Hey Gang,
Here is an interesting discussion we had today concerning trading philosophy...
Good Luck
Ken
www.mtrader.com
MTrader Class - 09/14/98 (C) Copyright 1998 The Momentum Trader
[12:34] <KenWolff> 9:34:22 Lets discuss an important subject we will
forever be impressing into your consciouness... and hopefully it will get into you sub consciousness..
[12:34] <KenWolff> 9:34:47 I was DCC'd by a young trader who chose to buy TLAB at 49 1/8 ...
[12:34] <KenWolff> 9:35:14 TLAB was a gainer that was on a pullback... first fact was that it was unusual in the beginning because why???
[12:35] <KenWolff> 9:35:35 any guesses??
[12:35] <Player25> please, to send question to KEN double click on player25, thnx...
[12:35] <altaaboy> pullback
[12:35] <KenWolff> 9:35:51 was any other gainers pulling back???
[12:35] <Riverdog> Nope.
[12:35] <Riverdog> Correction: AMZN
[12:35] <KenWolff> 9:36:19 OK.. 2nd fact... what was the pace of trading and spread changing like????
[12:36] <Riverdog> Bouncy and erratic.
[12:36] <KenWolff> 9:36:53 Yes.. AMZN was also selling down.. but it was again the only one.. along with TLAB..
[12:36] <KenWolff> 9:37:05 so we had an unusual opportunity.. first fact..
[12:36] <KenWolff> 9:37:11 it was still an opportunity..
[12:37] <KenWolff> 9:37:38 Yes river.. bouncey and very erratic.. I for one could not see the buying until after the bounce..
[12:38] <KenWolff> 9:38:26 Was the Pace of trading: 1. VERY FAST 2.
MODERATLEY FAST 3. EVENLY PACED 4. SLOWER PACED.....??????
[12:38] <_philaguy> 1
[12:39] <Riverdog> Very fast - it was the most actively traded stock of the morning.
[12:39] <KenWolff> 9:39:40 YES... so our young trader should have entered with: 1. Extreme Caution 2. Caution 3. Mildly aggressive 4. aggressive... ????
[12:39] <Sneezy> not at all?
[12:39] <gainer> lol
[12:39] <Janine> 5. short
[12:39] <KenWolff> 9:40:07 LOL.. EXACTLY sneezy...
[12:39] <_H-man> none of the abov
[12:39] <Sneezy> <beaming> exactly what I did!
[12:40] <KenWolff> 9:40:26 I was waiting for #5....
[12:40] <_Alpine> So fast RT quotes were behind for some
[12:40] <KenWolff> 9:41:03 OK... so the young trader DCC'd me feeling sick cause they exited from 49 1/8 at 48 1/2 ...
[12:40] <KenWolff> 9:41:10 for a loss of 5/8 of a point..
[12:41] <Riverdog> Good thing it wasn't 10 points.
[12:41] <KenWolff> 9:41:35 OK... they wanted to know if they should try 47 now????
[12:41] <KenWolff> 9:41:50 What would be your advice????
[12:41] <gainer> no way
[12:41] <KenWolff> 9:42:00 It was bottoming at 47 ..
[12:41] <Sneezy> only if the trader is masochistic
[12:41] <KenWolff> 9:42:07 why gainer???
[12:41] <gainer> lol
[12:41] <_Poetus> tie hands to chair
[12:42] <gainer> burned once..enough
[12:42] <KenWolff> 9:42:31 right...
[12:42] <KenWolff> 9:42:45 the rule is: "TRY TO KEEP A CLOSE AND
REASONABLE STOP!!'
[12:42] <Riverdog> If he knew he could keep a quarter point stop, based on the percent down it would be reasonable. But the pacing was so jumpy I don't think he reasonbly ccould expect that.
[12:43] <KenWolff> 9:43:50 How do we do that...??? By assessing our own abilities in light of the: 1. Trading pace 2. spread action 3. knowledge of the execution system we are using 4. experience 5. Market we are in..
[12:43] <KenWolff> 9:44:01 very true River..
[12:44] <Player25> 2 questions holding...
[12:44] <KenWolff> 9:45:09 Once you lose 5/8 of a point... what does that tell you???? 1. unlucky 2. Bad MMs 3. Poor Market 4. bad trade....?????
[12:45] <Putter> #5....If you can't keep stop #1, there is a good chance stop #2 WILL BE BLOWN if tested.
[12:45] <KenWolff> 9:45:37 answer: "You are not able to keep a close stop" FOR WHATEVER REASON..
[12:45] <gainer> all of the above
[12:45] <KenWolff> 9:46:19 So based on 5/8 of a point stop losses... how many times can you afford to be stopped on ONE trade??????
[12:46] <gainer> once
[12:46] <KenWolff> 9:46:31 answer: NOT MANY!!!!!!!
[12:46] <KenWolff> 9:46:40 exactly... Only Once..
[12:46] <KenWolff> 9:46:54 so I advised the student... "You cannot play the stock again"
[12:46] <KenWolff> 9:47:06 they were sick and wanted to make that money back...
[12:47] <Riverdog> Revenge trades usually end up costing you even more.
[12:47] <KenWolff> 9:47:45 but when it hit 44... then 42... then 40 ... then 38 ... they were not so sad anymore..
[12:47] <KenWolff> 9:48:15 and the 2 1/2 dollar bounce would not have made up for the early losses...
[12:48] <KenWolff> 9:48:52 They were still feeling like a loser.... they said to me: "BUT IT IS REAL MONEY!!! NOT A GAME!!"
[12:48] <gainer> lol
[12:48] <Janine> speaking of TLAB it's at 38 7/8
[12:49] <KenWolff> 9:49:26 I said to them: If you think of it as "MONEY".. You are destined to lose..
[12:49] <KenWolff> 9:49:34 why is that???
[12:49] <_H-man> you freeze ?
[12:49] <Janine> because then you get emotionally attached to the stock?
[12:49] <KenWolff> 9:50:07 We are so engrained with thinking of trading as making MONEY.. or LOSING MONEY...
[12:49] <BillyD> you are not focusing on the trade
[12:49] <gainer> too much fear
[12:50] <Riverdog> Can't be mechanical about keeping stops.
[12:50] <KenWolff> 9:50:24 Let me ask you this:
[12:50] <_Poetus> well isn't that a big part of trading?
[12:51] <KenWolff> 9:51:39 "Does your gardner think of wearing out his shovel everyday??" , "does your local seamstress think about wearing out the sewing machine each day??" , "does your local cook think about losing his stove each day??"
[12:51] <Threei> you have to do your job. Money will come if you do it
right. Impossible to trade if you think of money instead of trading
[12:51] <KenWolff> 9:51:54 NO...
[12:51] <KenWolff> 9:52:19 If they did they would not do a lot of work... would they...they would only think about the "LOSS" of equipment..
[12:52] <_Poetus> i thoughtt the job of trading was to make $
[12:52] <KenWolff> 9:52:40 NO poetus..."THAT IS NOT YOUR JOB!!!"
[12:52] <KenWolff> 9:52:54 So then what is your job????
[12:52] <_Alpine> preserve capital
[12:52] <_Poetus> uh oh i'm just a newbie brrrrr
[12:52] <Sneezy> I see... so think of a stop loss as depreciation on
equipment...
[12:52] <KenWolff> 9:53:09 and what is the tools necessary to accomplish it???
[12:52] <KenWolff> 9:53:21 are the tools... bad grammer..
[12:53] <Rusty> Trade well
[12:53] <Riverdog> Learning how to recognize buying and selling and learning how to execute appropriate stop losses.
[12:53] <SteveB> stops
[12:53] <Janine> good riverdog
[12:53] <KenWolff> 9:53:54 "THE GAME, THE RULES, THE GAME, THE RULES, THE GAME, THE RULES, THE GAME, THE RULES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"
[12:53] <Threei> Our job is to assess momentum, right side of the market and exercise good timing...
[12:54] <KenWolff> 9:54:29 Many traders are like chess players that "HATE" to lose those cute little pawns...
[12:54] <Janine> TLAB at 38 1/2
[12:54] <KenWolff> 9:55:15 The best chess player I have ever played
against offerred me their queen early in the game and check mated me soon after..
[12:55] <KenWolff> 9:55:51 So he was willing to lose what he considered a reasonable loss to accept the winning of the game..
[12:55] <KenWolff> 9:56:03 that is what we do here...
[12:55] <KenWolff> 9:56:20 We play a very serious, tough and trying and emotional game...
[12:56] <KenWolff> 9:56:44 we play by the rules and try to assess the risk, the players, the variable and the potentiall...
[12:56] <KenWolff> 9:56:51 we are not here to make money...
[12:56] <KenWolff> 9:57:19 I congratulated the student and said how proud I was of them... keeping a stop at a loss of 5/8 was smart...
[12:56] <_Poetus> okay, but what if you came to daytrading to make money; ;can u still change your mindset?
[12:57] <KenWolff> 9:58:03 and I did it when TLAB was bouncing up and looking like it was going over 49 ..
[12:58] <KenWolff> 9:59:00 I told them that was the game... and I would rather see a loss at 5/8 than them making 5 bucks on a bounce off 47 up to 54 dollars..
[12:59] <KenWolff> 9:59:30 If you do not poetus ... I am afraid you are doomed...
[12:59] <_Poetus> ok
[12:59] <KenWolff> 9:59:38 it is a very fragile nuance with trading..
[12:59] <KenWolff> 10:00:16 You must look at money as a tool only... do not focus on it...
[13:00] <KenWolff> 10:00:31 If you play the game properly... let the money take care of itself..
[13:00] <_bear> KEN what you are saying is you must play by the rules and that, will eventually earn you money
[13:00] <KenWolff> 10:01:03 Just consider STOPS, SHARES , AND POINTS ... enter and exits..
[13:00] <KenWolff> 10:01:18 Yes bear...
[13:01] <KenWolff> 10:02:00 Figuring it as money will only cause
hesitation as you attempt to see how much money you won or lost..
[13:01] <KenWolff> 10:02:17 and it is really a matter of time and
percentages...
[13:02] <KenWolff> 10:02:45 your portfolio will climb and drop and climb and drop and hopefully over a period of time... climb!!!
[13:02] <KenWolff> 10:03:17 but I want you to be on auto pilot...doing what is necessary for your ultimate success...
[13:03] <KenWolff> 10:03:44 Just thinking of trades, percentages,
potential, buying.. selling.. enter and exit...
[13:03] <KenWolff> 10:03:54 and especially STOPS..
[13:03] <KenWolff> 10:04:16 So based on reasonable trading.. our young trader had no business in TLAB in the first place...
[13:04] <gainer> lol bird
[13:04] <KenWolff> 10:04:50 and if they had needed "MONEY" then would probably jump on it... but according to the "RULES" of the game.... NOT ACCEPTABLE TRADE..
[13:05] <KenWolff> 10:05:58 If you have a wife or husband or friend that asks you how much money you made today... refuse to answer... only anser this way: "I PLAYED THE MARKET VERY WISELY TODAY AND PROPERLY AND DID THE BEST I COULD HAVE POSSIBLY DONE!!!"
[13:06] <KenWolff> 10:06:27 that is the only thing that really matters in trading...
[13:06] <KenWolff> 10:06:38 "DID YOU PLAY THE MARKET WISELY??"
[13:06] <_H-man> lol, the wife would never go for it !, but agree with the sentiment
[13:06] <KenWolff> 10:07:06 You can play it Luckily but will that really be a long term strategy for you????
[13:07 ] <KenWolff> 10:07:40 Hey.. I have had a few fights.. but I refuse to be lured into a making money mentality when trading..
[13:07] <KenWolff> 10:08:06 It can only do you harm... I see no good in it..
[13:08] <KenWolff> 10:08:49 You desperately need: "PATIENCE,
PRUDENCE,TIMING,A HEALTHY MENTAL ATTITUDE"
[13:08] <KenWolff> 10:09:20 You do not need : "PRESSURE, OUTSIDE FORCES THAT DO NOT KNOW ANYTHING ABOUT WHAT YOU DO!!!"
[13:10] <KenWolff> 10:10:31 If your spouse asks what you did today... you say.. "I learned a bunch and expect to be rick some day!!!"
[13:10] <KenWolff> 10:10:40 rick=rich
[13:10] <Sneezy> (spouse phoned 1/2 hour ago: "did you make any trades today??" I hung up)
[13:10] <gainer> lol
[13:10] <_Alpine> It's seems too hard to keep money making mentality out of your head when you are a professional, or this is your bread and butter (retired or something).
[13:11] <KenWolff> 10:11:28 It is very hard Alpine..
[13:11] <Magic> my wife always asks how I did (I think she is getting ready to go shopping Big Time)
[13:11] <Magic> agree with Alpine
[13:11] <KenWolff> 10:12:07 but I will keep at you until you focus on "GREAT STOPS" , "GREAT HIGH PERCENTAGE TRADE" , "EXCELLENT EXECUTION"
[13:11] <Magic> but learning from Ken
[13:11] <KenWolff> 10:12:17 I really do not care how much money you make..
[13:12] <KenWolff> 10:12:34 SMART TRADING ...
[13:12] <Sneezy> I am a CPA, former CFO... profit making thoughts are in my blood
[13:12] <KenWolff> 10:13:02 Because sometimes the market is taking
heads... and we do not want to be fighting the market... 'THE MARKET
ALWAYS WINS'
[13:13] <KenWolff> 10:13:31 I know sneezy.. mine too... I know exactly how much 1/16 will make me on 1K shares...LOL
[13:13] <Sneezy> ( have a chart taped to my monitor.. $63.. should I tip it off??)
[13:13] <Sneezy> tip = rip
[13:13] <_Alpine> lol, me too
[13:13] <bishop> looks like alsi could have made us 3 bucks today, no one has mentioned it much though, opinion
[13:13] <KenWolff> 10:14:18 But our goals are a bit different.. smart enter, smart exit.. sometimes 2 bucks will be smart... sometimes 1/16 will be smart...
[13:13] <bishop> for ken
[13:14] <Janine> ken TLAB down to 37 3/4
[13:14] <KenWolff> 10:14:56 LOL..
[13:15] <KenWolff> 10:15:30 Ok.. I think you get the point... that is the reason for me being here...
[13:15] <KenWolff> 10:15:44 I am not trying to be a smart A__ .....
[13:15] <Sneezy> they are not dollars.. they are just POINTS..
[13:15] <KenWolff> 10:16:09 I will forever be pointing out the percentages and hazards of every trade...that is my job..
[13:15] <KenWolff> 10:16:18 as best I can...
[13:16] <Player25> 3 questions holding...
[13:16] <runner> That is great KEN .
[13:16] <KenWolff> 10:16:57 so If I tell you the trade is not a good
one... it is not because I am a big ego personality.. I will attempt to point out percentage only..
[13:17] <italiano> test
[13:17] <KenWolff> 10:17:42 I hope you have the luck of 1000 Irishmen... but I would rather you have the Mentality and skills of a good chess player..
[13:18] <KenWolff> 10:18:27 If you shorted TLAB at 52 bucks and covered at 38 ... YOU ARE LUCKY..
[13:18] <KenWolff> 10:18:46 If you shorted TLAB at 52 bucks and covered at 50 ... YOU ARE SMART..
[13:18] <KenWolff> 10:19:15 You played the proper percentage and got out expecting a run to the upside... smart play..
[13:19] <KenWolff> 10:19:48 hindsight makes the 38 cover look good... it is luck... which I do not mind...
[13:19] <KenWolff> 10:19:53 but luck will run out...
[13:19] <KenWolff> 10:20:00 SMARTS WILL NEVER RUN OUT..
[13:19] <KenWolff> 10:20:14 questions???
[13:20] <Janine> is TLAB at bottom 37 1/2?
[13:20] <KenWolff> 10:20:57 GOSH janine there you go.. wanting money....
[13:20] <KenWolff> 10:20:58 LOL..
[13:20] <KenWolff> 10:21:08 sorry... My quotes are froze..
[13:20] <KenWolff> 10:21:10 LOL..
[13:20] <gainer> lol
[13:21] <KenWolff> 10:21:49 Just a sec..
[13:21] <SteveB> some complaints of MBT down..mine okay
[13:21] <KenWolff> 10:22:05 seems like we missed 36 5/8 low janine....dang it..
[13:21] <KenWolff> 10:22:20 No problem I have back up quotes..
[13:22] <KenWolff> 10:22:27 MBT is back up..
[13:22] <KenWolff> 10:22:48 should hit 39 1/2 though janine..
[13:22] <KenWolff> 10:23:20 but it can very well fall to 36 7/8 again..
[13:23] <Janine> OH great
[13:23] <KenWolff> 10:23:37 If it does.. lets buy it..
[13:23] <SteveB> cnbc CIEN rehash....here
[13:23] <KenWolff> 10:23:49 for the experienced traders..
[13:23] <KenWolff> 10:23:56 can we ask the questions later...??
[13:23] <KenWolff> 10:24:12 Lets go back to trading...see if we can getsome action...?? OK.. |
