Time Frames -modified from a previous Newsletter , subscribe for free at tdesk@yamner.com, subscribe in subject.
One recurring theme I seem to see in the various emails I get each day from random investors centers around the difficulty in finding a trading strategy or system that works. Many talk about daytrading and spurts of success, yet this is often tempered or overwhelmed by either professional time committments away from the trading screen or poor trading choices and a corresponding lack of discipline which eventually consumers any gains from more positive trades.
Let me make a few points:
1. Trading isnt for everyone. Their is no exact recipe or list of things that if done, guarantees success. In fact, for those without discipline or prudence, no profession offers as much downside as trading.
2. Much turns on time frames. In my opinion, the shorter the time frame, the more difficult it becomes to be successful. For those looking to trade for 1/8s and 1/4s, in my opinion, the odds are clearly against you. Thats not to say I dont think it can be done, because there are some fantastic traders out there making it happen, and doing so in a big way. Many are clients with us and when I sued to do so myself, I would have considered myself successful. But I also ramped up my own personal performance making a few adjustments to my own trading strategy bringing it more in lines with my needs and risk tolerances and time committments.
FOr those successful day traders, Kudos to them! They are the successful ones...but My feeling is that the odds are against you. I dont think many would disagree. I think we would all agree that the failure rate has to be greater than 50%, so the odds must be stacked against you. Evaluate your performance to date and be realistic about your success rate.
Difficulties in such short term trading involve a lack of immediacy to trading system, a lack of trading system, a lack of experience and understand of the workings of such trading systems, a lack of order flow and exposure to the 4000 broker dealers that do such a large quantity of trades int he various markets, etc. There are many good firms out there that provide reasonable access to a few of the trading execution systems. SOme provide more , some provide less. SOme provide them via. the internet and some dont. We've evaluated internet based routing systems and have turned them all down as a result of the inconsistency of the internet at this point as well as the limited bandwidth for most home-based traders. You all know my opinion here...nothing is more reliable than a phone answered by one of the industry's best trading desk within 2 rings, with real-time audio and video conference sites for those with the bandwidth. See our site at yamner.com.
Anyway, for those that are meeting success daytrading for 1/8s and 1/4s, etc., congratulations and keep up the good work. If interested, please post some of the reasons you feel you have met with such success. I think it could be very helpful.
For those that havent, or for those that are looking for something else, it is critical to find a trading strategy that works for you. Ask a long term investor about their trading strategy and if they tell you they have been buy sp500 stocks for a few years, they will be able to report some incredible results. Of course, for most up here, thats probably a good allocation for some of our money, but not exciting or rewarding enough for most of it.
So, my suggestion is to hunt around and look for trading strategies that offer you upside potential you are searching for, while helping you limit and minimize your downside risk. Also, the system should be able to fit within yourother time requirements as well, your possible 'other' career, you understanding or possible lack-there-of of access and understanding of executions and market makers, etc.
For such traders, I would suggest you look at position trading. position trading guages momentum in stocks and looks to take positions in such issues in a timely manner, no different than any other trader wishes, but with a slightly longer time frame.
There are many individuals out there who present such ideas and concepts. I have heard good things about Jeff Coopers' systems as well as many others.
One particular system that I have seen work quite well, when executed with discipline, is Gary Smith's system. As a disclosure, Gary is a client, came to us about a year ago and has often had very nice things to say about us. THis is in no way any packback because he doesnt make money discussing his strategy. I would never recommend a system unless I felt it was doing so. And to set the record straight, I am not suggesting his system as something you must or should pursue, but something that those looking for a strategy which fits with their needs, take a look at. I am not sure of the url to his site, but he is a writer at TheStreet.com, so I'd do a search on their site. In particular, its noteworth for its firm committment to discipline, and the freedom it provides traders from having to watch the market moment to moment.
If anyone can recommend FOR EVALUATION, any other systems, etc. please post them up here so we can take a look at them.
Whether you are a day trader, a position trader or a long term investor, it is important that you have a strategy and system. Whatever you system, it isnt for everyone. What works for one may not work for another. Be sure you find a system that permits you the necessary upside risk with consideration of minimizing downside.
Best regards,
Steve@yamner.com |
