Hi Chief et al,
Many of you claim to ignore the information I mentioned,...but I've always wondered whether you really do, or perhaps you don't realize the huge volume of knowledge you carry around in your head about the market, the economy, the industry, even the company, the brokers and analysts playing the companies, interrelations in the market etc.
I suppose if all you look at is price and volume, you would never watch the TV during trading hours, to see how the Naz, Dow, TSE, other assorted indexes, newsflashes etc. You would just scan the list of active issues and look for setups. Of course how would you know what a good setup is if you didn't know something about the market makers, the rules of trading, why the stock was the price it is, why it is going up or down, why the market wants it in the first place.
The more we play the market, the more we know about how a stock reacts to certain stimuli and why. We probably know something about the potential stock movements from our conversations with our brokers, chats on the chatlines, which broker is the most active trader and possibly why they are trading, how they trade, who's there on the market depth, trading patterns, what this particular stock has done in the past with news or market changes. The more we study the market, the better we get at catching on to all these relationships and subtle clues.
What makes you chose the stocks to watch in the first place? What makes you pick your entry points, exit points, what you are prepared to lose? Do you use just the price/volume data,...or a lot more intimate knowledge of the market, the industries that are hot or cold, the main players in the market, Greenspan, interrelationships among the stocks, the markets, the economies, current events, current trends etc., etc., etc.
Just how do we decide whether the market will like that stock a little wee longer so we can snatch a point or two from it. How about holding certain stocks overnight for a quick bounce in the morning because we "know" how that stock has reacted in the past in a similar environment.
What makes you decide a turning point of a stock has occurred. Do you just rely on the price and volume data,...or is some part of your brain secretly watching the business channel on TV and you see some relevant market index or associated stock is rising that may and should affect the stock you are watching,...or perhaps you noticed one of the big brokers has pulled a big bid or ask,...or a broker you know has good knowledge of the stock has started to buy or sell, or you see a block trade, or a pattern of trading you have seen before. Maybe you stepped out to let the cat out and noticed it was bloody cold out,...maybe those gas futures will head up today because you know supplies are tight. Maybe your broker informed you that two funds were accumulating a position, or selling out. Why do we put stocks on our watchlists,...just because they had good price/volume data the other day?
All those spikes, valleys, charts, volumes, velocities, waves,...sure you don't know the reasons behind some of the ups and downs, and use that as a factor in choosing when and which ups and downs to play,....relying on past trading behavior to a stimulus to predict future trading behavior? Sure you don't take a peak at the latest news release before placing your bet on a high volume stock of the day? Just how much knowledge is already in your brain to allow you to make a quick judgement? Does none of your past experience or education come into play, just what you see in the price/volume data? Lots of stocks have news these days, but only the hot sectors seem to get up momo, while many have down momo,...is this always true,...or does the market change and we need to know when it does?
With thousands of stocks out there to choose from, why do we pick the ones we do,...only because of price volume data,...or because we know more about that stock or instrument than we are letting on? How do we know the market will continue to want the stock after we buy into it?,...do we know a little more about that market than we think we do. Is some little corner of our brain or stomach feeding us information we don't think we have about MOMO or what the trend may be? Why do we choose one type of MOMO over another,...or is there only one type of MOMO?
It has been my experience that daytraders get better with time, as experience levels and knowledge of the market increase,....that's the 5-10% that do better than breakeven. That suggests that simple price/volume rules are not the whole story because one would think if they were, most people could be good daytraders from day one if they just followed those rules.
People are asking how we decide to enter a position, how we set our stop losses, why we watch what we watch, how we set our trailing stops, how we select our entry points,....to those of you who say just the price/volume data,...why do we do different things at different times with similar price/volume data,...I wonder. Many of us were scientists, engineers, computer techs or programmers,... whatever. We use all that baggage, consciously or unconsciously to make our decisions. We also watch CNBC, ROBtv, The learning channel or some media I imagine at some time of the day. We use those media or others to make decisions on what stocks to watch and how to play them. That was my point Dan, sorry if it seemed I placed you in a group. Although my reply was to you, it was sent as a general point of discussion for the thread.
Perhaps we all use a lot more data in our Daytrading than we think we are, and my point is, it is probably more essential to the outcomes of our trades than those of you who disagreed with what I said are admitting to. When I talk to successful day traders (ones who make money every year and have done so for 3 years or more) and ask them why they made a trade, I discover that they are aware of a lot more about the stock and the environment around the stock than they initially let on. They have read something about the stock, or about the industry. They know a lot about the current trading market and economy, they have seen what has happened to similar stocks in the current market, they watch who is trading the stock, they know something about the market cap and how the stock has behaved to certain news in the past even if the stock was not on their initial watchlist for the day. If the stock is on a watchlist, it is usually there because a lot of information gathering has already occurred about that stock or the industry that it is in. With all that information in their brain, they then look for the appropriate price/volume information to determine entry, exit, stop loss etc., points.
Why and how might you play NT or ABX or DMX in the last few minutes of this market. Is it because of the price/volume data solely, or is your brain feeding you a lot of other information about how these stocks have been reacting in the current market environment? |
