brcm s .19

[10:55] {nemo} like JF?

[10:56] {BillyD} HIG, just enough to stop me

[10:56] {jfjf64} bg battle here

[10:57] {Threei} Obama Job Approval Below 50% for First Time

[10:57] {Threei} 40% Say Obama Has Too Many Press Conferences, 47% Say Number Is Right

[10:58] {jfjf64} 1/1 half out

[10:58] {Threei} good setup

[10:59] {jfjf64} stop even out 2 half

[11:00] {jfjf64} ohh well

[11:02] {fernp} have to go. see u on monday. have a nice weekend all

[11:02] {ese} l bac .44

[11:02] {jfjf64} enjoy weekend my trading buddy

[11:03] {jfjf64} s jnpr .66

[11:04] {Threei} take care fern, have a great weekend

[11:10] {jfjf64} .05 break axp vad look good to ya need market help

[11:11] {Threei} worth a try

[11:11] {jfjf64} 5 cent stop

[11:11] {Threei} well

[11:11] {Threei} stop will be under the low of this pullback

[11:12] {Threei} and if low is set too far, it's not a break play anymore

[11:12] {_bradc} how about rimm long break at .50 if failure of weak drop base if holding .39?

[11:13] {Threei} spiked too vertically into it

[11:13] {Threei} hate buying breaks at the top of vertical spike

[11:16] {jfjf64} 1/1

[11:16] {jfjf64} stop at even last half

[11:16] {Threei} good one

[11:17] {jfjf64} 1/4 out .19

[11:19] {jfjf64} stop at.10 last piece

[11:19] {jfjf64} done

06[11:20] * Threei slaps jfjf64 around a bit with a large endorsement of good trade management

[11:20] {jfjf64} im thinkin i wussed out last piece

[11:21] {Threei} who cares

[11:21] {jfjf64} ty

[11:21] {Threei} there was a logic and discipline under this way to manage it

[11:21] {nemo} bird in hand

[11:21] {Threei} if the logic proves to be not optimal in most cases you'll review it

[11:21] {Threei} and change it

[11:22] {Threei} one case makes the logic invalid not

[11:22] {Threei} but discipline to follow the logic of the moment is what makes or breaks the trader

[11:22] {jfjf64} very true

[11:23] {jfjf64} sittin watchin ya helpin meeeeeeeeee

[11:24] {Threei} and typing in that weridest language I can't find the name for

[11:24] {nemo} yodaish

[11:25] {jfjf64} c/h cof

[11:26] {nemo} or top jf

[11:26] {jfjf64} whatever call it missed ittttttttttttttttttt grrrrrrrrrrrrrr

[11:30] {jfjf64} ms late to dance l .79

[11:31] {jfjf64} break .79

[11:31] {chiro} ss COF .74

[11:35] {Threei} why?

[11:36] {jfjf64} 1/1

[11:37] {chiro} -.15 stopped

[11:37] {jfjf64} stop.85

[11:37] {Threei} not sure I undrestood that play chiro

[11:37] {Threei} kind of not here nor there

[11:38] {chiro} set up was vol slowing down...price extended above 3 min MA of 28.61

[11:38] {nemo} it's 11:30 (lunch) on a Friday at end of July Chiro, volume always slows this time of day

[11:38] {nemo} add the seasonality

[11:39] {jfjf64} done ms

[11:39] {jfjf64} +10 cents +4 cents

[11:39] {chiro} {{duh.....chiro has forgotten too much....closing day green....be back monday

[11:40] {Threei} take care chiro,

[11:40] {Threei} I hjave to say

[11:40] {Threei} you had fantastic week

[11:40] {Threei} (yes, I am watching you)

[11:41] {chiro} thnk u....i am watching u closer:=D

[11:41] {Threei} lol

[11:41] {Threei} this last setup is questionable

[11:41] {Threei} but heck... let's talk about next week

[11:42] {jfjf64} look this axp

[11:42] {chiro} yes....i'd had a decent day, and decided to push my luck....still green.....nice cabernet coming my way....

[11:43] {jfjf64} enjoy chiro

[11:44] {chiro} ty

[11:45] {Threei} guys... how many losing days we had in July?

[11:45] {Threei} anyone runs room calls stats?

[11:45] {jfjf64} wfc l .50

[11:45] {jfjf64} break

[11:46] {Threei} what, no one cares?

[11:47] {jfjf64} if holdin .42

[11:48] {ese} see you all in a couple of hours.....have to go pick up my kids at camp....still long bac....stop is in at .39

[11:48] {jfjf64} hv good weeked ese

[11:49] {jfjf64} out of here after wfc pays me

[11:51] {jfjf64} need to print .53

[11:53] {Threei} {WFC} you need just one thing from me {(

[11:53] {jfjf64} ?

[11:53] {Threei} never mind

[11:54] {Threei} my brain goes on weekend hand in hand with my sense of humor - and both do it before actual weekend

[11:56] {jfjf64} here it goesss

[11:57] {jfjf64} follow the market wfc

[11:59] {jfjf64} 1/1

[11:59] {_patel} nice job on WFC jf

[11:59] {jfjf64} stop .55

[12:00] {jfjf64} 1/4 out.67

06[12:00] * Threei slaps jfjf64 around a bit with a large roll of cash

[12:00] {jfjf64} stop .60

06[12:00] * magoo slaps Threei around a bit with a large trout

[12:00] {BillyD} gj jf

[12:01] {Threei} what was that for?

[12:01] {Threei} not that I mind fish

[12:01] {magoo} howd u miss move in WFC?

[12:01] {magoo} .35 -.68

[12:01] {Threei} ??

[12:01] {Threei} jf called it for you

[12:01] {Threei} I bowed to his read

[12:01] {magoo} i thoght he was lying

[12:01] {Threei} oh

[12:01] {Threei} you need to trust people more

[12:02] {jfjf64} stop .65

[12:02] {nemo} he's been married too long

[12:02] {magoo} nice one jf

[12:03] {BillyD} BCRX might be worth shot if large .24 offer taken

[12:04] {jfjf64} done .66

[12:04] {BillyD} what ya think Vad

[12:04] {nemo} his brain is off for the weekend Billy

[12:04] {Threei} this is typical setup for it, and over last week it worked randomly

[12:04] {BillyD} ty

[12:05] {Threei} a few times it worked after taking those huge offers,

[12:05] {nemo} is that a definite "maybe" vad?

[12:05] {Threei} a few times failed

[12:05] {Threei} who knows what it's going to be this particular time

[12:05] {Threei} {nemo} his brain is off for the weekend Billy {--- this is very true but then again, when did it prevent me from trading?

[12:10] {jfjf64} what goin on lk at cat bg push isnt it lunch tm

[12:11] {BillyD} I understand JF's typing clear as a bell now

[12:11] {BillyD} lol

[12:11] {jfjf64} lol

[12:11] {_patel} what did u just type jf.

[12:12] {magoo} lies..lies ...lies

06[12:13] * Threei slaps magoo around a bit with a large suggestion to have some faith in humanity

[12:40] {tomg} thanks, vad, for a another good week. have a good weekend all

[12:41] {Threei} take care toim, have a good one

[12:42] {magoo} bunch of slackers :)

[12:42] {Threei} I take sever umbrage in that remark

[12:42] {Threei} it alleges that some of us here are not slackers

[12:43] {Threei} meanwhile we all are

[12:43] {Threei} and proud of it

[12:44] {Threei} Long Setup: AIG .25

[12:44] {Threei} if stays above .15

[12:45] {magoo} that "if" part always gets me he he

[12:46] {Threei} are you ok with "and", "or" and "but"?

[12:48] {nemo} "should it" stay above... is that better Mags?

[12:49] {BillyD} lol....partial ghere

[13:00] {jfjf64} nice if they buy .30 break

[13:01] {Threei} BCRX again... lol

[13:01] {BillyD} who????

[13:02] {jfjf64} comon break

[13:06] {jfjf64} bounce market

[13:06] {Threei} SBUX CFO: Expecting to open stores in India within next year or two; have begun selecting store sites - interview comments

[13:15] {jfjf64} this is torture

[13:15] {BillyD} lol

[13:19] {Threei} let's put stop under .20

[13:19] {Threei} not ecause there is a lot of reasons to do so... but in order to make torture shorter and less painful

[13:19] {BillyD} it is good for our emotional well being

[13:21] {jfjf64} market mkin push follow leader aig

[13:22] {jfjf64} comon buy the 30 break suckers

[13:23] {BillyD} Vad...looking for 1:1 on AIG?

[13:25] {Threei} lol... I have no idea anymore

[13:25] {Threei} it takes too much effort to remember I have it

[13:26] {BillyD} how about just out some time today...lol

[13:26] {Threei} let alone to think what to do with it

[13:26] {Threei} that's it

[13:26] {Threei} at some point today we will exit it - of this I am absolutely sure

[13:28] {jfjf64} what md ya decide to punish us with this dog

[13:28] {nemo} your success this week

[13:29] {Threei} kind of, yeah... I thought it was way too easy for you all, with 5 winning days in a row

[13:29] {Threei} maybe more but my memory doesn't reach last week

[13:30] {Threei} weekend is a serious treshold for memory to overcome...

[13:30] {Threei} eas there life on the planet before this last weekend?

[13:30] {magoo} BRCM starts

[13:31] {nemo} RIMM took off

[13:32] {Threei} Fed's Bernanke: Fed is currently winding down its emergency measures; do not expect programs to return to their prior levels - testimony

[13:32] {Threei} - Note: Fed reduced size of TAF auctions earlier today

[13:32] {nemo} everything has gone positive

[13:32] {Threei} 1:1!!!!

[13:32] {Threei} can you believe it?

[13:33] {BillyD} sheesh........out ty

[13:33] {nemo} did he just say that?

[13:33] {Threei} earlier comment on market pullback:

[13:33] {Threei} [10:52] {Threei} and, I suspect, to lure shorts in

[13:34] {Threei} guess who is on TV'

[13:37] {jfjf64} afl l 36.01

[14:04] {BillyD} .

[14:11] {BillyD} BCRX keeps teasing

[14:12] {_patel} what just happened? I got kicked out.

[14:12] {wulff} obama

[14:12] {Threei} server hiccup

[14:13] {_patel} ok

[14:14] {wulff} RIMM has good channel

[14:16] {dptl} have a good weekend all :)

[14:17] {Threei} take care dp

[14:17] {Threei} guys, I need to leave for about 40 min, will be back to see if we can find some closing play

[14:27] {ese} i'm back.....how the day going

[14:28] {nemo} Vad left

[14:28] {ese} your in charge nemo

[14:28] {nemo} that's funny

[14:52] {ese} what happened

[14:53] {ese} anyone else here?

[14:54] {BillyD} yes,

[14:54] {ese} were you cut off

[14:54] {BillyD} mkt goes up and falls down & vice versa

[14:54] {BillyD} I wasn't

[14:54] {BillyD} I don't think

[14:55] {ese} i was......all of a sudden this room has a different look to it

[14:55] {BillyD} Vad is gone, much prettier now...lol

[14:57] {BillyD} most everything is random today

[14:57] {BillyD} no patterns

[14:57] {ese} definetly

[15:02] {Threei} {BillyD} Vad is gone, much prettier now...lol

[15:02] {Threei} I'll remember that

[15:02] {nemo} no you won't

06[15:02] * BillyD {------- Hides

[15:03] {Threei} {nemo} no you won't {--- true... good chance... but I

[15:03] {Threei} ll try...

[15:04] {BillyD} took my eye off CKSW short set up and whamo

[15:05] {nemo} rally into close vad?

[15:05] {Threei} quite possible... but sidelines is more likely

[15:06] {Threei} BCRX consolidates near the high

[15:06] {_patel} is it just me or everyone keeps getting kicked out

[15:07] {Threei} new high

[15:07] {BillyD} missed

[15:07] {BillyD} wasn't watching

[15:08] {ese} whats up?....got cut off again

[15:08] {Threei} I took .50

[15:08] {Threei} half out .65

[15:08] {BillyD} gj

[15:09] {ese} no patel.....it's not just you

[15:09] {BillyD} still in vad

[15:09] {Threei} half

[15:09] {Threei} OPEC is preparing for a sharp decline in crude prices in next few weeks - WSJ (related USO )

[15:10] {Threei} why?

[15:10] {nemo} demand, but that means prices will go up

[15:10] {ese} no demand

[15:10] {Threei} cites fuel stockpiles at 24 year high

[15:11] {ese} vad how do you get rid of the ads at the top of the page?

[15:11] {Threei} huh?

[15:11] {Threei} what ads?

[15:12] {ese} ads by google....this one says single transvestites

[15:12] {Threei} ??

[15:12] {ese} meet canadian singles

[15:14] {ese} how do you get rid of them

[15:15] {Threei} anyone understands what ese is talking about? :)

[15:15] {BillyD} nah

[15:15] {nemo} whaddya' put in the bong ese?

[15:15] {ese} there are ads at the top of my rooom

[15:16] {Threei} oooohhh... you use mibbit

[15:16] {ese} i guess so

[15:16] {Threei} okay... MIRC here, so nothing like that

[15:16] {nemo} what browser you using ese?

[15:17] {ese} say chat by Mibbiet.com

[15:17] {ese} firefox

[15:17] {ese} mibbit

[15:17] {nemo} go to the firefox add on an plug in page, there are downloads to stop advertisements

[15:18] {ese} am i on the wrong site?

[15:18] {nemo} How would I know?

[15:19] {BillyD} rofl

[15:20] {_bradc} who uses intelliscan?

[15:21] {Threei} do I count?

[15:21] {_bradc} yes, how important is that tool for your trading?

[15:21] {Threei} ummm... that's where I get most of my alerts from

[15:22] {nemo} ese, go to tools } add-ons, then at the top of the window go to "Get Add-ons"

[15:22] {Threei} nwemo... who are you talking to?

[15:22] {nemo} ese Vwad

[15:22] {Threei} and do you see him being here?

[15:26] {Threei} AIG

[15:26] {Threei} let's see if it pulls back for long

[15:28] {Threei} now you can continue nemo {G}

[15:28] {ese} i think i'm back....

[15:28] {nemo} {nemo} ese, go to tools } add-ons, then at the top of the window go to "Get Add-ons"

[15:28] {ese} will do...

[15:38] {ese} which one gets rid of the ads nemo?

[15:39] {nemo} ad-block

[15:40] {nemo} https://addons.mozilla.org/en-US/firefox/addon/1865

[15:40] {ese} tks

[15:40] {nemo} give me your address, I'll send my bill

[15:41] {Threei} ,ese} vad, remind me your address please

[15:41] {BillyD} hgsi festiv

[15:42] {Threei} probably next week HGSI will be on watch for 15 break

[15:48] {ese} ok ...thats working but it has to be reset everytime i open the room

[15:54] {Threei} okay guys, calling it a day

[15:54] {Threei} no single losing day this week

[15:54] {nemo} c u monday

[15:55] {magoo} ty vad

[15:55] {BillyD} cya monday

[15:55] {Threei} have a great weekend

[15:55] {Threei} see you Monday

[15:55] {BillyD} u 2 ty

Interesting lifestyle concept for a trader

noreply@blogger.com (Vadym Graifer) — Fri, 10 Jul 2009 01:01:00 +0000

The World visited our city

Interesting concept eh? Unless you are are prone to seasickness... but navigating choppy market should have taken care of that I assume.

Main problem would probably be constant confusion with time zones and their relation to New York time... when do I get up tomorrow for NYSE opening if we are in New Zealand?... Sydney?... Bahamas?... (OK, this last one was easy).

For those who are too lazy to click on a link: this is floating condominium constantly circumventing the globe. Buy your condo (not very cheap, mind you) and live in permanent cruise-state.

Can't help it but show one more version of the shot:

Averaging down - Yea Or Nay

noreply@blogger.com (Vadym Graifer) — Wed, 24 Jun 2009 00:01:00 +0000

"Averaging down" as a trading approach regularly causes controversy. While difference of opinions is always good, let's have a deeper look into it to make sure that opinions are informed and that we are talking about the same thing.

There is averaging down and averaging down. Not all of them are created equal. I'd break them down by two kinds.

1. A trader buys, position goes against him, he fails to cut his losses, sees them growing and getting out of hand. Eventually at some point he adds to his position following the logic "If I liked it at $20, it should be even better at $10" and/or "it can't go any lower". Both are false: anything can and often will go lower (no lack of examples of that over last year, eh?); and who is to say it was any good at $20 to begin with? And is $10 a better price or simply a proof that $20 was a mistake? This kind of averaging down is a "bad" one; it's done out of frustration, and it adds to a mistake. More often than not it increases eventual loss. In most cases what follows is: your position does recover some, by some magic stalling right under new breakeven level ($15 in our example). This gives you a chance to exit with a small loss but you don't take it - after all, recovery has started, you are looking at possibility of nice profits now (and on double size, no less). Sure enough, stock reverses and drops under $10 where you either exit with even bigger loss or put it in your long term portfolio, a.k.a. Grave of Short Term Trades Gone Bad. Another frequent scenario is, stock dives briefly under your second entry level, you sell your second position for a small loss, and that's where stock reverses and goes back to that 15... you curse your decision to cut losses on second part and don't sell first part - after all it's cutting the loss that killed your chance to get out even, right? Sure enough, it reverses down and you are looking at ever-increasing loss again.

Those rare instances when this strategy works only reinforce the idea of it being a viable approach, eventually provoking you to employ it again and again, until it leads you into a loss exceeding anything you saw in your worst nightmares.

2. Averaging down is a part of planned strategy. When a stock comes into your target zone but there is a lot of uncertainty in the markets, you don't feel confident enough to fully commit and don't want to stay on a sideline. You break your purchase in parts and plan a strategy for those parts. This strategy includes various scenarios of building up to full position in a case of further drop, in case of reversal, in case of stall. It also includes an "uncle point" - event or scenario which proves that the whole idea of entry was an error, so whatever is accumulated up to that point is being dumped. There is nothing's wrong with this kind of averaging down - it's done by a design, to minimize exposure at the uncertain time and increase it as events develop in a favorable way. I wouldn't even call averaging down but that's a matter of semantics.

As we see with many other things, there are no absolutes in trading. There is, however, need in clarity, in straigforward well-designed and thought through plan. Such plan, among other things, wil include definitions - as we mentioned earlier in this blog, "as you name the boat, so wil it float".

Securities Tax Proposal

noreply@blogger.com (Vadym Graifer) — Sun, 22 Feb 2009 19:32:00 +0000

I've got quite a few e-mails asking about my take on this proposal, enough to warrant a blog post. For a someone making his living by trading the market my answer may be somewhat unexpected: I don't worry about it too much.

Here is why: I don't believe it has any realistic chance to materialize; And if it does, we will have much bigger problem on our hands than the end of active trading as our way to provide for ourselves and our families.

Let me explain. Most of my correspondents are coming from the (absolutely correct) assumption that such tax will end day trading. Imposing a prohibitve cost on the transaction, it no doubt would do just that. Notice that it's not just an additional burden, additional cost on the essential need that would help replenish government coffers as for instance gas tax would - it's prohibitive cost that renders the activity unprofitable and eliminates it altogether. There goes the idea of "let the Wall Street pay for bailout" - there won't be financial benefit to the government. Instead, there will be the destruction of the whole profession, sending more people to an unemployment lines. And I am not talking about day traders only - what about whole brokerage industry, discount brokers who suddenly lose their whole client base? More uneployed, more unhappy, less taxes collected - who could benefit from that?

Now, is the impact going to be limited to day traders and brokers that serve them? If it were so, some political expediency in search for a scapegoat could still warrant such proposal going through. After all, imposing $25K rule on day traders was no less idiotic (although less damaging), yet it did pass. In this case, however, it's about much more than just those pesky day traders. You don't really think it's just a day traders who trade every minute and every second and whose prints fill the tape with this endless flow, do you? Think of how many day traders there are and what kind of volume they could provide - and compare it with every day's volume on NASDAQ, NYSE and AMEX. What do those numerous trading desks of the banks, brokerages, all kinds of funds are doing day in day out, all day long? Who provides liquidity for longer term traders when they want in or out? Who makes the market bidding and offering on each and every stock at each and every point in time? Whom pension funds buy from and sell to when they reposition themselves? All these people, all these organisations will suddenly be put out of business by such tax. Now, imagine them all being out of the action. What happens to volume, liquidity and bid/ask spreads? Can you apply any word to the US capital market other than desert if that happens?

Let's talk about foreign investors - what are they going to do when they find themselves in the market with no lliquidity? Does the government want mass exodus of those?

Let's talk about companies listed on US markets. What are they going to do when the markets all but cease to exist? This is their financing source and pricing mechanism. Does the government want mass exodus of those?

Let's talk about the public. Does average member of the society benefit from the cost of transaction being passed to him/her when their 401K etc are being positioned and repositioned? Or from their self-directed transactions being burdened with this cost? I mean, no one seriously thinks brokerages are going to eat this cost, do they? Does the government want to load our, dwindling as it is, investments with this additional expense?

Internet and globalization era, the markets all over the world are accessible with unprecedented ease... do you impose such prohibitive measures on your market and push people into the welcoming hands of competitors?

All above leads us to one question: who would benefit from that proposal? After all, for any legislation to go through, there must be benefitting party influential enough to push it through. I fail to see any single entity within the USA that would benefit from it. We have Wall Street, Main Street, public and government as the suspects to look at. Who of them benefits from this? Not the government, not the banks and brokerages, not the public, not the companies. I just can't see it happening.

Now, as a last argument: not all things happening are being governed by the logic and that dying creature called Common Sense; sometimes raw emotions, populism, pandering to the lowest emotional reactions of the crowd takes over. That could lead to such proposal still being seriously considered and passed. Well, I still prefer to think that with no one particularly interested in the outcome, it won't - and if it will, we, as I said at the beginning, would have much bigger problem on our hands. We would have Powers That Be deliberately destroying the very fabric of the society, contributing to the job losses, capital outflow and desrtuction of the business - all for no good reason. If that happens, we better make sure we turn our houses in fortresses and have means to protect them, because in the chaos and insanity that will come, clicking Buy and Sell buttons will no longer be of any concern.

Turning Points: how trends are born and how they die

noreply@blogger.com (Vadym Graifer) — Tue, 28 Oct 2008 12:09:00 +0000

There are a lot of lessons to be derived from the recent market events. In this post I want to focus on two that have to do with identifying turning points. At the risk of making post too long, I'll put them together since they are very interconnected.

Turning points are in effect change of the trend. Thus, it's important to look into what maintains trends and what causes them to end.

Lesson 1. What causes trends to end, or pendulum effect.
System when pushed hard and far enough, pushes back. The harder and farther has it been pushed, the harder and farther does it push back.
This concept is well described and explained in a brilliant book The Fifth Discipline: The Art & Practice of The Learning Organization .
We all witnessed how, during oil stunning rally, all kinds of higher and higher targets were assigned - 150, 200, 300. Part of those predictions that is related to what we discuss is this: there were explanations to those targets and to continuing rise of the price, that cited all kinds of equations, how much oil is out there and can be extracted per day, and how much oil per day is consumpted and needed. Projection of the growth in both parts of equation led to a conclusion that supply and demand ratio will inevitably cause further price rise. Were those equations correct? Sure - if you accept the fact that system will not push back. But it will (and it did) - in a form of slowed down consumption (caused in no small part by the very cause of imbalance in the system, fast and hard oil price rise), in a form of developing other energy sources (yet to materialize to really meaningful degree). Similar predictions put food prices above the clouds, and failed in a similar fashion. Similarly, rapid increase of predators in a certain area eliminates their very food base and leads to banace restoration when predators start dying of starvation. Similarly, explosive expansion of a particular company often undermines its growth perspectives and requires contraction to regroup and find the way to evolve in a more mature fashion. Similarly, overheating of a certain area covered with water leads to increased evaporation and forming of clouds that cool the area off. Finally, to return to the markets, similarly excess of buying leads to exhaustion of buyers and eventual trend reversal. Similiarly, abundance of short positions leads to short squeezes. This phenomenon is known as "becoming a victim of own success". It's also known as reversion to the mean. Nothing exists in vacuum - everything is a part of the bigger system, and when a certain element of the system gets out of balance, there will be parts of the system that push for balance restoration. Thus trends are being born when a certain element upsets the system, and trends reverse when system pushes back.

Lesson 2. What maintains trends, or inertia effect.
Markets tend to overshoot any reasonable targets on both sides.
This phenomenon is well known as well, but somehow rarely taken into account at the time. When oil started showing signs of cooling off and reversal, very few people called for such seemingly far away (at the time) targets as 80 and below. When NASDAQ started running in 1998, no one could even think of such heights as 5000 - and similarly, when it reversed in the spring of 2000, no one could imagine that it could drop as low as it did. "Market can stay irrational longer than you can stay solvent" - sounds familiar in light of recent events even to those who never heard this sentence, doesn't it? If you want to see the most recent example of this, look no futher than at intraday chart of UAUA for two days, Oct 16 and 17. It would reach all reasonable targets, and still continued to go to unreasonable, and then some more, and then a lot more. This phenomenon takes care (which in market terms means deprives of profits or causes losses - cynical, I know) of those who trade on "obvious" as they see the obvious - which is usually how the majority sees it. "Deprives of profits" part is materialized when profits are being taken where reasonable targets are reached - and market advances well beyond reasonable, leaving those who took their profits in the dust. "Causes losses" part is materialized when countertrend position is being initiated at reasonable targets (shorting oil on the way up at 80? 90? 110? Going long on thwe way down at 120? 100?), and market overshoots those targets and stays "insane" long enough to cause desperation or margin calls.

Failure to take into account and to balance against each other both of these principles leads to severe misreading of the market. Try to analyse what caused billion-sized losses in Pickens energy fund, and you will see how this works. Having made immense amounts of money in oil, where such mis-calculations came from? From misreading the system as a whole first, thus believing in endless price rise? From underestimating the inertia on the downside move, thus multiple calls (and according actions or luck of such) of "oil will never lose $100" kind? You will see numerous examples of miscalculations of this kind in analysis and trades of many around you, and possibly in your own. Hopefully, this overview will help you recognize the fallacies in thinking and balance these counteracting principles in the future.

Information - Price Divergence

noreply@blogger.com (Vadym Graifer) — Sat, 04 Oct 2008 16:16:00 +0000

This is one of the most reliable indicators helping you discern the market's intentions. Some theory first, not too much, I promise... rather like a brief refresher. Market is a discounting machine, meaning tomorrow's development is being factored in by today's price action. That's why one who acts on known information is always late - when information is known to everyone, it's being already acted on, and late arrivals will be taken advantage of. As an example, think of upgrades and downgrades issued AFTER a major price movements or earnings announcements. Price action is an ultimate truth in the market - and it means that if there is a divergence between what a price is supposed to do based on available information, and what price does in reality - it's a price action that you need to go with. More than that, such divergence serves as a very powerful indicator for you, because it shows you that at this junction Smart Money clashes with Crowd. Crowd goes with obvious - with what information says. Smart Money meanwhile takes contrarian position. This is an ultimate case of "Trade what you see, not what you think".

Now, let's use fresh example as practical illustration of the principle. Yesterday, while the markets were preparing to a 700B rescue bill vote (you can read a whole transcript of our trading session in trading logs, Oct 3), I was asked:

[11:48] {member} so..whats your thoughts after passage on mkt for the day?

Here is the answer:
[11:49] {Threei} seems like selloff in cards... with or without initial short-lived spike

... and follow-up comment:
[12:10] bill passage is now all but sure, yet market doesn't really running
[12:10] makes you think...
[12:11] that dump may be an outcome in any case

Indeed, this is exactly what happened: immediately after bull passage market dropped fast and hard. Let's see how I arrived to that conclusion (which naturally kept us out of long trades at the moment of House vote). When a project of this bill was first announced, market rallied for two days. When a bill was brought for a vote first time and rejected, market dropped 700 points. Natural conclusion is, market likes the bill and will go up when it passes the House. So, day of the vote comes, comments clearly show that the bill is going to pass, yet we see failry lackadaisical, if I may say so, movement. Market is positive but there is no serious upward pressure, no boiling, no bruning desire to buy everything in sight. That's your Information - Price divergence. Information says: bill will pass, market likes the bill, it's a long. Price says: beg to differ. You saw what happened next. Price always wins, and a trader makes money by being right on price, not on information.

Non-stop Discussion of... Stops

noreply@blogger.com (Vadym Graifer) — Tue, 05 Aug 2008 01:32:00 +0000

No matter how much I write about stops, this topic doesn't seem to go away. Like Phoenix from ashes, time and again it arises. Recent discussion with a long-term trader returned me to this endless source of questions, doubts, hopes and frustrations.

Warning for overly sensitive types. The text below may seem harsh. Consider it tough love. My counterpart in this discussion took it this way and, I am sure, stands to benefit from it.

The story is probably all too familiar. A good trader in all other regards, knowledgeable about both fundamental and technical sides of trading, capable of picking right sectors and stocks, determining the direction and timing his entries. Beautiful performance on winning trades. Overall performance, ummm... leaves to desire. Threading water at best, losing money is more like it. Why? You probably guessed it. Some of misses are so disastrously big that they manage to negate all the wins and add some red on top.

I think I'll never understand why traders so stubbornly refuse to take stops. No, I was not born with this skill ingrained or inherited. I had my share of blown stops in early years, and they cost me dearly. But but but... how many times the same lesson needs to be taught before we finally heed it?

Here is why I don't understand it. Are you, a trader who doesn't want to take stops, compete for the title of Da Best Trader of All Times and Nations? Because if you manage never ever to lose, you sure are going to be one. No trader in history avoided losses. Not one, period. Whoever your trading idol is, be it Jesse Livermore or the guy who taught you how to click Buy button (hint: GENTLY), did he win all of his trades? No matter how skillful you are, you will lose on some of them simply because of market's nature. Uncertainty Thy Name O Market. It works in odds, not in certainties - meaning, even the best of setups and flawless trades executed according to those setups will fail sometimes. Now, if you acknowledge this (and if you don't, you have no business to be trading), why not limit your losses? This is exactly what stop loss does - according to its very name it STOPS YOUR LOSSES.

Let me say this... the question above is rhetoric one. I know why you refuse to do it. I already wrote about it in the past at
here (and discussed how to place them in two articles before that). One aspect of this, however, I want to return to. This aspect is RANDOM REINFORCEMENT. It means that not every time a market is going to reward you for doing the right thing or punish you for doing wrong one. Sometimes a stock you just took a stop on will rebound right away. Sometimes a stock you held against all rules will reward you for breaking the rules. Each such case will lead you into temptation to abandon your discipline. "Just this time, please, and I promise to be good again" Nope. Won't happen. You will be bad again, because being bad was rewarded. This great temptation by the market is like siren song - never what it seems to be yet who of us can resist.

Cure is simple. Run the stats. Calculate the total of all losses that got out of hand. Calculate the total of all the losses taken according to the rules - when the stop was hit that is. See what those stocks did after you got out - rebounded? Died on the vine? calculate where your portfolio total would have been should you take all the stops in disciplined manner. Calculate the same fior the case where you would have refused to take any stops. You got your answer.

Me - I take any stop whenever it's hit and consider it my salvation. Foe stop to me is not.

Lost and Found, or Does Common Sense Work in Trading?

noreply@blogger.com (Vadym Graifer) — Sun, 25 May 2008 19:03:00 +0000

There are things in trading that run contrary to common sense as we know it. Recent conversation with a trader who asked for advice is a good example of such occurence and illustrates often-made mistake.

First, a joke showing what common sense leads us to do. Fair warning: joke is silly and decisively not funny. A drunk crawls under the street light looking for something on the ground. Asked what he is looking for he says "Lost my watch on that corner". Asked why he is looking here when a watch is dropped 15 yards from the spot, he explains "It's dark over there, little chance to find anything, so I am looking here where there is a street light".

... OK, I warned it was lacking in laughter department. Nonetheless, it indicates that looking for a lost thing in a well-lit spot instead of where the loss has occured is silly. Now, let's get back to our trader and his question.

- I have this pattern of suffering a string losses... it starts usually when I get onto some very volatile stock or a stock making unusually big movement, looking so lucrative because of a great potential. So I jump in, it moves against me, I take quite a loss. Next thing I know, I make trade after trade on this same stock. It's like I got addicted to it and just can't move onto something else. Loss after loss, the day turns into total disaster. Got something to hit me with to cure this disease?

- Got a question for you. Why continue trading that same stock after couple tries proved unsuccessful? Why not leave it be and move to something ou have firmer grip on?

- Well... it makes big movements, I have better chance to get back all those unusually big losses...

- But you don't have reliable read on this particular one. Isn't it more likely that you will suffer more "unusually big losses"?

- Ummmm. I don't know. I just feel it's natural to stay with it until I get my money back. Hasn't happened yet, even once.

That's when I remembered that joke. It's a common sense and natural thing to do in every day's life to look for a lost something at the spot where you lost it. In trading, not so much. Go to well-lit spot and look to get your money back there. Lost money is not tied to a particular spot (stock), it's lost in the market. The market is a big space; go where there is a streetlight that helps you read things well. A stock that you have no read on is to be left alone. You have no personal relationship with it, you don't need to get revenge; it has no idea about you and it's not after you. Free yourself from things that don't work. Focus on what does.

Scan for Your Battles

noreply@blogger.com (Vadym Graifer) — Mon, 05 May 2008 11:39:00 +0000

At the beginnning of March I opined that under certain conditions we were going to see market rally to 13000 DOW and 2000 NQ. Now that those targets and I suggested liquidating long positions, are hit a few e-mails asked whether I see this moment as a short opportunity. My negative response caused feedback along the lines "If no long anymore, then why not short?"

Here is how I approach this. There is no such thing as continuous read on the market or particular stock for me. In other words, I don't have a clear idea what to do all the time. Sometimes there is a recognizable situation, and that's where I take action by initiating a new trade. Sometimes there is nothing recognizable, and I sit on a sideline or liquidate existing position - not because I see the tide turning but simple because I have no read anymore. Thus, the reason for exit can be "I read the move as exhausted" or "I can't read this move anymore". In a former case, yes, I may start hunting for an entry on the opposite side. In a latter case - no, I exit original position but do not look for an opposite direction trade yet.

All above has a broader implication for my trading approach. My process of hunting for a trade is entirely based on an idea of having my favorite setups and waiting until such setup shapes up and triggers an alert for me. I don't watch particular stock and hunt for an entry - rather I wait for whatever matches my entry criteria. View it as casting the net with certain mesh size and reviewing whatever got caught in there. Such net for me is a scanner which I have configured accordingly to my criteria and which scans the market constantly looking for what I asked it to. Covering NYSE, NASDAQ, AMEX, TSX, TSX Venture, OTCBB, Pink Sheets and indices and being easily customizable for any thinkable trading approach, it's all the search tool I need. There are three things though it doesn't have: no dartboard, no tea leaves and no "scan for winning trades only" setting.

Such approach can be construed as one of cases of "let the market come to you". Usually it's applied in a sense of waiting for certain price treshold where you render entry most favorable. This is just another way to apply this idea.

A Trader's Job

noreply@blogger.com (Vadym Graifer) — Wed, 30 Apr 2008 00:52:00 +0000

As it happened before, during some unusual market events and/or very jittery market action I get more visits and discussions from somewhat different sandbox - long term traders. I mean, normally they won't even give a second look to my measly 30 cents here, 60 cents there profts... OK, just kidding. Either current market events drive them, at least for the time being, to shorter time frame, or something they read in Techniques of Tape Reading stuck in memory and resonated with what they encounter now... interesting thing though is, they usually come to seek a change of a timeframe they operate in but what they find is a necessity to change their philosophy - no matter whether they look at 1 min chart or monthly one.

Anyway, there was this lengthy conversation over a course of several days which, with kind permission of my collocutor, I will cite here in as short form as possible. My remarks are in blue.

- So, here is a problem I run into. At the beginning of March I took massive short position based on negative read on the economy, on financial crisis etc, you know what headlines say for quite a while. Now, things don't really seem to be improving in general economy, so I know my read on it is right. The market action, however, is totally different story. For a week or so it seemed to be rewarding my entry - and it did nothing but go against it ever since. Now I am sitting on a massive loss, market just won't let go, and I just can't bring myself to take the loss - after all I AM right! banking crisis is far from being over, economy is in crapper, etc etc. Now, I did read your post and the follow-up on this topic and understand the concept of "too obvious" but still... shouldn't common sense prevail? How can I be punished that severely for being right? What am I doing wrong?

- You are talking about being right about economy state. What you are trying to profit from, however, is the market movement. You are coming from assumption that market must reflect the economy. While connection is there, it's not that straightforward. Ultimately, you are running into divergence between map and territory. Your read on the economy is a map. Market you are trying to play is a territory. If you see the differencies, will you insist on a map being right and a territory wrong?

- No, of course not but isn't such drastic divergence a sign of manipulation?

- It very well could be, and probably is. You can call it manipulation, you can call it market discounting the future, or come up with more explanations for this action. The important thing is though: whatever definition you chose, what does it lead you to?

- Explain this please.

- See, you can throw your arms up in desperation and say "this market is manipulated, it's impossible to make money in it". Or, you can view it as opportunity. Think of it this way: when you have this divergence between available information and price action, this is great trading opportunity. Market moving against the obvious is the one delivering maximum possible pain to as many participants as possible. Isn't it exactly the situation where Smart Money take advantage of the Crowd? That same situation that creates the very foundation of Tape Reading principles? Nothing particularly new about it either - I can list quite a few books describing just this.

- Come on... I just can't see this rally as real.

- What do you mean "real"? It happened, didn't it? I have a chart to prove it. You must be thinking of how sustainable it is when you say "real" - now, that's another matter and is a subject of continuous read of the market action. So far it's bullish in one timeframe, still bearish in another - and both of those are right until they aren't.

Now, when I ask what your definition leads you to, I want to make one more distinction. Don't ever forget what your job as a trader is. Your job is to make money, not to lose it. If it's a market direction that makes you money, give it priority over your fundamental read.

- OK, not to beat a dead horse, but just one more question on this. Obviously, as far as market direction is concerned, I've been wrong so far and the pain is serious. Was there anything to tell me it was coming?

- Have a look at this chart. First, double bottom came. Then it got confirmed by the break of the top between those bottoms. That was your first warning sign. Then inverted Head and Shoulders was formed. Then it got confirmed by retest of the right shoulder line and bounce off of it. Second alarm bell... Then major resistance at 1900 got broken. And notice, all this happens while all the headlines are still total doom and gloom! If that is not a writing on the wall...

- So, when does it end?

- I think you already know. It ends when majority of participants decides that the worst is really over and that they are missing on a bullish run. They jump on a rally bandwagon, start chasing it with no regard to the price... and get trapped by market reversal. Oh, and by the way - all this will happen with choire of cheerleading media justifying the bullish case.

- This is wicked...

- This is market...

- This isn't right.

- What is your job as a trader?

- Right... You know, I just realized one fascinating thing. I repeated these slogans so often, like "Don't argue with market", "Market is always right", "Don't fight the tape"... and I thought I internalized them, made them my mottos. Yet when it came to this situation, I found myself breaking all of them. I tried to outstubborn the market, outsmart it. If I got stopped out and waited for better entry, I would be totally fine. But no, I had to decide I was right and market was wrong... Got emotionally attached to my opinion, married to my position. Let my ego take over.

- All I can add is one more motto for you. My favorite. Trade what you see, not what you think. When you see markert action contradicting your thinking, chose territory over the map. Give a priority to a market action over your trading idea.

- This is hard.

- This is liberating... and, isn't the hardest thing to do usually exactly the right thing to do?

Trading Psychology - Stage 4. Through the Looking-Glass

noreply@blogger.com (Vadym Graifer) — Sun, 27 Apr 2008 15:16:00 +0000

... and What Alice Found There.

This last stage of a trader's development in psychology department is fairly simple to understand, maybe not very easy to implement... but give it due recognition and make an attempt, and it will happen with not much effort - as long as you are ready for this transition.

The idea is really simple. There are emotions that, at your early stages, plague your trading and cause erroneous entries and exits. Those are the same emotions that cause the crowd's mistakes. As you learn to deal with your emotions, take control over them and diminish, then eliminate, their impact on your trading decisions, you don't completely eliminate emotions themselves. You just learn to dull them and separate your trading actions from what your emotions try to push you to. However, you still should be able to observe them as detached cold-blooded observer, This is a stage where you gain an bility to actually utilize them instead of being their slave. If you can see how huge selloff creates this feeling of panic somewhere deep in you, this is what crowd feels. Feel the temptation to buy this parabolic upward spike, seemingly unstoppable? Chances are, at the moment when you feel the strongest urge to give up and just buy, that's when last buyers hit Buy at Market.

You see the point now. Use this as a mirror, as your window into understanding how crowd acts. Together with your strict self-control, such approach will put you on the right side of trades - and as we know from Tape Reading principles, right side is usually not the crowd's side. It's not a stand-alone method of trading of course but it's a good supplement to your tape/chart reading skills.

Two fair warnings. First, do not try to implement this element into your trading too soon. You really need to be at Stage 3 and get steady and confident at it before you try to move to Stage 4. No jumping over steps. Contrarian approach of this kind requires a lot of experience and perfect self-control.
Second, somewhat humoristic... as you progress, you may find that you stop experiencing those crowd-like emotons altogether and your impulses are fully in line with your own reading now. When it happens, your attempt to read YOUR impulses as a window in CROWD's impulses may backfire as you start trading as a contrarian to yourself rather than crowd, eseentially becoming a part of a crowd again. OK, that was half-joke.

Trading Psychology - Stage 3. Clarity

noreply@blogger.com (Vadym Graifer) — Mon, 31 Mar 2008 10:26:00 +0000

Finally. Painful process of hatching is over, and a trader is born. You are no longer a slave of your emotions, you are your own person. You are in full control of your own actions. You don't jump in the middle of action or out of it on a whim - rather you are capable of pausing and weighing your options and making your decisions in a cold blood. You can see the crowd's emotions on a chart clearly, and you are no longer a part of that crowd nor you are affected by their emotions. You can evaluate those emotions and utilize them. This is an amazing state of clarity, and it's very liberating. These two words (clarity and liberation) probably constitute the essence of this stage of a trader's development. Ability to see clearly the reality of what happens and the freedom of making your own choices as to how to react - this is what makes you a master of your trading vs. being part of the crowd.

You are but detached observer of the market, never involved emotionally yet constantly evaluating the emotions of other participants, waiting patiently for the moment when the opportunity presents itself and the odds are the most favorable; entrenching yourself where you anticipate the action to unfold; pouncing when the right moment comes; having no problem to retreat if proven wrong; having no emotional baggage over any outcome and ready to act again.

All above is the description of this stage and how it feels. Let's talk a bit of how you arrive to it. The transition from stage 2 to stage 3 is not a single moment of epiphany. It's a gradual process of many small clicks, each being another piece of the puzzle falling in its place. Realization of how market's logic is different from conventional Aristotle type of logic - click. Understanding how Smart Money acts vs. how Crowd acts - click. Understanding how a chart reflects emotions - click. Realization that you don't have to participate in any market event and are free to choose your battles - click. Each click comes as a result of another lesson taught by the market - and a good teacher it is for rarely does it miss a chance to put you through another lecture or test. If you are an avid student of the market, you will listen carefully and take notes, collecting knowledge and experience. Ore comes in, steel comes out. This process takes time but it's so worth it, as all the sinter is being discarded and the final result is extremely rewarding - Clarity and Liberation.

A little sidenote is in order: when you arrive at this point in your trading career, you find out that this whole transformation has changed you not only as a trader - it changed you as a person, reflecting in other aspects of your life, making you more disciplined and in control of yourself, giving you the clarity in seeing "behind-the-curtain" happenings, better understanding people and events around you, better ability to deal with them. This comes as a side effect and is an icing on a cake... or maybe it's an ultimate achievement in and of itself, and better trading performance is merely a side effect?

Now, all above sounds so good, I just have to throw a spoon of tar in all that honey. The bad news is, this state of mind once being achieved is not necessary going to stay with you once and for all. Now and then you are going to have unpleasant lapses of sanity when old habits seem to return. We touched on this earlier in this post. The process of kicking nasty habits is not a single event, it's a process. There are sound reasons for those temporary setbacks. When we succeed we tend to stop doing what made us success in a first place. Complacency, letting your guard down, overconfidence, feeling that we became so good rules don't apply to us anymore... However, as frustrating as it can be, there is a good news, too. As you move along, overcoming another drawback and returning to the right path, your skill of dealing with this phenomenon becomes better. Relapses become less frequent, you learn to recognize them sooner and eliminate them faster and easier. They will finally stop altogether when the right way to act in the markets becomes your second nature. Or first.

So, is this all there is to the stages of psychological transformation from the sheep to be slaughtered to the money extractor, aka trader? Almost... there is just one little twist left, and that twist will constitute stage 4. Next post will go over it and conclude this mini-series on trading psychology.

For how long can you afford being wrong?

noreply@blogger.com (Vadym Graifer) — Sun, 23 Mar 2008 22:31:00 +0000

Response to the previous post warrants one more dip in the topic before I go back and finish Psychology 101 series. While the concept of "being right on the reasoning doesn't mean being right on the direction" is accepted by all who wrote back to me, one more issue has rise in discussion. The question is, since price is bound to go where it belongs sooner or later, why not just close one's eyes and let "them" play their games? Wait it out, however stomach-churning the process is, and greet the return of fairness and common sense with victorious throaty laughter?

It's surely tempting. Idea of closed eyes appeals to anyone who experienced the phenomenon of the market kicking one's butt for doing the most sensible well thought through and reasonable thing. The problem with this approach is this:

The market can stay irrational much longer than you can stay solvent.

I don't remember who said that but boy, was he right. I will go down the memory lane for one of the most remarkable examples, to illustrate just how powerful contra-obvious movement can be. I already talked about it as one of my prominent lessons (learned the hardest way, too) - those of you who got Techniques of Tape Reading (TTR) can open page 21. For those who for some incomprehensible reason still haven't read it, reminder of how the story went.

K-Tel, NASDAQ symbol at the time KTEL, little company with tiny float, announced that it was going to sell the albums with music of 60-70 over the Internet. Fine, who cares, right? Wrong. It was the beginning of Internet era. Netscape already went into stratosphere. K-Tel became a symbol of a new way of doing things. E-commerce was a new word. And a new world - as usual, brave one. Stock shot up from under 5 to over 20 in a couple days. Warranted? Heck no. Fundamentals were laughable. Perspectives were bleak. No one believed this move could mean much for the company's bottom line. So, every sensible trader on the planet, and I suspect some for Mars, went ahead and shorted it. Stock danced a bit around 20, then slowly moved closer to 30 (those were fractions times, they moved easier than under decimal system these days). Next morning it opened at 31 and proceeded higher. Then brokers called shorts in, to the horror or those who decided to close their eyes. If you don't remember those days or haven't read TTR, try to guess where the stock finally topped out? Eighty dollars!

Now, even if not for shorts being called in, would you be able to sit out such ride? I highly doubt it (unless you ARE from Mars that is). Chances are, you would have given up long before it was over, and the closer to the top your capitulation occured the more insulting it would have been. Worse yet: let's suppose blue-eyed miracle happened and against all odds you did manage to sit tight through this experience (nothing short of being made to watch Inconvinient Truth five times a day two weeks in a row). Do you think you would be able to profit from subsequent price drop? I wager Victoria, biggest crater on Mars , that as soon as KTEL dropped closer to $20 making you even, you would have covered your short with sigh of relief loud enough to be heard from that same crater. And if I am right about this, then all this horrible risk and gut-wrenching experience was for what, to get out about flat? Give or take couple millions nerve cells?

Oh, and for the irony... K-Tel's CEO, when interviewed those days, said he was not selling his shares because "he was told stock goes to 100". Now that KTEL is long gone, I wonder... if that's what happened and he never sold, was it an ultimate case of market killing both sides or what?

"History teaches us..."

noreply@blogger.com (Vadym Graifer) — Sun, 16 Mar 2008 15:45:00 +0000

As you know, I don't commment on current market conditions on this blog. Being an educational blog, it's simply not the purpose. Being that, it would also be a crime not to comment on immense learning opportunity provided by the market conditions we are seeing.

Make no mistake, we are going through the crisis of historic proportions. It's almost time to start coining a name for it. Great Liquidity Crisis? Credit Crunch of the Century? The Day (insert bank name) Fell? If you as a trader went through this market unharmed - good job protecting your behind while sharks circle around. If you make money in this market - congratulations, you do not belong to majority anymore. If you are a newer trader just starting your quest - consider yourself very lucky. Yes, lucky, because if you learn in this environment - you will find the "normal" market to be piece of cake to trade in.

Let us outline the lessons to be learned during such extreme times.

First and foremost, and the most important:
1. Logic of underlying events vs. logic of market movement.
This is one of the most confusing aspects of the market for many investors and inexperienced traders. We are conditioned to see causes and outcomes as being linked in a logical fashion. Bad news should send the price down. Good news should cause rallies. We want to buy good news and short bad news. We want to trust our analysis and act on our conclusions - and we, naturally, expect the market to follow. So, shouldn't we feel perplexed seeing how the market stages stunning rally when there is nothing but doom and gloom in all the sources of information? What else can we do but dismiss it as manipulation?

Well, manipulation it is in many cases. However, this notion doesn't take us anywhere as far as money-making is concerned. The major lesson in this is old as the market itself: if something is exceedingly obvious, the market will act against it. Market by its very nature cannot reward the obvious with money - simply because majority follows the obvious, and majority cannot be profitable. It can't because there is no pool of money set aside for the winner - money is being extracted from other market participants. Who could majority extract the money from? And, if there is no money for a group betting on certain direction, then this group in fact renders this direction as wrong by simply being too big.

If this sounds confusing, let's put it in simpler terms. If there are just 10 participants in the market and 9 out of 10 bet on downward move, who is left to sell more and push the price lower? They all sold short already, so what are they going to do when they see that the price is not dropping anymore? What other choice do they have but to start closing their short positions, pushing the price higher? That single player that took long position against those 9 may be wrong about the events in economy - but he will be right on the market direction. He will make money by betting against majority. Of course this is simplified way to look at things, the reality is much more complex, with all the different timeframes, new participants jumping in or getting out. This simple case, however, explains the divergence between the logic of the market movement and the logic of economy events.

This is the major lesson of this market because rarely can it be seen as clearly as these days. Do not fall into the trap of obviousness. Being right in a long run will not protect you from the losses today. Being right about the meaning on events does not mean the market hasn't priced those events in yet. Alternatively, market may be preparing to move in your direction, and its way of preparation is to shake out prematurely taken positions. Market is doing its best to move having as few participants on board as possible - and it's doing it by means of moving against the obvious. Price action overrides everything. We traders profit from price changes - that's the ultimate market language. This divergence is your friend, not your foe - it allows you to distinguish the Smart Money action from the Crowd actions and position yourself on the right side. This is major difference between the way traders think and the rest of population think.

2. Handling extreme volaitity.

If you are a short-term trader, imagine being an investor at the times when major indices swing as wide as they do these days. 400 points range is almost a new norm for Dow. NASDAQ rallying 40 points in a matter of minutes after talking head on CNBC mentions a rumor? Gut-wrenching... How do you control your risk under such circumstances, challenging even for a day trader?

- keep your position size reasonably smaller than usual
- shorten your holding period to limit your exposure and minimize your chance to get caught into sudden move; book your profits. These are the times when investors go to swing trading; swing taders go to day trading; day traders go to scalping; scalpers.... umm, scalpers remain scalpers, some of them haven't even noticed that there are some major changes underway. Lucky bunch eh?
- never ever let these wide ranges lure you into false sense of security of "it will be back to my price on the next pendulum swing anyway" kind. Market can stay insane much longer than you can stay solvent - keep your stops religiously.

3. Use this market as a tremendous learning opportunity even when you stay in cash.

This is a lifetime opportunity to learn. A lot of things that are usually muted and barely visible are very "in your face" right now.

Watch how major players react and interact - financial stocks, techs, metal-related. Watch how market reacts on news and rumors. Watch how breakouts work, how breakdowns work, how ranges hold. Watch market reactions on news and rumors. Watch which moves get follow-through and which get faded; try to get a feel for the difference so you would be able to tell in the future one from another. Watch when the market becomes totally unpredictable and erratic so that in the future you could recognize such situation as early as possible and go to cash.

Finally, one more thing to observe... it takes us back to our title:

4. History teaches us that it teaches us nothing.

Watch eternal cycle of hope based on denial and fear stemming from lack of understanding of market inner workings. Every piece of "good news" spat out by propaganda machine sparkles explosion of optimism - no matter how lame "news" is. Someone comes to TV and says something, with agenda or just striving for attention - and their words become a gospel or anathema, depending on listener's positioning in the market. Positions are being held despite market going against the holder. Positions are being taken and dumped out of pure emotions; rules are being abandoned. Emotions run high making people do a lot of stupid things. Observe it all as, just as in previous point, when the heat is that high all these things are seen very clearly . Such heightened tension as we have now serves as a photo film development.

It may sound a bit cynic at the time when the wealth is being destroyed at such rate, but let's say it again... as a trader consider yourself lucky to have such learning opportunity. Use it to its full extent.

Oh, and by the way... The quote that served as a title for this post is a cute simplified form. Full quote from Hegel is even more telling. “What experience and history teaches us is that people and governments have never learned anything from history, or acted on principles deduced from it”.

Trading Psychology - Stage 2. Acknowledgement.

noreply@blogger.com (Vadym Graifer) — Wed, 20 Feb 2008 12:42:00 +0000

So, our trader comes to realization that his inner mind a) greatly influences his trading performance and b) isn't always under his, trader's, control. Naturally, he wants to take control over himself - and this is what it is about, self-control.

You can view it in the same terms as you do in life in general. We all found ourselves in a number of situations where the right way to act was not what our emotions dictated. Boss whose thinking doesn not light up the office with knowledge and wisdom? Kid right behind you whose only purpose in life seems to be to pound your seat with his feet during whole flight? Chatty co-worker who doesn't let your button go until he enlightens you about all the plot twists of the soap opera you never knew existed? Leisure-minded driver in front of you who doesn't seem to recognize green as permission to move his foot from brake to gas? Go ahead, list all your gripes with the world, I'll wait couple minutes. OK, an hour.

... Done? Cool, let's continue. What is it that keeps you from giving all the offenders listed above the piece of or your mind (providing you do keep yourself in check)? Or, let's say, from grabbing the ice cream from the passerby when you happen to want it and he happens to have your favorite kind? Discipline does, reinforced by society customs that serve as limitations on our behavior. "Freedom of you fist ends where freedom of nose starts". Now, imagine all those limitations being removed and all reinforcements gone; imagine any negative outcome of your action being limited to you only so no moral or ethical brakes either. Are you garanteed to stay as disciplined and restrained? Heck, some can't even with all those restraining factors in force. Are you more likely now to give in to temptation and act your emotions out?

Probably yes. But that's exactly what we have in trading environment. There are no external factors keeping you from causing harm to your account. If you allow your emotions to take over and start governing your actions, no one stops to tell you "hey mister, what the heck do you think you are doing?". No one calls 911. Do as ya please and may it do ya fine - that's the psychological backdrop we deal with in the markets. With this realization comes understanding that in absence of external restraints we need much stronger self-discipline and self-control in order to continue following the rules.

Next question is, naturally, how? It starts with right understanding of the very nature of the market as an uncertain environment. Such understanding creates a foundation for the proper mindset. It continues with some strategies and tricks helping a trader form strong set of rules and motivations. My favorite are "Model Trader" and "If I Were Smarter" described in The Master Profit Plan . The process takes a while usually. How successful you are in creating the proper mindset and strict self-discipline will actually define how successful you are in trading.

Let's move on to the description of the third stage so you have a clear idea what you need to arrive to.

Trading Psychology - Stage 1. Blissful Unawareness.

noreply@blogger.com (Vadym Graifer) — Tue, 12 Feb 2008 12:21:00 +0000

As I mentioned in the previous post, first stage is usually the one where a newer trader doesn't acknowledge the role of psyhcology in his trading. It happens out of ignorance or arrogance.

In a former case (ignorance) it's simply lack of knowledge and mistaken notion that one can trade succeffully if given "right" system or indicator ot tip or whatever causes one to enter and exit his/her positions. It usually takes a while before a trader starts seeing how his mindset influences his trading and how his personal traits shine through his trading decisions. It comes as a surprize realization that different traders will get different results while trying to apply the same system. It is counter-intuitive, isn't it?

In a latter case (arrogance), a trader shows some kind of denial - it's "not me" attitude, thinking that goes along the lines "maybe it's a problem for some but I am in control of myself", "this stuff is for weak-minded" etc. Needless to say, it's rarely the case... and even more importantly, it's not so much about weak vs. strong mind as it is about influence one's personality has over one's trading.

In any case, the important thing at this stage is to come to appreciate this aspect of trading. It happens when one sees how much truth there is in saying "everyone gets what they want out of market" (Ed Seykota I think?) Again, seems counter-intuitive, right? After all, don't we all want to succeed, to make winning trades, to make money? Sure... but it's not what our conscious mind wants, it's about what our inner core dictates, and that is not always easy to realize and control.*

Simple example to illustrate the idea: do you know people who repeat certain behavior patterns harmful to themselves? Getting themselves into relationships with types that make them miserable, over and over again? Repeating the same mistakes in their interaction with others, obviously not learning from the past? I bet you do (although you personally never act like this, right?) So, why do we do it even though we see (or could see if we looked) that these behavioral patterns hurt us? Because those patterns are not just some easy to break habits; rather tthey are part of our personality, of who we are, and it takes much more than simple decision not to do that anymore to change our ways. Pretty much the same thing happens in trading - we know what not to do yet we continue doing it.

As soon as one realizes all this, the first stage is completed. The role of psychology in trading is acknowledged, denial is over - and this forms the foundation for a change.

*My favorite example of this phenomenon is one I referred to several times in earlier writings, although not on this blog I think - Russian movie Stalker. Briefly: there is a certain machine granting wishes (stalkers in the movie are people who take clients to it through many dangerous traps). Machine grants wishes alright but there is catch: it's not a wish that you stand in front of the machine and announce that will be granted... it's a wish that constitutes your essence, your core, your deep desire - and it's not necessary the one you realize and announce to yourself and to the world. Pretty much what happens in trading and pretty much what the author of that saying meant.