Monday, September 29, 2008

Benefits from Unemotionally Trading Your Plan

There isn't much to add to this example of a trader's breakthrough in sticking to the trade plan. 

Too often and too easily a trader jumps in to change course and deviate from a pre-determined course of action within a trade - and the result is almost always suboptimal.  In fact one of the worst things that can happen to a trader is to have one successful outcome from changing a trade from the plan.  That sets up a bad behavior and strengthens the "flight" part of the "fight or flight" equation.

A Trading Journal Is Self-Diagnosis

Don't misunderstand me - I'm not advocating sticking with a losing trade.  Just be sure the loss you take is within the threshold for which you've planned. If a trader has a predetemined time in the trade and a stop loss to prevent a stock's freefall (in either direction), then let that trade run its course and live to call another play in the trading game.  

This doesn't mean that a plan must be adhered to in the face of consistent losses either.  Having a journal that records all measures of a trade makes such diagnosis possible.  In this case StockPunk learns to select a different criteria for setting a stop loss and is rewarded.

Here's an excerpt,
"Finally, I get a trade that works out the way I planned it. This trade came from a NR7 signal using Trade Ideas ... In the past I would have trailed my stops using the 20EMA (green line) as my threshold, so I probably would have sold at 20.70. Corey at Afraid to Trade (my mentor extraordinaire) challenged me to change the way I was setting my stops and determining my exits when I spoke to him last week. I owe him for the success of this trade."
Popularity of NR7

On another note it is interesting to see the NR7 alerts within Trade-Ideas used more and more as a signal for interesting moves.  

Here is WallStreetWarrior's recent trade using the alert.

We added this alert based on the feedback from TraderMike and I'm glad that we took his advice!



Friday, September 26, 2008

Round-Up: How Traders Use Trade-Ideas

Here is a round-up of the more useful articles and buzz on how others are using Trade-Ideas in their routine.

Filters I Use to Create My Universe of Tradable Stocks

http://tradermike.net/2008/09/filters_i_use_to_create_my_universe_of_tradable_stocks/

I was recently asked about how I determine my “universe” of stocks ... . To do that I use the following two scans in Trade-Ideas: Bearish Scanner’s Filter: Min Price: $10 Max Spread ... .

1 day ago by tradermike in Trader Mike · Authority: 184

Another one:

Dummy Trades - Follow the Market

http://traderjamie.blogspot.com/2008/09/dummy-trades-follow-market.html

CRR from the Trade-Ideas scanner - Short Trader's Paradise. Multiple alerts on this name so I added it to my focus list. Waited to see how it would pause - consolidation or retracement. NR

2 days ago by WallStWarrior in Wall St. Warrior · Authority: 53

And a final one we referenced earlier this week:

Backtesting Your Trading

http://blog.stocktickr.com/2008/09/23/backtesting-your-trading/

This is the fourth in a series of posts about how and why and how I started down the path of ... - especially if you use the Trade-Ideas Odds Maker, which allows you to test strategies very, very ... ). Our automated trading robot is available now.

2 days ago in StockTickr Blog · Authority: 29









Wednesday, September 24, 2008

Put A Go-Getter and A Cleaner on Your Payroll

As helpful a suite of tools like Trade-Ideas is to have on the payroll; generating ideas based on pattern recognition, backtesting those ideas based on the recent market activity, and in some cases automating the next trade, there's another important 'player' to employ on your staff: the cleaner or bookkeeper.

StockTickr is an online portfolio tracker that automatically captures the data of each trade essential for any manual journal and allows a trader to make more informed conclusions about a trader's performance over time.  The value of having someone clean up and make sense of your trades - priceless.

The Oz behind StockTickr, Dave Mabe, uses his tool combined with Trade-Ideas' Automated Trading Bot so well, he's changed his trading style and lived to write about it.

Here's the latest in a series of posts about his journey.  This article discusses how backtesting (and its assumptions and abstractions from the real thing) plays a crucial role in grading a trading system.

"You only have to do a very few things right in your life so long as you don't do too many things wrong."

"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it." -- Warren Buffett, on trading and life

Related Articles

Monday, September 22, 2008

Hi, I'm testing out...

Hi, I'm testing out the new technology offered by Jott that allows me to make posts directly to blogger without typing but by simply calling Jott and having my words transcribe directly to a post. listen

Powered by Jott

Tuesday, September 16, 2008

Trade-Ideas in Your Town: NYC


Lots of buzz and mentions regarding the latest release of the beta verison of Trade-Ideas PRO v2.2 on the internets.

Thank you TraderMike, Trader Eyal, and on a related note, to Dr. Brett Steenbarger for bringing attention to the recent news that Scottrade added our backtesting tool, The OddsMaker, to their ELITE platform for their customers.

Today I'm flying to NYC for a week of meetings with a whole cast of characters and friends - old and new.  

I am especially looking forward to tonight's party being thrown by TRADERS Monthly.  I'm also scheduling some time to swing by the interesting Web 2.0 Expo New York 2008.  I'm sorry I missed PingPongPalooza 2008 but this is New York City - something else is always just around the corner.

If you are in the area, dear reader, leave a comment or Twitter me and let's meet up. We take these offers seriously. I met a reader of the blog here in NYC and answered many questions about the use of Trade-Ideas as an input into the quant fund he manages. Good stuff.

Monday, September 15, 2008

Institutional Brokers Teeter, Retail Brokers Innovate

It's tough to get anything else out about the markets or its players on this solemn day but ...

... a bright spot exists among the retail brokers (who seem to be in better shape than the institutional ones) with a second broker rolling out event-based backtesting powered by Trade-Ideas.

On Friday Scottrade announced a host of new improvements to its active trading platform, Scottrade ELITE, among them Trade-Ideas' backtesting tool, The OddsMaker.

The improved tools, available at no charge to ScottradeELITE customers, allow customers to make more informed investment decisions and quickly react to trading opportunities.
The announcement goes on to specifically mention backtesting
-- Back testing -- Trade-Ideas(TM) Backtest is a back-testing tool within the Trade-Ideas window that allows customers to test strategies using historical data from the previous 15 trading sessions. Customers receive a summary that includes information on a trading strategy's odds in the market, a better understanding of where profits can be taken and stops can be placed, and identify what strategies are the most in tune with recent market activity.
And the world keeps turning ...

Friday, September 12, 2008

Trade-Ideas Releases Beta of v2.2 Without Stephen Colbert's Endorsement

Stephen Colbert hawks his bestseller, I Am America (And So Can You!), with the pronouncement, "When you make the first one this good, you don't have to write another one."  
We agree.  

He's talking about his book of course, but it's just as easy to substitute with the phrase 'decision-support trading tool', right?  That's what we thought about Trade-Ideas Pro v2.1 when we launched it way back on May 30, 2007.

"It's the book to end all books. Until I write another one"

Exactly.  Announcing v2.2 (the beta).  Here is the link to download this tested, but still beta version:  


As readers of the blog know, we offer this special invitation to beta-test Trade-Ideas Pro Version 2.2 ahead of other subscribers and its formal release sometime soon. It is our intention to show our gratitude for your support and use of Trade-Ideas.

"Finally a reason to become literate" [about trading]

Some significant  changes:
  • All the new alerts added in August and September are in here! 
  1. Alert: Running Up/Down Now
  2. Alert: 2/5/15 Green/Red Bar Reversal
  3. Alert: 2/5/15 Wide Range Bar
  4. Filter: Fundamental based
  5. Filter: Min/Max Position of Open(c)
  6. Filter: Min/Max Up Previous Day
  • Added new mode which sorts by the first time a symbol occurs (View Mode)
  • Added search panel to the config window.  Right click in a window and select 'Configure'
  • TI Pro can now support add-ins.  These appear on the Tools menu.  Add-ins consist of the new Automated Trading Bots(TM) (patent pending) that work with specific brokers and partners
  • Changed our free trial and demo approach.  The alert window will provide delayed data to users who do not have permission to see live data instead of hiding the stock symbol with '***' - that was annoying
  • Our What's New page is available as an RSS feed.  Now you can add it to your favorite reader and be notified first when we make new improvements!
"Finally, a book you won't want to burn"

There's alot of hidden improvements too that relate to latency and some internal plumbing. Keep in mind 2 points:
  1. No matter which platform you use (e.g., browser, TI Pro), you can always access any new alerts and/or filters we add. These are automatic to subscribers because both applications make a "call" to our servers for the latest list whenever someone interacts with our alert window settings via 'Configure'. When we add such alerts or filters, you receive them instantly. Note that The Odds Maker, however, is a feature found only in TI Pro.

  2. This beta version lacks additional improvements and features that the final release will include. This is by design since we plan to include user feedback and solve any issues that may appear with heavier traffic and use. No flaws appear in our own testing of this beta release. However, should you find anything unusual (e.g., a bad print), please let us know at info at trade-ideas.com. We'll also take any praise there too!
Stephen ... any last words?
"It's the Bible of books"

"240 pages of genius. With pictures!"

"The best-written book I have ever written"
Thanks.  We could not have said it any better than that!

P.S.

"Read the book you'll want to have thrown at you"

He must be talking about our User Manual!

Sunday, September 07, 2008

The Perils of Long Term Buy and Hold


Many readers here can say they lived and even traded during the greatest bull market in the history of the stock market. Around every corner held opportunity. Every pullback was another great point to add to positions. Are we in such a pullback now or are we destined to muddle through sideways or declining markets? A quick look at history prepares us for an answer - but luckily we're trading with the same tools the greatest generation used.

Survival is a study of how to adapt to the onslaught of change. Is change coming?

Source: http://stockcharts.com/charts/historical/djia1960.html

Here is a stock chart of the Dow from 1960 to the present. It looks pretty amazing; in fact, the growth is exponential. But lets get mortal for a minute. What is long term? Is it 5, 10, 15 years? Let's say its 1960 and life was not always easy for you and you really start getting your head straight with your finances at the age of 40. You feel optimistic because a new decade is approaching, its the 1960s. You have a family that you are looking to provide for and see the stock market as an opportunity to take your finances to the next level.

Flash forward, you did everything right. You put away money every month, and bought blue chip names to keep things safe. The problem is that now in 1975, 15 years later, you are actually worse off than when you started in 1960.

Not only has the market lost ground during those 15 years, adjusted for inflation, but you really took a big hit. Even worse your peak earning years are behind you. How could this have happened? Well it did, and does, and will continue to happen time and time again. The Japanese stock market has still not recovered from the excesses of the 80's and it is twenty years later.

Too Long Can Be Wrong

You need to be aware of the simple fact that just going blind and buying may not produce any results. The industry is geared to have you think otherwise but this little time-traveling journey we took proves the fact that long can be wrong. So what is the answer? We believe the answer is to open your eyes and use tools that were not available a long time ago to take advantage of the whatever the market will bring - up or down. The tools I am referring to are quantitative in nature.

The difference between today and decades ago is the fact that it is easier to get one's hands on information that was not readily available. Today you can dip the preverbial toe in the investment water without actually getting wet. Even better is the ability to ask and answer questions that previously were impossible to fathom. Questions like, "What win % rate and ratio of winning trades to losing trades result if I use this trading strategy for only an hour from 11:00am to Noon? What results are generated if I hold a position for 15 minutes vs the whole day?

Tools for Every Job, But Which One Saves the Most Time?

Our back testing tool called The OddsMaker allows you to see what happens to many trades so that you can get a gauge as to which way you ought to be trading. In other words are you going to be landing in that soft pile of money or on hard jagged rocks. Look before you leap.