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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Apakhabar who wrote (10973)12/16/2000 6:11:22 PM
From: TraderAlan  Read Replies (2) of 18137
 
Ap,

I want to trade with the wind at my back at all times. I never look at an individual stock pattern in a vacuum. I use the broader cycles to support my position. The problem with the last month or two is that the major indices have been in a very oversold condition. This fuels many of the short squeezes. I'm content to trade less dangerous conditions (ie the sloppy middle) from the short side.

Absolutely I believe that swing trading can be done intraday. When Taylor discussed his method, it was impossible to trade anything but the daily chart. But I believe that time frame is a non-issue. 5-minute charts produce clean trends. But, system noise increases as holding period shortens. For example, trying to buy a clean 62% retracement on a 5-minute chart doesn't yield good results because a single tick or two can carry a stock 10-15% in either direction. Mathematics just isn't that exact in the intraday environment.

Naz has been a PIA because natural stop levels are being blown out on almost every common pattern. I can adjust to that with an understanding of how stocks can violate these points but not change their trends. But frankly it's exhausting and I'd rather move on to easier opportunities. I have nothing to prove and just want to be an opportunist. NYSE allows me to do that. I hate the crowd and their love of tech stocks. This tells me to play where the herd isn't playing.

Squeezes have very different characteristics than pullbacks off of bull moves. Fear generates a different price chart than greed. I have entered shorts at the end of squeezes but, again, I find the manic environment distasteful and the volatility undermines my risk considerations.

Of course scalping is highly dangerous to beginners. Market swings and their nature is one of the most complicated forms of knowledge. Newbies don't understand the nature of price movement without a long period of observation and commitment of their own funds. That's why I say it is "advanced". The ebb and flow of price movement is highly deceptive. As we noted with Dustin, some folks have a natural talent to understand this. The unwashed masses do not. The statistics support my view. The failure rate for scalping is well over 90%. Not a pretty picture.

You raise a good point as to why scalping is so difficult. Most traders, including new ones, cannot manage the reward:risk equation. Scalping requires mastery of this equation due to the limited reward. A few bad moves or mental lapses places the scalper quickly into a losing position.

Alan
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